Despite the diplomatic tension with the US, Israel will purchase a second squadron of F-35 stealth warplanes, and will also complete its purchase of its first squadron, after having originally bought 19 of the planes. The Israeli government has not yet approved the deal. The US approved $3.1 billion in military aid for Israel, at a time when Washington is cutting back on its military aid to other countries. The deal also requires approval from Washington.
Minister of Defense Moshe Ya'alon met with US Secretary of Defense Chuck Hagel last week during his visit to the US. They discussed procurement matters for this year and planning of the Israel Ministry of Defense budget. In addition to the US commitment to military aid to Israel, Ya'alon and Hagel also discussed increasing the aid, starting in 2017. At the same time, sources in Jerusalem predicted that the volume of aid would not change as long as President Barack Obama was still in the White House.
The agreement on the purchase of the warplanes was reached in 2010, when Israel signed a deal to pay $2.75 billion for 19 stealth multirole fighters, to be supplied to Israel over three years, starting in 2016. The Israeli air force is pressing to close the deal as soon as possible in order to create continuity of procurement. On the other hand, purchase of the V-22 Boeing helicopter-plane is off for the moment, due to budget constraints in Israel, despite US approval of its purchase.
In addition to warplanes, Hagel also approved the IDF's continued procurement of US-made precision and smart weapons, and continued US support for special development and procurement projects for 2015, including the Iron Dome, David's Sling (also called Magic Wand), and Arrow 3 aerial defense systems, as well as the Namer APC. Following US approval, Israel must decide about the type of weapons it will buy with US aid, the extent of procurement, and the pace of production. Defense Ministry sources predicted that the pace of Namer production would be slowed down.
Next week, Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1) will inaugurate its assembly line for F-35 wings in the presence of representatives of the Defense Ministry, Lockheed Martin, and the US Army. As part of the huge F-35 deal, Israel and the US agreed that Israeli defense industries would be included in the production of parts of the jet, and that Israeli-made products would be included in it.
Published by Globes [online], Israel business news - www.globes-online.com - on October 28, 2014
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