Halfway through a 10-year agreement between Washington and Tel Aviv, the U.S. now gives Israel $3.1 billion each year in foreign military funding (FMF), which is about one-fifth of the total Israeli defense budget, according to a recent report by the U.S. Congressional Research Service (CRS) .The FMF total does not include American money spent on joint missile defense projects with Israel, for which $99.8 million has been requested in Fiscal Year 2013.
Israel can spend up to 26.3 percent of the annual FMF grant on purchases from its own defense companies. This provision “has helped Israel build a domestic defense industry which ranks as one of the top 10 suppliers of arms worldwide,” the CRS report concludes. Conversely, according to a former U.S. government official quoted in the report, because the Israeli Defence Force receives so much free weaponry from the U.S., Israeli defense companies must sell as much as 75 percent of their output abroad to stay profitable.
The report relates how the U.S. has exerted much greater formal and informal control over Israeli defense exports after controversial sales to China that included fighter aircraft know-how and airborne early warning (AEW) technology. The report mentions, but does not say whether the U.S. has objected to or prevented, the proposed sale of IAI Heron UAVs to Russia.
Israel’s acquisition of the F-35 will be funded entirely from the FMF grants, according to the CRS. The first 19 are costing $2.75 billion. Israel has received approval to acquire up to 75, which would cost five years’ worth of U.S. FMF at the current level.
The U.S. has provided about $1 billion, or 50 percent, of the development and deployment cost of the IAI-Boeing Arrow I and II system, which defends Israel against tactical ballistic missiles. It has provided a further $225 million to date for the enhanced Arrow III system, which will defend Israel against medium-range ballistic missiles launched from, for instance, Iran.
The report notes that Lockheed Martin, supported by the Pentagon, urged Israel to acquire the equivalent-capability theater high-altitude air defense system (THAAD) instead of developing the Arrow III. The U.S. has also contributed nearly $416 million so far to the development of the Rafael David’s Sling anti-missile system, in which Raytheon is a partner. Further, the U.S. is providing $205 million so that Israel can deploy more Rafael-developed Iron Dome counter-rocket systems. Israeli officials told the CRS that each Iron Dome battery costs $50 million, plus $80-$90,000 for each of the 60 interceptors.
The report also notes that Israel has additionally received excess American defense articles or services worth $330 million since 2001, at reduced or no cost. This includes weapons transferred from a stockpile that the Pentagon maintains in Israel. The Federation of American Scientists made the CRS report available.