US statement confirms terms of new $38 billion Israel aid package

Growing wheat in Israel's Hula Valley

Growing wheat in Israel’s Hula Valley

It will be the largest sum of military assistance the US has ever pledged to another country.

But Israel remains the United States' No. 1 ally in the region and the biggest single recipient of U.S. military aid, while also a big customer for USA arms exports.

Additionally, the deal over time reportedly will roll back the approximately 25 percent of the funds Israel may spend on defense equipment manufactured at home. The MoU will be signed for Israel by the acting head of the National Security Council, Brigadier General (res.) Yaakov Nagel.

USA president Barack Obama said: "This commitment to Israel's security has been unwavering and is based on a genuine and abiding concern for the welfare of the Israeli people and the future of the state of Israel". The agreement sets the Israeli prime minister up for a successful visit to NY next week for the UN General Assembly, where he is expected to meet with Obama.

The first issue was whether the Netanyahu government would negotiate a 10-year renewal to the expiring 10-year memo with the Obama administration given the history of friction between the president and prime minister, or whether it would wait to deal with the next administration. "Congress has an independent duty to make a decision about the proper level of support for Israel or our other allies".

The United States and Israel have reached an agreement on a record military aid deal worth at least $US38 billion ($50 billion) over 10 years.

Israeli newspaper Haaretz reported that the terms of the deal included some compromises on the part of Israel, such as prohibition from seeking more funds from Congress, an added condition to phase out United States aid spending on its defense industry, and to progressively increase the use of aid for American made weapons.

Netanyahu also agreed to end Israel's use of 13 percent of the US money on military fuel purchases, officials said. In February, Netanyahu quietly floated the prospect of waiting for Obama's successor in hopes of securing a better deal, and Graham said Netanyahu told him last month he wouldn't deny more money would be preferable.

Ties with Washington worsened significantly when the USA and world powers struck a nuclear deal with Iran.

In March 2015, Netanyahu addressed US Congress during which he thanked Obama for his support of Israel while at the same time criticized the Iran nuclear agreement because it would "not block Iran's path to the bomb". Importantly, this deal also challenges the special terms previously granted to the Israeli government that allowed it to use United States military aid to by equipment from its own domestic suppliers. And it also argued against a USA proposal to phase out an arrangement that had set aside 26 percent of the earmarked funds for the Israeli defense industry.

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