Increased US military aid includes less for Arrow 2

Defense experts warn against ignoring Iran's conventional missile threat.

The fiscal 2010 budget bill that the Obama administration sent to Congress last week includes $2.78 billion in defense aid for Israel, up from $2.55 billion for this item in the 2009 budget. The increase is based on the formula reached in the ten-year deal which set out US military aid to Israel.

Under that agreement, Israel will receive $30 billion in military aid through 2018. Military aid will gradually be increased to a total of $3.1 billion a year in 2013, and capped at that amount through 2018, subject to Congressional approval. As in previous years, Israel may spend up to a quarter of the aid on procurements of weapons and equipment from Israel's defense industry, while the rest is slated for procurements from US companies.

The Obama administration proposes boosting aid for the next-generation Arrow 3 anti-ballistic missile defense system from $30 million in 2009 to $37.5 million in 2010.

In April, Minister of Defense Ehud Barak met a delegation of Congressmen and asked them to increase US participation in the Arrow 3 program. The request was made because of concerns, which have since been realized, that the administration was proposing to slash the Pentagon's budget, as well as claims by US officials that the Arrow 3 was a paper tiger. Raytheon Inc. (NYSE: RTN) is offering a competing ballistic missile defense system to the Arrow 3.

Yesterday, Israeli Ambassador to the US Sallai Meridor predicted that the Obama administration would increase defense aid to Israel. In a statement, he said that the administration was continuing to express its willingness to invest in the joint development with Israel of systems that will defend both countries against threats, including missiles.

However, while increasing aid for the Arrow 3, Obama administration has more than halved aid for the Arrow 2 from $74.3 million in 2009 to $36.3 million in 2010. Aid for short-range missile interceptors was cut from $72.9 million to $45.8 million.

"Defense News" quotes Israeli defense experts as saying that while Israeli, US, and European leaders were right in focusing on the growing nuclear threat from Iran, they should not ignore the rapid pace at which Iran is strengthening its conventional ballistic missile force.

The experts who believe in the power of the Israel Air Force believe that it will be easier to locate and destroy Iran's large missile launchers than the small camouflaged rocket launchers used by Hizbullah in 2006. However, these same experts admit that a war with Iran would put great pressure on Israel's offensive and defensive capabilities, and recognize that the threat is serious enough to justify increasing Israel's missile interceptor batteries.

Israel Missile Defense Association executive director Avi Schnurr said, "We need to continue production of the Arrow 2. This would be proper, basic, and logical military conduct."

Ministry of Defense spokesman Shlomo Dror told "Defense News" that there might be an effort to expand Arrow 2 production and increase the number of missile interceptor batteries, but there was no plan to change the program at this time.

Published by Globes [online], Israel business news - - on May 10, 2009

© Copyright of Globes Publisher Itonut (1983) Ltd. 2009

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