Just before its Easter recess, the US Senate and House of Representatives approved by a large majority a $706 million allocation for Israeli military procurement in the 2018 US budget. The allocation will be divided into Israeli research and development programs and procurement of the Iron Dome and David's Sling missile defense systems, produced by Rafael Advanced Defense Systems Ltd., and the Arrow 3 missile defense program, produced by Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1). $375 million will be allocated to continued development of the Arrow missile, while most of the remaining $330 million will be allocated to procurement contracts from US industries.
The budget allocated was at the request of the US Missile Defense Agency (MDA), which initially asked for a much smaller allocation, but added $558 million to its request on the eve of the vote, thereby almost tripling the amount.
The vote on the US budget faced the threat of a veto by President Trump, who objected to what he regarded as an inadequate allocation for construction of a separation fence between the US and Mexico. Eventually, after it turned out that Congress could not be recalled to Washington to amend the budget, Trump signed it.
Minister of Defense Avigdor Liberman today published a statement thanking the US, saying, "This is the highest aid budget ever. We will use the money for mass production of Iron Dome, David's Sling, and Arrow 3 interceptors, and for future development of the multi-layer defense system against future threats.
"I thank our great friend, the US, which has invested $6.5 billion to date in defense of Israel's skies."
Liberman mentioned the US agencies responsible for the connection between the countries, headed by the MDA. $655 billion of the $1.3 trillion US allocation for military procurement is slated for the budget of the Pentagon and other defense agencies, and $11.5 billion is allocated for ballistic defense programs.
The original allocation for ballistic defense was $9.5 billion. Congress increased it in order to pay for expenses in 2017 related to measures for dealing with the threat from North Korea.
Published by Globes [online], Israel Business News - www.globes-online.com - on March 26, 2018
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