After months of arduous negotiations the US has signed its biggest-ever military aid package, granting Israel $38 billion (€34 billion) over the course of the next decade.
The agreement, signed on Wednesday at the state department in Washington, will go into effect upon the expiration of the current package in 2018.
The negotiations were conducted despite the acrimonious relationship between US president Barack Obama and Israeli prime minister Binyamin Netanyahu, which reached a new low when Mr Netanyahu publicly campaigned against last year's Iran nuclear deal and addressed a special session of Congress to outline what he perceived as the dangers the deal posed for Israel and the entire Middle East.
US administration officials hinted that Israel would get a significantly improved memorandum of understanding (MOU) if Mr Netanyahu agreed to drop or even tone down his opposition to the nuclear deal, but the Israeli leader continued to criticise the deal even after it was signed.
Mr Netanyahu considered delaying concluding negotiations over the military aid deal until a new administration was formed, but officials in Washington made clear that under such a scenario Israel would not be offered such generous terms.
Concessions
In the end Israel was forced to accept a new MOU that included two significant concessions: Israel will be prohibited from making additional budgetary requests from Congress, with the exception of during a war, and the offshore procurement clause, a concession that allowed Israel to spend 26 per cent of the US money on Israeli hardware and technology, will be gradually phased out over the next six years.
The current military aid package, which will expire in 2018, provided Israel with an annual sum of $3.1 billion. Mr Netanyahu requested a significant increase to $4.5 billion per year on account of the Iran nuclear agreement, but was forced to settle for $3.8 billion.
Missile defence
The new package will incorporate, for the first time, money for missile defence projects which hitherto have been drawn from funds directly from Congress – American legislators had transferred up to $600 million for Israeli missile defence projects over recent years.
The MOU is seen as a crucial element of Israel’s ability to maintain its qualitative military edge in a turbulent region.
Public security minister Gilad Erdan said Jerusalem can be proud of the deal and said Israel would have received worse conditions if Mr Netanyahu hadn't voiced his opposition to the Iran nuclear deal.
Opposition Labour Knesset member Shelly Yachimovich said thousands of Israeli workers employed in military industries will now pay the price for Mr Netanyahu’s speech as orders dry up due to a lack of US funds.