Thursday, August 16, 2007

Israel, U.S. formally sign new defense agreement

By Barak Ravid, Haaretz Correspondent

Israel and the United States signed Thursday the Memorandum of Understanding on the new American defense package for Israel. Under the new aid agreement, the U.S. will transfer $30 billion to Israel over 10 years, compared with $24 billion over the past decade.

Israel is slated to receive the first pay out in October 2008, amounting to $2.550 billion. That sum will grow each year by $150 million, until it reaches $3.1 billion in 2011.

In addition, the agreement permits Israel to convert into shekels 26.3 percent of the aid money, thereby enabling it to procure defense equipment from Israeli companies. The rest of the aid must be used to purchase equipment from American military industries.

Israeli negotiators tried to step up the percentage of aid that could be used for procurement from local companies, without success.

Prime Minister Ehud Olmert met Wednesday with visiting U.S. Under Secretary of State for Political Affairs R. Nicholas Burns, in preparation for Thursday's signing.

Olmert asked Burns to thank U.S. President George W. Bush and Secretary of State Condoleezza Rice for their efforts in transforming the understandings with Olmert, reached during his last visit to Washington, into a binding agreement.

"The aid agreement with the U.S. is an important and significant component for Israel, and proves once again the depth of the relationship between the two countries and the United States' commitment to Israel's security, and to preserving its qualitative advantage over other countries in the Middle East," Olmert said.

Burns met Thursday morning with Bank of Israel Governor Stanley Fischer, who headed the Israeli team in negotiations with the U.S.

At noon, Burns signed the aid agreement with Foreign Ministry Director General Aharon Abramovich, and meet with Foreign Minister Tzipi Livni.

Burns also met Wednesday with Transportation Minister Shaul Mofaz, who oversees the strategic dialogue with the U.S. Mofaz and Burns agreed to hold a strategic dialogue in mid-October on Iran and Lebanon.

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