TEL AVIV — Israel’s Defense Ministry is asking the US government to guarantee billions of dollars in low-interest bridge loans for a Pentagon-proposed package of V-22 Ospreys, F-15 radars and precision-strike weaponry that it ultimately intends to fund with future military aid from the US.
US Defense Secretary Chuck Hagel, when visiting here in April, announced that Washington “would make available to Israel a set of advanced new military capabilities” to augment Israel’s qualitative military edge.
At the time, Israeli defense and industry sources criticized the premature publicity generated by the Pentagon-proposed package, insisting negotiations on cost, quantities, payment terms and delivery schedules had not yet begun.
But in the past two months, MoD efforts to secure a US-backed loan for eventually US-funded systems on offer have intensified, with preliminary responses from relevant authorities in Washington expected later this summer, sources from both countries said.
Israeli Defense Minister Moshe Ya’alon aimed to advance the issue in meetings with lawmakers and Jewish leaders on Capitol Hill on Thursday. On Friday, Ya’alon is scheduled to fly to the Pentagon aboard an Osprey, where he will be greeted by Hagel ahead of their talks.
Under the novel, Israeli-proposed funding plan, US government guarantees would allow MoD to initiate near-term contracts for advanced, Pentagon-offered weaponry with cut-rate cash from commercial banks. Israel would pay only interest and servicing fees on the government-backed loan, with principle repaid from a new, 10-year military aid package that President Barack Obama — during a visit here in March — promised to conclude before the current bilateral aid agreement expires in 2018.
Israel is slated to receive $3.1 billion in annual Foreign Military Financing (FMF) grant aid through 2017, minus some $155 million in rescissions due to US government-mandated sequester. Those funds, sources from both countries say, have already been tapped to cover payments on existing contracts for Israel’s first squadron of F-35I joint strike fighters, heavy armored carriers, trainer aircraft engines, transport planes and a host of US weaponry.