A 10-year military-aid package goes into effect next year. The package, first revealed in September 2016, has long been forgotten by many Israelis. Time goes by so fast that it’s easy to overlook aid packages, and this package is said to be the largest bilateral military assistance in the history of the United States.
The package sounds like a good deal, with a value of $38 billion.
The package will go into effect for a 10-year period from 2019 through 2028. But Israel wanted more from the package. The package’s annual assistance is $3.8 billion, and Netanyahu was demanding $4.5 billion during the negotiations.
He may have known that $4.5 billion would be too much, but he knew that he and Obama would iron out the details and work on a compromise. An increase from $3 billion annually, the package is a significant boost in assistance and earmarks $5 billion for a missile defense system.
So, what’s the problem then?
Well, Knesset members are asking for the government to reopen talks for the deal. Members claim that the aid package, which is generous, will lead to tens of thousands of jobs lost, with a projection of 22,000 jobs being eliminated because of the package. There’s also fear that the aid package will lead to the country’s defense preparedness being lower in the next decade.
Israel will lose the right to buy fuel with the new aid package, and the country has spent 13% of current aid to fuel its own fighter jets. A total of 26.3% of the aid package has been used to buy equipment and services, even including office supplies, from the local defense industry.
Local-procurement allotments will start to decline in the sixth year of the package and eventually be eliminated.
I’m not too worried about the loss of jobs because Israel has remained resilient in the past, and the startup culture will help fuel the economy’s growth. Jobs lost will result in a larger talent pool for startups, allowing for some of the brightest minds in the country to be applicants for promising startups.
President Donald Trump’s administration has shown a very favorable view of Israel, and MKs claiming to be very optimistic that Trump’s administration would reconsider terms. MK Mickey Levy claims that the administration today is very different from the Obama administration, and that there is hope for diplomatic talks to develop.
Yes, there is a concern that the administration will not increase aid. Trump’s administration has been adamant on “American-made,” and there’s a chance that the pro-American industry stance may not lead to higher aid or allotments of aid.
Levy claims that the changes may lead to 130 factories closing.
I’m hopeful that a deal will be done, and that Israel can negotiate a better military assistance package. The risks are high, with the potential of Israel’s technology sector being impacted from the change. But with Israel’s startups leading the way for larger businesses, I’m confident that despite job losses, Israel will find a way to maintain its technological advantage and spread the impact out over the coming six years.