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By Arie Egozi

The Israeli defence industries are facing a growing challenge that may affect the future of some. You make the best systems for combat missions but you still buy them elsewhere.

This situation is unusual but it has been an integral part of the reality created by the fact that Israel is getting a large military grant from the U.S in the framework of Washington’s Foreign Military Financing (FMF) program. Recently, Washington approved the grant for the next 10 years starting from 2019, totaling $38 million.

It is nice to get a few billion U.S$ as a grant but there are strings attached, very strong ones and it created very odd situations.

In recent years, these strings are pulled tighter as the Israeli industry develops and manufactures more and more very advanced systems that are being exported with limitations to different countries but bypass the Israeli natural customers, in many cases the Israeli air force (IAF).

A recent issue exemplifies this serious dilemma. The IAF is upgrading the capacities of its F-15I’s (RA’AM), which will include a new advanced radar. The radar to be part of the upgrade program is one made in the U.S. The selection of the American-made radar instead of a locally-made one is probably based on the fact that to purchase the radar, Israel can use the Foreign Military Funds (FMF) it gets annually from the U.S.

Such situations are getting more frequent but it seems that as long as the FMF grants are given to Israel – this is the reality.

And this reality affects and will affect the Israeli defence industries, mainly the medium size and small ones but not only.

The situation is getting worse as many countries that were clients of the Israeli defence industries have begun making systems locally. “The situation is bad and it may become even critical if steps are not taken soon,” a source in the defence industry told i-HLS.