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The situation is going to deteriorate from 2019 on. This will be the year when the new U.S foreign military funds package to Israel goes into effect.

The 10-years package is a massive 38 billion U.S$ one, but it contains a clause that will gradually eliminate the dollars part of the package that Israel can convert to Israeli currency.

This would inflict a huge blow to the Israeli defense industries which still don’t know how to cope with it.

The new package is in fact just another blow to the local industries that even currently are suffering from the consequences of the FMF (Foreign Military Funds) packages.

The situation is very weird – you make the best  combat mission systems but still, you buy them elsewhere. It is an integral part of the reality created by the fact that Israel has been receiving a large military grant from the U.S in the framework of Washington’s Foreign Military financing (FMF) program.

It looks very convenient to get a few billion U.S $ as a grant but there are strings attached, very strong ones, and that has created very odd situations.

In recent years, these strings are pulled tighter as the Israeli industry develops and manufactures more and more highly 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 example reflects 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 that would most likely be installed as part of the upgrade is the APG-82(V)1, electronically-scanned array (AESA) the same as the one installed in the U.S Air Force F-15E’s instead of the aging APG-70.

Choosing an American radar instead of a locally-made one is probably based on the fact that only dollars remained in the Israeli defense budget, and no NIS, and Israel can use dollars only to purchase American products. To mention just one example out of many.

And from 2019 on, this already deteriorated situation will be going down the slope.

Some Israeli industries have U.S subsidiaries that will help them survive within this new developing reality.

Others, mainly the state-owned companies, have indeed established local subsidiaries in the U.S but on a scale that will not solve the evolving problem.

In this situation, only a fast decisive action will enable the state-owned defense companies to have the R&D funds needed to develop the future combat systems. This thing is crucial but it seems that the urgency of a solution has not yet penetrated into the government offices.

Arie Egozi
iHLS editor-in-chief