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July 19, 2016 11:45 am

Israel’s Defense Industry Will Suffer ‘Severe Blow’ if Jerusalem Accepts New Terms of US Military Aid Package, National Security Expert Says (INTERVIEW)

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Dr. Oded Eran. Photo: INSS.

Dr. Oded Eran. Photo: INSS.

New stipulations attached by the Obama administration to a proposed US military aid package for Israel will result in a “severe blow” to the Jewish state’s defense industry, a former Israeli ambassador to the European Union and Jordan told The Algemeiner on Tuesday.

Dr. Oded Eran of the Institute for National Security Studies (INSS) was responding to reports that the White House is reversing a long-standing policy that allows Israel to invest a significant amount of the military aid it receives from the US in its own domestic defense industry.

As reported by The Algemeiner, President Barack Obama wants to remove the “offshore procurement” (OSP) provision that has been unique to Israel’s aid package. Through OSP, Israel spends some 26 percent of its foreign military aid on local defense research, development and programs.

According to Eran — who headed Israel’s negotiations with the Palestinians in 1999-2000 — the ramifications of this new condition could be serious.

“It really all depends on the final arrangement between Israel and the US. If the OSP is totally cancelled, without any sort of compensation to Israel in a different manner, it will be a severe blow to the defense industry, especially in sensitive areas where these industries rely on procurement in Israel,” he told The Algemeiner. “A second option depends on whether the OSP will be phased out over time, which will allow the industry to adjust itself accordingly.”

“If OSP is cancelled completely, it will cause severe problems,” Eran reiterated.  

Israel receives $3.1 billion in military aid from the US annually, which, according to Eran, has helped the Jewish state maintain its qualitative military edge (QME) over its regional enemies.

“Historically, this aid has helped Israel’s defense industry to the extent where OSP facilitated its growth. From the beginning, however, the rationale for having this arrangement was to keep Israel’s QME over its neighbors. The OSP is part of the QME strategy and has influenced Israel’s capability to defend itself,” he said.

A standing 10-year military aid deal between both countries is set to expire in October 2017. Currently, Israel and the US are negotiating new terms, with Israel pushing the White House to increase aid to $40 billion over the next 10 years.

While Jerusalem has remained relatively mum on the OSP condition, senior Israeli officials have said that Prime Minister Benjamin Netanyahu is open to accepting a deal, but “not at any price.” According to Eran, Netanyahu “has a choice” and “must take into account Israel’s long-term security assistance.”

“Netanyahu should consider finalizing the deal now, because he will be taking some sort of gamble with the next president,” he said.

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  • Ellenl

    Don’t worry about it. Netanyahu is bringing money into Israel through assistance to other jurisdictions, such as India, African nations, the State of California (water conservation), the State of Georiga (counter-terrorism training) and many others. Hopefully, the income from business will outpace whatever the US gave previously. The US just might find itself in dire need of Israel’s assistance on counter-terrorism and terror policy, so the tables may turn.

  • nat cheiman

    Obama calculated this to be prejudicial to Israel

  • The worst case scenario would be that Hillary gets elected (God Forbid). If that’s the case her treatment of Israel will be no worse than Obamas’. However, if Trump wins (Please God), Israel will remain our strongest ally.

  • Jonathan C. Marchant

    Please keep in mind that in six months B.O. will be gone. Overriding any deal made can be accomplished with a minimum of fanfare, if a deal is made at all. Should “The Trumpster” be the new Commander in Chief (my choice), Israel will receive a far better deal than any that could be made with the lukewarm Democrats.

  • Israel has been betrayed by Obama in so many different ways.

    Obama embraced Muslim Brotherhood Morsi’s Egyptian government and provided him with tanks and jets all to be used against Israel one day.

    Obama has favored the Arabs over Israel from day one and Obama’s nuclear deal with Iran is the most dangerous threat to the existence of Israel.

    He doesn’t even hide his dislike of Israel and I’m sure that comes from his indoctrination as a Muslim child in Indonesia where he was taught to hate Jews and Israel.

    What is wrong with Jews not to see this hatred from a man who attended a Liberation church in Chicago for 20 years with his pastor Jerimiah Wright, an anti-Jew, anti-Israel bigot who is friends with Farrakan.

    • Markus Elkana Brajtman

      I begged the US Jews NOT to vote for Obama the first time that he stood for election
      I warned them that he is dangerous and a liar.
      When he addressed AIPAC, he said the Jerusalem must never be divided,
      The US Jews thought that Obama is the answer to all of Israel’s problems. The very next day, he said “That is not what I meant.
      That was clue that he will be bad for Israel. I phoned and emailed many in USA. My one cousin in NY told me that he will; vote for OBama and never to contact him again, He has blocked my emails,, Another cousin in Boston shouted at me to “mind your own business” and that she will vote for Obama as she is a Democrat.
      ause Now Israelis in trouble because jews USA are Democrat. I am sure that if Hitler was to stand for POTUS and is a Democrat, they would vote for him.

  • Ted Crawford

    Bibi is taking a heckuva gamble with the sitting POTUS. As much as he acts like it and wants to be, Obama is not G_d.

  • Leslie Benjamini

    No, he should wait. No one will be as bad for Israel as Obama !!

    • Really? No would be as bad for Israel as Obama? How about this Shrillary? She has promised to continue the Obama (disastrous) policies and when it comes to Israel, guess which way she would go after accepting huge donations from Arab sources.

  • Linda

    Israel loses nothing by waiting the few months to deal with the new US President.

  • stevenl

    IL should wait for the next Pr. and/or outsource her research industry with/to countries like India.

  • len

    Taking a gamble with the next president? It’s time for Israel to definitely do some phasing out!The phasing out should be however not the OSP but the military aid it gets from America.It should begin with the next presidential administration no matter who that person is.It’s time for Israel to begin,yes begin to be independent financially from American handouts. It would weaken Israeli critics in America who use the “aid”issue as proof that the Jews are controlling America. Even though Israel helps America immensely with intelligence and technology ,Israel must still operate on American terms which is not good for Israel in the long run.There has been reported that over a million Muslims have entered America in the last few years,soon these people will become American citizens and politicians from whence they reside will be demanding an end to this aid!Demographics defines a country’s policies and thus it’s history.We must face the fact that not only are they already here but there are a lot more coming.Trump or Clinton it makes no difference in the long run well after they are gone.Israel should begin to do it now and figure out how she can improve her Economy to accommodate this fact of life.

  • Prime Minister Netanyahu should finalize the deal now, and renegotiate new terms with the next U.S. Administration. Israel may need to recalibrate its relationship with the U.S. after the new President assumes office. And Israel should prepare for the time when the U.S. cuts foreign aid.

  • enufizenuf

    If Hillary Clinton is elected Israel is going to need $40 Billion just to protect itself against what she’s likely to do.

  • Laura

    Sounds like the intent is to make Israel even more dependent on the US for its defence. Really bad deal.

  • John Train

    Remember that Obama just gave the IRGC between $50 billion and $150 billion which they are spending on advanced attack aircraft, sophisticated missile defenses for the nuclear program etc.

    The United States guaranteed Israel’s qualitative military advantage in exchange for a series of concessions that Israel made over the years. This was not a gift … this was a deal.

    Now that United States has gotten its concessions the US wants to destroy Israel’s advanced military development capabilities. After that comes complete dependency. After that comes the complete sellout of Israel.

    This is the same Obama that suspended routine military supply during the Gaza war and shut down
    Ben-Gurion airport [an unprecedented event that signaled to Hamas that if they fired a few random rockets landing a distance from the airport, Obama would be use this as a pretext for disrupting Israeli international access. Obama’s brass-knuckle threat was very clear.]

    When will Jewish liberals such as Rabbi Rick Jacobs and Rabbi John Rosove discover that they are undercutting the long-term survival of Israel.

  • SteveHC

    Let Israel work with its private defense contractors to offer the sale of bonds to replace the lost US funding of Israeli R&D and production. And then if the US wishes to purchase the resulting Israeli products let them be sold at full, non-discounted price points.


      THAT’S the best idea i’ve heard yet………..

  • Jonah

    What have I always told you what Obama gives you with his right hand he takes back with his left. He also has a knife for your back in his left hand when you least expect it.