Israel, Boeing sign reciprocal spending deal
Boeing has agreed to spend billions of dollars in Israel over the coming decade if it wins major defense contracts, the Economy Ministry said on Tuesday.
The “reciprocal procurement” agreement calls for Boeing to collaborate with Israeli industries for at least 35% of the value of any transaction it signs with the government. This could ease concerns over new requirements of a US aid package that diverts funds away from local industries.
Boeing is competing for a number of key Defense Ministry contracts, including the purchase of additional F-15 aircraft, fueling planes and a squadron of transport helicopters, the ministry said.
Israel is expected to make $10 billion in military purchases from Boeing over the next decade. The agreement with the US aerospace company will yield $3.5 billion in new business, the ministry said in a statement.
“A reciprocal procurement agreement of this magnitude is a significant achievement that will lead to the growth of many companies in the economy, increase their activity and also their success in international markets,” said Economy Minister Eli Cohen.
Under a defense aid deal signed in 2016 by Prime Minister Benjamin Netanyahu and former US president Barack Obama, the US agreed to provide $38 billion in military assistance over a period of 10 years.
However, one component of the deal was to phase out a special arrangement that allowed Israel to use 26.3% of US aid on its own defense industry instead of spending it on American-made weapons. All of the aid must be spent on US equipment by 2026.