Israel has signed a reciprocal procurement agreement with Boeing that will see the company spending billions of dollars if it wins major Israeli defense contracts.
The “reciprocal procurement” agreement will have Boeing collaborate with Israeli companies for at least 35 percent of the value of any transaction it signs with the Israeli government, Reuters reported Wednesday.
The Economy Ministry said Boeing is in competition in Israel for a number of important tenders, including the manufacture of additional F-15 aircraft, refueling planes and transport helicopters.
The ministry said Israel expects to spend over $10 billion with Boeing over the next decade, and the deal will mean $3.5 billion worth of new business in Israel, according to Reuters.
It is thought the deal could ease concerns within Israel’s defense industry that the US aid package to Israel — the biggest of its kind, giving Israel $38 billion in military assistance over ten years starting from 2019 — could decimate local industry due to its requirement that all the money eventually be spent on US-manufactured arms.
In May, the Defense Ministry told lawmakers that up to 22,000 workers in the defense industry could lose their jobs amid $1.3 billion in annual losses unless US President Donald Trump agreed to reverse a clause in the US military aid package to Israel that insists the money only be spent on US-made arms.
One clause specifies the gradual phasing out of a practice that has enabled Israel to use 26.3 percent of the cash on its own defense industries. By 2028, all of that money will have to be spent on US-made military hardware.