Israel Misses Apache Helicopter Deal Due to Budget Dispute

Israel has missed its final opportunity to purchase 12 Boeing Apache attack helicopters from the United States due to an ongoing budget dispute between the Finance and Defense ministries. The acquisition was considered a key lesson learned from the October 7th Hamas attack, aiming to improve the Air Force's response time. The total cost of the deal was approximately $1 billion, with $288 million needing to be secured. Despite extensive discussions over the past year involving the Defense Ministry, Finance Ministry, and the National Security Council, a budget source could not be found.

"We received extensions from the Americans three times to settle the issue, and we did not meet the final deadline," a senior defense official told Calcalist. This official also warned that other urgent Israeli defense procurement plans in the U.S. are at serious risk because of the lack of decision-making and funding from the Finance Ministry. These include acquiring two additional KC-46 refueling aircraft from Boeing, on top of the six already ordered, and increasing the order of CH-53K transport helicopters from 12 to 18 from Lockheed Martin-Sikorsky.

Concerns have been raised for months that the prolonged budget debate could lead to a loss of production slots, causing significant delays and price increases. The defense source explained that these are government-to-government (G2G) deals, and the U.S. Department of Defense was waiting for Israel's decision before confirming orders with Boeing, which included Israel's 12 helicopters. "After three extensions that we received and already delayed, try explaining to them what 'numerator' limitations are. We got into a very embarrassing situation," the source added.

Funding for these deals was planned to come from an additional NIS 350-400 billion allocated to the defense budget over a multi-year period from 2027 to 2040. However, these allocations were not approved, citing a breach of the 'numerator' mechanism, which assesses the impact of government decisions on future state budgets and ensures their funding. "We tried to save the Apache deal until the last moment, but the Finance Ministry ran to the Justice Ministry and torpedoed it, symbolically and ironically, on the third anniversary of the October 7th massacre," a defense official stated, adding that the U.S. might hesitate to grant future deferrals.

Sources in the Finance Ministry countered that the procurement committee had approved the deal based on the Defense Ministry's proposed framework, which the Finance Ministry prepared to fund. They claim the Defense Ministry later changed the framework, contradicting its commitment and the committee's approval. The Finance Ministry also stated that deviating from the agreed framework violates budget limitations mandated by law, making it impossible. The ongoing, unprecedented conflict between the Defense and Finance ministries over defense budget allocations has left the Defense Ministry unable to secure funding for over NIS 17 billion in orders placed with major defense industries like Rafael, Elbit Systems, and Israel Aerospace Industries. The IDF and Defense Ministry assert that an additional NIS 40 billion will be required by the end of 2026 to bring the total defense budget to NIS 183 billion.