Israel Plans Billions in Defense Spending to Offset US Aid Cut

Israel is preparing for a potential halt in U.S. military aid by allocating billions of shekels over the next decade to bolster its military and expand its domestic defense industry. The country plans to invest 350 billion shekels to strengthen the army, increase weapons production, and reduce reliance on foreign suppliers, according to military correspondent Avi Ashkenazi of the Maariv newspaper. This strategic shift is reportedly prompted by statements from U.S. President Donald Trump regarding an agreement with Israeli Prime Minister Benjamin Netanyahu to cease annual $4 billion military aid, though the specifics of this understanding remain unclear. Israeli officials speculate Trump's announcement may be politically motivated ahead of U.S. elections. The Israeli Ministry of Finance has already prepared for a scenario without Washington's funding. Ashkenazi notes that while U.S. aid has been crucial for the Israel Defense Forces (IDF), it also fostered dependency, hindering Israel's defense industry's development, autonomy, export markets, and tax revenues. A past example cited is the U.S. administration of former President Joe Biden's temporary suspension of JDAM bomb supplies before an operation in Rafah, which led the Israeli Air Force to conclude the necessity of independent production. Israel does not plan a complete cessation of U.S. military equipment purchases but aims to use local currency or barter for future acquisitions. The development of national production capabilities is intended to enable Israeli companies to compete with major U.S. defense corporations, leveraging the IDF's combat experience as a key advantage for testing and demonstrating new technologies. Examples include the F-35 fighter jet's combat debut with the Israeli Air Force and the Arrow and Iron Dome missile defense systems. The new rearmament program, guided by the Nagel Committee's recommendations, prioritizes countering Iran, border defense, deterring the Sunni axis including Turkey, maintaining technological superiority, and enhancing space capabilities. Planned acquisitions include additional F-15EX and F-35 squadrons, eight refueling aircraft, helicopters, Apache squadrons, warships, submarines, and the expansion of armored, engineering, and infantry units, alongside intelligence and space technology development. Funding will come from optimizing the defense system for 100 billion shekels in savings, an IPO for Israel Aerospace Industries, and increased arms exports, with anticipated returns to the state budget through taxes and domestic orders.