US reduces Israel aid cut

The US military aid cut to Israel for fiscal year 2013 will be reduced by 5% to $155 million, instead of the 8% cut initially planned.

7 March 13 17:44, Adrian Filut and Yuval Azulai

US military aid to Israel for fiscal year 2013 will be reduced by 5%, instead of the 8% initially planned, amounting to $155 million, rather than $250 million, out of $3.1 billion.

Minister of Finance Yuval Steinitz was notified of the decision today by "reliable sources" in Washington, as his aides put it. Top Ministry of Finance officials told "Globes" that the reduction was not dramatic, and that even after the cut, US military aid this year will be larger than in 2012.

The reduction in US military aid to Israel is part of the $85 billion sequester in the federal budget, after the federal deficit reached $16 trillion. The automatic sequester came into effect on March 1. AIPAC led a lobbying campaign among Members of Congress to head off the cut to military aid to Israel.

When President Barack Obama signed the sequester directive, it was not clear how it would affect aid to Israel, and some Israeli sources feared it could reach $750 million. Despite the smaller reduction, it will still affect revenue of Israeli companies, mostly defense contractors which produce products for US-funded programs, and companies which provide goods and service to US defense companies, which could see reduced orders because of the sequester.

Minister of Defense Ehud Barak met new US Secretary of Defense Chuck Hagel a few days ago in Washington. Hagel sent an encouraging message to Israel, saying that the sequester would not affect funding for antimissile programs. Former Secretary of Defense Leon Panetta approved $678 million in funding for the development of these systems.

Published by Globes [online], Israel business news - www.globes-online.com - on March 7, 2013

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