Business | Wed Jun 15, 2016 2:27pm EDT

U.S. signals accommodation of Israeli terms on defense aid

WASHINGTON/HERZLIYA, ISRAEL | BY MATT SPETALNICK AND DAN WILLIAMS

The Obama administration is prepared to incorporate missile defense funds in a new long-term agreement on military aid for Israel, a U.S. official said on Wednesday, accommodating in principle a key request by its ally in the yet-unresolved talks.

Disputes over the scope and fine print of the memorandum of understanding (MOU) have clouded already difficult ties between Israeli Prime Minister Benjamin Netanyahu and U.S. President Barack Obama during the latter's final months in office.

The current MOU, signed in 2007 and due to expire in 2018, gave Israel around $30 billion in so-called foreign military financing. Israel has been seeking around $10 billion more for the next decade and that money be earmarked for missile defense projects that were hitherto funded ad hoc by the U.S. Congress.

U.S. negotiators previously proposed a total of $3.5 billion to $3.7 billion annually for Israel under the new MOU, but did not say whether this might include missile defense funds. A senior U.S. official was more forthcoming on Wednesday.

"We are prepared to make an unprecedented multi-year missile defense commitment as part of a new memorandum of understanding with Israel on military assistance," the official, who requested anonymity, told Reuters.

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