Israel’s reciprocal purchasing agreement with Boeing Aerospace paves the way to all American aid to Israel being spent in America
Reuters is reporting today that Boeing Aerospace of America (BA.N) and Israel have signed a “reciprocal procurement agreement” under the therms of which Boeing is agreeing to spend no less than 35% of the value of any purchases that Israel makes with it back in Israel.
Since the value of such purchases over the next decade may reach as much as $10B, Boeing is essentially committing to spend $3.5B in Israel for research and development as well as for purchases of Israeli products and services.
The contracts that Boeing will be bidding on to make up the ten billion dollar number include renewed purchases of upgraded F-15 fighter bombers, as well as air refueling aircraft and a number of helicopters.
This deal replaces the current agreement between the American and Israel governments, one that allows Israel to spend up to 26.3% of the value of all American aid at home rather than back in America. The value of American aid to Israel as agreed upon by Prime Minister Netanyahu and then American President Obama is $38B over 10 years starting in 2016. When this deal ends in 2026, Israel will have to spend the entirety of any future American aid in America.
The Boeing reciprocity deal brings Israel into alignment with most other developed nations, which always insist that any foreign suppliers spend a percentage of the contract in the purchasing country, with the details of said investments being an important part of the procurement decision.
Furthermore, this deal highlights the fact that American military aid to Israel does not imply that American tax payer dollars leave the US. Rather, just under three quarters of them (and all of them after 2026) are spent in America, creating American jobs and aiding in American prosperity.