In offices throughout the Defense Ministry, the army's general staff, and in air force bases, one can see a gray model of the Lockheed Martin F-35A Joint Strike Fighter. It reflects an understanding that for the defense establishment in Israel, it is clear they want a huge procurement deal for the stealth jet as Israel's next generation front line combat aircraft.

On the other hand, in Israel's defense industries, they talk of a "secret pact" governing the deal, and complain that Israel is about to commit nearly all the U.S. military assistance funds for the coming decade into a deal for the fighter.

They are even more bitter at being kept out of the deal, which in the past had given them generous returns as a result of locally produced technology that was incorporated into the fighters.

"In the past, when Israel bought a new fighter, there was a round of consultations between the air force, the defense industries and the defense ministry, in which a decision was made on which Israeli systems we would be interested to include in the aircraft, and then, during negotiations with the Americans, they sought agreement on the majority of these systems," an industry official said.

"This time, the defense establishment skipped over this stage and is willing to accept the American dictate that this aircraft is a closed package [technologically] and it is very difficult to make changes to it that are specific to each client," the official said. "The air force urgently wants this aircraft and it looks like they are going to give in, which is going to result in the Israeli industry almost not participating in the largest procurement program in IDF history."

A different source in the defense industry said that "all the heads of the various companies have spoken with the defense minister, the director of the Defense Ministry and the IDF chief of staff, but no one will speak publicly about the matter because it is clear that the air force wants the aircraft and who is willing to challenge his biggest client?"

A Lockheed delegation visited Israel last week and held a series of meetings with the top brass of the defense establishment. Last July, the Defense Ministry presented Lockheed with an official request for the purchase of 25 planes, intended to be the first stage of a broader deal to acquire 75 aircraft.

Initially, Defense Minister Ehud Barak, ministry director Pinchas Buchris, and Chief of Staff Gabi Ashkenazi planned to take a much tougher stance on the incorporation of Israeli military industries in the package, possibly even delaying procurement by several years. However, the current inclination at the top of the defense establishment is to compromise, and hope for early delivery and a reduction in price. The feeling is that the signing of a deal on the first batch of aircraft is closer than ever.

A low price is of course a relative term in this case. Deliveries of aircraft for operational squadrons will not begin for two more years, and current estimates hold that each machine will carry an $80 million price tag. But if some of the Israeli demands are accepted, the price may climb beyond $100 million. Moreover, a committee assigned to evaluate the costs and time table of the project presented a report to U.S. Secretary of Defense Robert Gates, warning that the project could exceed costs by $15 billion and that deliveries could be delayed by at least two years.

The air force has already ruled in favor of the aircraft, even though it is uncertain that the Americans will include specialized electronic warfare suites. Israel Air Force chief Ido Nechushtan has already said in public that "the deterrent effect that comes with Israel having the most advanced aircraft is very important. This is the effect that was created when we received the Mirage [in the 1960s] and the F-15 [in the 1970s]."

In the air force they insist that at a time when the Turkish air force and other Muslim countries intend to procure the F-35, "it is inconceivable that Israel will stay behind."

They also warn that there is no alternative since the Pentagon decided to scrap production of the F-22 and is not willing to allow its sale abroad. But former senior officers in the air force claim there are alternatives in more advanced versions of the F-16 and F-15, which would incorporate Israeli systems and, in parallel with new generations of unmanned aerial vehicles, would meet Israel's needs.

Senior defense officials insist that the incorporation of Israeli military technology in the F-35 remains a "central parameter" in the decision, but is not the only one.

Supporters of the F-35 say that there are Israeli systems in the aircraft that will funnel some $500 million in revenues to local industries.