Israeli Lawmakers Told 22,000 Jobs Could Be Lost Under New U.S. Military Aid Package

Knesset Finance Committee members urge government to reopen talks on 10-year accord that goes into effect this year

File photo: Israel's Iron Dome missile defense system.
Tsafrir Abayov / AP

Knesset members urged the government on Monday to open talks with the United States regarding the 10-year military-aid package that goes into effect next year, saying it could lead to losses of tens of thousands of Israeli jobs and hurt the country’s defense preparedness.

“We have to have a discussion with the United States. It’s our friend. It’s interested in what’s happening here. We have to provide a solution for these people,” said Moshe Gafni (United Torah Judaism), the chairman of the Knesset Finance Committee, at the end of the committee’s deliberations.

Israel had been allowed to spend up to 26.3% of U.S. aid, or about $815 million annually, on procurement of equipment and services from the local defense industry and another 13% to buy fuel for Israel’s fighter planes.

Under the new agreement, which was signed in 2016 and goes into effect later this year, annual aid will increase to $3.8 billion annually. However the local-procurement allocation will begin to drop starting in the sixth year and eventually drop to zero. In addition, from the outset of the period of the agreement in 2019, Israel will no longer be allowed to buy fuel with the U.S. aid.

The agreement was negotiated with the Obama administration. On Monday, MKs said they were optimistic that the Trump administration would be open to reconsidering its terms. “The administration in the United States today is different from the previous one, so we can act on a diplomatic level,” said MK Mickey Levy (Yesh Atid).

Zeev Zilber, an economist at the Defense Ministry, estimated that job losses could reach 22,000, and he expressed doubt that Trump would make concessions. “The current government is tough about its preference for American industry. This is a dramatic change,” he said.

Knesset members pointed to both the human costs of job losses as well as the damage the new aid terms could cause the Israeli defense industry.

Levy said it could lead to 130 factories closing, 40% of them in outlying areas of the country, where unemployment is already higher than the national average. It could affect 9,000 workers, some of whom would be out of a job, he said.

“Ensuring employment in the periphery is no less important than the issue of defense. It means that society will crumble if tens of thousands are fired. We cannot stand idly by in such a situation,” said Gafni.

MK Eyal Ben-Reuven of the opposition Zionist Union faction expressed concerned that Israel could lose its technological edge and its domestic sources of equipment if local industry contracts, pointing to the Iron Dome anti-missile system as a key example.

“Another problem is the technology [growth] engine. Small companies are the source of many ideas used by larger ones,” said Ben-Reuven, accusing the government of having no plan for coping with the problem. “We’re told that we will have six years, that [the impact] will be spread out, but the biggest companies are already on their way to the United States.”