Israel needs $3.9B to fund Arrow plan

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TEL AVIV, Israel, Jan. 13 (UPI) -- Amid controversial cuts in Israel's defense budget and concerns of new conflict in the Middle East, the Defense Ministry is grappling with the problem of funding costly plans to build a multi-layered shield against Iranian and Syrian ballistic missiles.

Ministry sources say, for instance, that $3.9 billion is needed to produce more batteries of the long-range, high-altitude Arrow anti-missile system built by Israel Aerospace Industries and the Boeing Co. of the United States.

But large sums are also needed to produce more Iron Dome system, built by Rafael Advanced Defense Systems and designed to counter short-range rockets and missiles, as well as develop the David's Sling system for intercepting medium-range missiles, also a Rafael project.

With hefty state funds being diverted to social programs following unprecedented protests in 2011, the defense budget, largely untouchable in recent years, are being slashed to cover much of the cost.

In situations like this, particularly with the threat of war looming so large these days, it's possible that Prime Minister Binyamin Netanyahu's right-wing government will turn to the United States for financial support.

Netanyahu's relations with U.S. President Barack Obama have been strained of late, but providing funds to aid Israel's military could be a big boost for Obama's looming re-election campaign.

The United States provides Israel with $3 billion a year in military aid, as well as other indirect support.

More than half the $3 billion cost of developing and building the Arrow over the last decade was covered by Washington.

The United States has already contributed $100 million toward developing the advanced Arrow-3, and contributed technology for a system still not tested in combat.

Arrow-3, which weighs about half as much as Arrow-2 and costs about one-third less, isn't expected to be operational until 2014.

Since Arrow entered service in early 2000 only about 120 missiles, each costing around $3 million and partly built in the United States by Boeing, have been built.

Israel currently has around 100 available and wants an inventory of at least 200 over the next few years.

In 2010-11, Obama chipped in with two payments totaling $435 million, to help pay for Iron Dome and David's Sling.

The latter is intended to eventually replace Israel's 48 MIM-104 PAC-2 Patriot air-defense missiles and the older MIM-23 HAWK system, both made by the Massachusetts-based Raytheon Co.

Iron Dome became operational in April 2011 countering short-range rockets fired by Palestinian militants from the Gaza Strip.

The system, whose computers can identify which rockets will hit populated areas and thus ignore those that won't, has had a success rate of 75 percent.

But there are only two batteries operational, based outside the Negev Desert city of Beersheba and the southern port of Ashkelon.

A third is on its way, but the military says at least 20 will be needed to provide nationwide protection. However, there are no funds available and are unlikely to be unless the Americans can be persuaded to help.

Israel's Globes business daily quoted a senior Israeli officer as saying that even the $3.9 billion the defense establishment seeks won't ensure total protection against the tens of thousands of rockets and missiles held by Iran, Syria, Hezbollah and the Palestinian radicals in Gaza.

"That's the amount we arrived at to provide only a reasonable response to the rocket and missile threat in the arena between Iran and Gaza," he said. "All of this is on top of the next multiyear defense budget."

He added: "We'll need several thousand interceptor missiles for Iron Dome. Each missile costs $80,000. We'll need hundreds of missiles for David's Sling and each costs $70,000.

"An Arrow-2 missile costs $2.7 million and the price of the future Arrow-3 will be slightly lower at $2.2 million.

"We'll need several score, or hundreds of Arrows to deal with the barrage of incoming missiles during a confrontation," the officer said.

For years, Israel's military establishment ignored the missile threat building up around the Jewish state.

It wasn't until Lebanon's Iran-backed Hezbollah pounded northern Israel with nearly 4,000 missiles in the 34-day 2006 war -- that's nearly 200 missiles a day -- that the high command realized there was an urgent need for a nationwide defensive shield.