ISRAEL has more than $4 billion (£2.1 billion) in outstanding credit and undelivered orders with American defence contractors.

Since 2001 the Israeli Armed Forces have been allocated $10.5 billion in military aid from the US Government, but they have received only $6.3 billion-worth of arms.

The remaining $4.2 billion of weaponry will be purchased or delivered over the next few years, although with Israel engaged in attacks on southern Lebanon a number of these orders are being expedited.

Since Israel started to bomb Hezbollah targets in Lebanon last month, it has asked for faster delivery of JP8 jet fuel and guided bomb units (GBU28s). The jet fuel order could be worth up to $210 million and the 100 GBU28s, which are better-known as bunker busters, could cost $30 million. Other outstanding deliveries include F16 fighter jets and armoured troop carriers.

Israel receives $2.6 billion in foreign military financing from America every year. Three quarters of this aid has to be spent on products sold by US companies, but in reality nearly all of it goes back to American firms.

The $4 billion in outstanding credit and orders will be a boon to defence contractors, many of which have reported lower exports as many countries are spending less on large defence projects.

American foreign military aid accounts for 20 per cent of Israel’s defence budget and, because it has to be spent in the United States, the Israelis typically use it to buy the most advanced equipment.

The Israeli Air Force has ordered 102 F16s from Lockheed Martin in a deal that will eventually be worth $4.5 billion to the American company.

Other outstanding orders include a $99 million order for 103 Textron troop carriers made by the Textron Corporation in Rhode Island and a $65 million deal for more than 300 vehicles made by the American Truck Company of Indiana.

Israel was in the process of allocating future and outstanding aid when the military campaign against Lebanon started. It is considering purchasing up to 100 F35 Joint Strike Fighters, new transport aircraft and Apache attack helicopters. The decisions have been postponed.

The allocation of foreign military aid to Israel is controversial as the equipment is to be used only for defensive purposes. In its assessment of Israel’s request for JP8 jet fuel, for example, the Defence Security Co-operation Agency said: “The jet fuel will be consumed while the aircraft is in use to keep peace and security in the region.”

A number of governments have criticised Israel’s attacks on Lebanon, saying that they have gone beyond self-defence.

In addition, European defence contractors point out that the aid is effectively a subsidy for US companies. This has formed a point of dispute between Boeing and Airbus. Boeing claims that Airbus unfairly gets launch aid from European governments, including Britain, while Airbus criticises cross-subsidies between civil and military divisions.

There are also domestic and political concerns about the America’s armament of Israel.

UNDER ORDERS

Outstanding military orders from Israel to US defence contractors

102 F16s from Lockheed Martin, Texas. Worth $4.5 billion (£2.4 billion)

100 GBU-28s (bunker buster bombs) from Raytheon in Arizona, Ellwood National Forge Company in Pennsylvania and Kama Dayron, Florida. $30 million

103 Textron troop carriers from Textron Corporation of Rhode Island. $99 million

50 M113 troop carriers upgraded from United Defense Industries. $18 million

900 Armour kits for Medium Tactical Vehicles from Oshkosh Trucks, Wisconsin. $145 million

256 High Mobility Medium Tactical trucks from the American Truck Company, Indiana. 49 trucks with cranes and 10 trucks for training purposes. $65 million

£22m Total UK arms sales to Israel in 2005

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive