US to fully fund Arrow 3 system; Cost of ballistic missile defense system likely to reach $100 million.

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Israel and the United States signed an agreement on Sunday under which the Defense Ministry will receive full funding for the development and production of the Arrow 3 ballistic missile defense system.

The agreement was signed in Tel Aviv by head of the ministry’s MAFAT Research and Development Directorate, Brig.-Gen. Ofir Shoham, and the head of the US Missile Defense Agency, Lt.-Gen. Patrick O’Reilly.

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In May 2009, the Obama administration said it would continue to support the Arrow project, as it had done since its inception over 20 years ago. However, Israel was concerned that the US would end the funding due to major cuts made to the US defense budget by Secretary of Defense Robert Gates. Development costs for the system are expected to reach some $100 million. The Arrow 3 will likely become operational in 2012-2013.

The Arrow 3 will be a longer-range version of the Arrow system currently in IDF operation, and will be capable of intercepting incoming missiles at higher altitudes and longer ranges. Israel and the US are also developing David’s Sling, a missile-based defense system for projectiles with a range of 70-250 kilometers.

Meanwhile, Defense Minister Ehud Barak left for Washington on Sunday for meetings with top administration officials. Defense sources said the talks were the continuation of Israel’s ongoing strategic dialogue with the US and would focus on Iran, Hizbullah and the Palestinian peace process.

While in the US, Barak will also discuss Israeli plans to purchase of the F-35 Joint Strike Fighter (JSF). America is pressuring Israel to make a decision on the aircraft.

If Barak authorizes the move, Israel would become the first foreign customer to sign a contract to purchase the advanced stealth fighter jet.

Under the proposed deal, it would likely purchase one squadron of aircraft, which it would begin to receive in 2015 – assuming that the project does not encounter additional delays in its development.