Israel’s Iron Dome Gets New Funding as Gaza Fight Intensifies

This story has been corrected. 

Israel’s Iron Dome anti-missile system has kept the country safe from the hundreds of Hamas rockets flying toward its major cities from the Gaza Strip. With fighting intensifying, Congress seems poised to give Israel and one of the United States’ largest defense contractors a jolt of good news: $175 million in new American aid that will help fund an expansion of the program.

The additional money for Iron Dome cleared one of its final hurdles Tuesday, when a key Senate appropriations subcommittee unanimously voted to double the Pentagon’s $175 million request for fiscal year 2015. The full committee will consider the defense appropriations bill on Thursday. Meanwhile, three other panels have already signed off on the funding expansion, making it all but certain the additional money will be provided. Iron Dome has received $720 million in American funding since 2011, when the United States became directly involved in the program.

Iron Dome, which is built by the Israeli defense company Rafael, has kept Israeli casualties so low that it’s credited with bolstering the public’s support for a longer bombing campaign rather than an immediate ground invasion into Gaza. If Hamas rockets had managed to strike major Israeli population centers, the government of Prime Minister Benjamin Netanyahu would have had little choice but to send troops into Gaza on a high-risk mission to find and destroy the militant group’s rocket launchers.

Instead, Israel is reporting that Iron Dome has had a 90 percent success rate, though it has only been used against 27 percent of the Hamas rockets. Because of the high cost of each interceptor — which the Washington Post pegs at roughly $20,000 a piece — Israel only uses the system when its radars indicate that a rocket seems likely to hit a populated area. The Hamas rockets are thought to cost less than $800 each.

With the conflict intensifying, a Hamas mortar shell fired from Gaza Tuesday caused the first Israeli death since the eight-day military confrontation began.* Israeli airstrikes on targets in Gaza, by contrast, have killed close to 200 Palestinians.  

While some missile defense experts say the success of Iron Dome has been overhyped, the system is frequently celebrated in both Israel and the United States for saving civilian lives. At a Pentagon press briefing in 2012, then-Israeli Defense Minister Ehud Barak presented then-Defense Secretary Leon Panetta with a mini-Iron Dome model. Panetta responded by giving Barak a photograph of the two of them visiting an Iron Dome site in Israel.

On Capitol Hill, meanwhile, lawmakers from both parties have long been eager to show their support for the program, which they see as a cost-effective way of developing state-of-the-art technologies that the Pentagon can use to improve its own missile defense capabilities. With U.S. contributions to the Iron Dome program set to reach nearly $1 billion, however, lawmakers have also made clear that they want more Iron Dome production work to move to the United States to create jobs for Americans and generate new revenues for American firms.

Defense giant Raytheon stands to be the biggest beneficiary, with the Massachusetts-based company signing on as a subcontractor with Rafael.

In March, the United States and Israel signed an Iron Dome agreement that hammered out many of the key details surrounding the new Rafael-Raytheon partnership.

The deal paved the way for 30 percent of Iron Dome production to take place in the United States in 2014 and 55 percent in 2015. Before the March 5 agreement, only 3 percent of U.S. funding on Iron Dome was spent on components bought in the United States, according to a report the Pentagon provided to Congress in April.

Still, some questions remain, particularly about how much starting Iron Dome production in the United States will add to the costs or delay the delivery schedule.

The Pentagon addressed some of those concerns in April, when it sent a report to Congress asserting that Raytheon and Rafael have worked together "to ensure that Raytheon’s costs did not exceed Rafael’s costs by more than five percent on any particular component." Anything that exceeds this threshold will continue to be bought from Rafael at a lower cost, the report said.

For 2015, the Pentagon requested $175 million for Iron Dome, but the Israeli government went to Capitol Hill this spring and asked Congress to double that amount.

"The reason for this is the impact of the cost of the transfer of production to the U.S., which was not part of the original proposed budget," an Israeli Embassy official told Foreign Policy Monday.

According to a person familiar with the matter, Israel’s request came as a bit of a surprise since it came after the March agreement and was done without giving the U.S. Missile Defense Agency a heads up.

Israel’s argument that more money was needed due to coproduction costs was met with some skepticism because there is little hard data available yet about how U.S. production may increase costs, the official said.

In their versions of the 2015 defense spending bill, the House Appropriations Committee, the House Armed Services Committee, and the Senate Armed Services Committee have all indicated they’ll provide Iron Dome the extra $175 million, but in the reports that accompany the committees’ legislation are a long list of questions for the Israelis about how they plan to spend the money.

The House committees have said the money can’t be spent until Israel provides the Missile Defense Agency with the information and its director signs off on it. A congressional source said Israel should be able to provide the requested information without a problem.

On Tuesday, the Senate Appropriations Subcommittee on Defense — the last committee to weigh in — also agreed to double next year’s $175 million request, essentially guaranteeing the funding boost.

Correction, July 16, 2014: The first Israeli fatality since its current conflict with Hamas began just over a week ago came from a mortar shell. An earlier version of this article incorrectly said it came from a rocket attack. (Return to reading.)