Israel announced that it would buy the M-346, made by the Alenia Aermacchi and designed for low-cost flights.

Italy will reciprocate the Israeli purchase by buying one billion dollars in Israeli defense equipment.

Israeli Defense Ministry’s director general, Udi Shani, said the offset deal enabled Israel to make the large purchase in a “harsh budgetary reality.”

The deal only has initial approval and needs official authorization from Israel’s Minister of Military Affairs Ehud Barak.

Israeli officials said they expect the agreement to get the final green light, and the planes to be delivered in 2014.

Israeli possesses a sophisticated air force of US-made F-15 and F-16 warplanes.

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The U.S. gives Israel approximately $3 billion per year in military aid. It is the only recipient of such U.S. aid that is not required to spend it on American companies. Therefore, U.S. aid often subsidizes competing companies in Israel and other countries, costing thousands of American jobs.