Israel voices satisfaction over US aid increase

JERUSALEM, July 29 (Reuters) Prime Minister Ehud Olmert voiced satisfaction today over Washington's intention to offset a package of arms sales to Saudi Arabia and other Gulf states with increased military aid for Israel.

He said he and US President George W Bush, in talks at the White House last month, agreed Israel would receive 30 billion dollars in US military aid over the next decade, averaging 3 billion dollars a year.

''This is an increase of 25 per cent for the military aid to Israel from the United States. I think this is a significant and important improvement of the defence aid to Israel,'' Olmert told reporters.

He spoke a day after a senior US defence official said Washington was working on a military assistance deal for Israel expected to top 30 billion dollars over the next ten years.

The aid boost has been widely seen as a US bid to help allay Israeli concerns over a package of arms sales, that could be worth some 20 billion dollars over the next decade, which Washington is preparing for Saudi Arabia and other Gulf states.

''We understand the United States' need to assist the moderate Arab states, which are standing in one front with the United States and us in the struggle against Iran,'' Olmert said, referring to Tehran's nuclear programme.

A US defence official yesterday said the Bush administration hoped to present the regional package to the US Congress for approval later in the year.

Washington is striving to assure Gulf allies, worried by the growing strength of Iran and war in Iraq, that the United States is committed to the region and will stand by them, with arms sales part of that process, US officials say.

The package for Saudi Arabia would upgrade its missile defences and air force and increase its naval capabilities, the official said.

The United States also is preparing a package of military assistance worth some 13 billion dollars in the next decade for Egypt, another US ally in the Middle East, a senior State Department official said.

(Additional reporting by Andrew Grey in Washington and Avida Landau in Jerusalem) REUTERS SM KP1520