WASHINGTON: Israel has signed a contract with the United States to buy 20 F-35 fighter jets, officials said after Washington offered “incentives” for the Jewish state to help sputtering peace talks.

The sale of the US-made Joint Strike Fighter will arm Israel with a more sophisticated combat aircraft than any nation in the Middle East, amid rising tensions with Iran and after a major US arms sale to Saudi Arabia.

“The most advanced fighter jet in the world today, the F-35 will enhance Israel?s ability to defend itself, by itself, against any threat or combination of threats, from anywhere within the Middle East,” Michael Oren, Israel?s ambassador to the United States, said in a statement.

Oren called the contract “an event of great strategic and historic significance” and that it would serve the common interests of the United States and Israel.

It was unclear whether the sale, reportedly valued at 2.75 billion dollars, was intended as an inducement to Israel to extend a freeze on settlements to keep the Palestinians in peace talks, or whether Israel agreed to such a trade off.

But Oren earlier told the Washington Post that the US administration had come up with “a number of suggestions, incentives if you would, to the Israelis that would enable the government to maybe pass a limited extension of two or three months.”

The White House last week denied reports that Obama had sent a letter to Prime Minister Benjamin Netanyahu offering Israel diplomatic, military and security incentives in exchange for a 60-day extension of the moratorium.

The F-35 agreement was signed on Thursday in New York, with US Air Force officials and Israeli defense officials attending.

“This agreement is for Israel’s first operational squadron and the aircraft are scheduled to be built between 2015 and 2017,” a US Air Force official said on condition of anonymity.

“This agreement is part of the United States commitment to ensure that Israel has the most advanced weapons for its national defense.”

Each F-35 jet costs about 100 million dollars, and Oren said the deal illustrated how his country’s purchase of US arms generated “thousands of more jobs, both here and Israel.”

Israel spends an estimated 2.25 billion dollars on US defense contracts, he said.

The announcement came less than a month after Washington unveiled plans to sell Saudi Arabia 60 billion dollars’ worth of weapons and hardware, including 84 F-15 fighters.

The F-15s are less advanced than the new F-35 aircraft, which are still under development.

US officials had described the vast arms sale to the Saudis as a counter to the threat posed by Iran, citing Tehran’s missile arsenal and its disputed nuclear program.

Israeli and US officials have refused to rule out possible military action to stop Iran from securing nuclear weapons. Tehran has denied it is pursuing a clandestine drive to build atomic weapons.

Manufactured by aerospace giant Lockheed Martin and its partners, the F-35 is billed as a “fifth-generation” fighter for the United States and its allies, with stealth technology that would allow it to dominate other planes in air-to-air combat while also backing up ground forces.