NEWTOWN, Conn: Negotiations between the Israeli Defense Ministry and Lockheed Martin for the purchase of advanced, new-generation F-35 Joint Strike Fighter stealth aircraft continue to bog down over the final hurdles of unit cost and integration of Israeli-specific avionics and armaments.

While the Israeli defense establishment complains of soaring F-35 unit costs – a completely rational concern considering the potential defense budget cuts looming on the horizon – the real issue seems to be the installation of Israeli-made systems onto the aircraft.

Israel’s five-year defense plan (‘Teffen 2012’) places emphasis on acquiring advanced precision strike fighters, with the focus being on the F-35. Under the Israeli defense plan, funding for a squadron of 25 F-35s will begin prior to first delivery, which, based upon Pentagon and Congressional approval in September 2008, should be in 2014. This first squadron would then come into service two years later. Israel is planning to purchase a further 50 aircraft in order to outfit two additional squadrons at a later date. Originally the Israelis had planned on purchasing 100 F-35s, but funding shortfalls forced them to downsize their immediate plans.

Yet despite Israel’s F-35 designs, its defense establishment is now considering whether the Israeli Air Force (IAF) can maintain its military-technological regional edge without going forward with the JSF purchase. Upgrades to existing Israeli F-15 and F-16 aircraft, or purchasing advanced types of both platforms (including the Boeing F-15 Eagle), are both seen as an alternative option.

This may be a smoke screen intended to extract concessions from the U.S. for permitting the implementation of Israeli systems onto the F-35s. The Israelis remain interested in wrapping up negotiations for the F-35 this year, and the IAF remains highly desirous of the aircraft.

While cost is no doubt a very real concern – the estimated price tag for the 75 F-35s is placed at $15.2 billion – much of the Israeli funding comes in the form of U.S. Foreign Military Financing (FMF) credits, which will total $11.425 billion from 2009 through 2012 alone.

Also, the other U.S. advanced stealth alternative, the F-22 Raptor, is not available on the export market per Congressional law. Even in the unlikely event that this law was revoked by the Obama administration, production on the aircraft is set to end in 2011, thus causing its unit price-tag – already estimated at $146 million in 2008 dollars – to escalate even higher and making its cost even more prohibitive than the JSF.

What aircraft option the Israeli Defense Ministry ultimately pursues may depend on the time frame by which Israeli intelligence estimates the Iranians could be capable of producing nuclear armaments.