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Boeing to manufacture Israel Aircraft's Arrow missile in US

Israel will receive a special $30 million grant for its part in the project

Israel Aircraft Industries and Boeing (NYSE:BA) on Sunday agreed to the construction of a joint production line for ballistic missile-intercepting Arrow missiles in the U.S.

Having signed the agreement, the two companies are now awaiting U.S. government approval to sell Arrow missiles to other countries.

The co-operation agreement was meant to speed up the supply of Arrow missiles to the Israeli Air Force, and to enable their acquisition with U.S. aid money.

According to the agreement, about half the missiles will be made in the U.S. Two sub-systems of the missile, the "Oren Yarok" radar system and the Gold Etrog intercept management system, are both developed and manufactured using Israeli technology, with full financing of the defense establishment.

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In order to set up the joint production line in the U.S., the American congress approved a $30 million grant to Israel in a special vote. The money will be given to Israel as a separate grant for the completion of the Arrow system and the development of the next generation of the missile. The grant is a separate item in the $135 million total grant the U.S. is to give Israel in 2002.