y Matt Spetalnick

WASHINGTON (Reuters) – The United States will give Israel $38 billion in military aid over a decade, the largest such aid package in U.S. history, under an agreement disclosed this week and signed on Wednesday.

The deal, whose details were reported by Reuters earlier, will allow Israel to upgrade most of its fighter aircraft, improve its ground forces’ mobility and strengthen its missile defense systems, a top U.S. official said.

While the package constitutes the most U.S. military aid ever given to any country, it entails concessions by Israeli Prime Minister Benjamin Netanyahu, according to officials on both sides.

Those include Israel’s promise not to seek additional funds from Congress beyond what will be guaranteed annually in the new package, and to phase out a special arrangement that has allowed Israel to spend part of its U.S. aid on its own defense industry instead of on American-made weapons, the officials said.

The $38 billion memorandum of understanding covers U.S. fiscal years 2019-2028 and succeeds the current $30 billion MOU signed in 2007, which expires at the end of fiscal 2018.

“Prime Minister Netanyahu and I are confident that the new MOU will make a significant contribution to Israel’s security in what remains a dangerous neighborhood,” U.S. President Barack Obama said in a written statement.

The agreement was signed at the State Department by U.S. Undersecretary of State Thomas Shannon and by Jacob Nagel, acting head of Netanyahu’s national security council.

According to a White House “factsheet,” the deal includes:

-annual payments of $3.3 billion in so-called foreign military financing, typically used to purchase U.S. equipment.

-$500 million a year for Israeli missile defense funding, the first time this has been formally built into the aid pact.

-A phasing-out of a special arrangement that for decades has allowed Israel to use 26.3 percent of the U.S. aid on its own defense industry instead of on American-made weapons.

-Elimination of a longstanding provision that has allowed Israel to use a portion of the U.S. aid to buy military fuel.

-The funding will allow Israel to update “the lion’s share” of its fighter aircraft, including purchasing additional F-35 Joint Strike Fighters. Israel is scheduled to receive 33 F-35 aircraft, the first two of which will be delivered in December.

(Reporting by Matt Spetalnick and Arshad Mohammed; Editing by Susan Heavey)