A new ten-year United States military aid package to Israel was signed by officials from both countries in Washington, following a period of protracted talks.

The deal, set at $38 billion, is described as Washington’s largest aid package to any country in history.

The ‘’memorandum of understanding’’ will operate from the 2019 fiscal year through to 2028.

Talks on the new package have been ongoing since as far back as November 2015. It is thought that there were two major sticking points on the new deal, which have only recently been resolved. Reports indicate that Israel has agreed to the gradual phasing out of the current arrangement whereby Israel is permitted to spend up to 40 per cent of the aid package on defence purchases in Israel.

In addition, Israel has also reportedly agreed to Washington’s preference to include spending on Israel’s missile defence system within the overall military aid package.

The US has either jointly developed or financed all three tiers in Israel’s missile defense program — Iron Dome (short-range missile interceptor), David’s Sling (medium range) and Arrow (long range).

Under the terms of the deal, Israel pledged not to seek additional funding from Congress for the next decade. The agreement also includes a provision curtailing Israel’s ability to spend the funds on its own arms industry over the next six years — a key area of dispute during talks. Washington had wanted Israel to spend a larger amount of the funds on American-made products. Currently, Israel can spend 26.3 percent of US military aid buying from its own domestic defense companies.

The agreement was signed in a ceremony at the State Department in Washington by US Undersecretary of State Thomas Shannon and by Jacob Nagel, acting head of Israel’s National Security Council.

It replaces a previous deal that is set to expire next year.

US President Barack Obama said that the deal “will ensure that Israel has the ability to defend itself from all manner of threats”.

He added: “It is because of this same commitment to Israel and its long-term security that we will also continue to press for a two-state solution to the longstanding Israeli-Palestinian conflict.”

Israel’s Prime Minister Benjamin Netanyahu praised the “important achievement” of an “historic agreement,” which constitutes the United States’ largest ever military aid package.

Netanyahu thanked Obama and said: “This agreement illustrates a simple truth: relations between Israel and the United States are strong and steadfast. This does not mean that we do not have disagreements from time to time, but these are disagreements within the family.”