* German Meko preferred over U.S. rival vessel
* Israel looks for discounted deal by end of year
* Netanyahu, Barak due in Berlin next week
By Dan Williams
TEL AVIV, Nov 25 Israel plans to buy two
warships from Germany rather than rival U.S.-made vessels and is
negotiating with Berlin in the hope of clinching a discounted
deal by year's end, Israeli officials said on Wednesday.
They said the Meko corvettes' purchase would be pursued by
Israeli Prime Minister Benjamin Netanyahu and Defence Minister
Ehud Barak when they visit the German capital on Nov. 30.
Built at ThyssenKrupp's (TKAG.DE) Blohm+Voss shipyards in
Hamburg, the Meko costs around $300 million but Israel wants the
German government to underwrite the sale. An official involved
in the talks said Israel sought a discount of 20 to 30 percent.
That would help the Meko outprice the Littoral Combat Ship
(LCS), which is made by American firms General Dynamics Corp
(GD.N) and Lockheed Martin Corp (LMT.N) and which the Pentagon
has been lobbying the Israelis to buy.
An Israeli official said despite the fact that U.S. defence
grants would significantly defray the estimated $460 to $600
million cost of the LCS, the Meko topped the wish list.
"We want to close a deal by the end of the year. Now it
comes down to financing issues with the Germans," he said.
A ThyssenKrupp official was in Tel Aviv this month to confer
with the navy about fitting the Mekos with Israeli technologies
to improve performance and reduce costs, the official said.
German Foreign Minister Guido Westerwelle, who visited
Israel this week, declined to comment on the Meko negotiations.
Keen to atone for its Holocaust history, Germany has in the
past partially financed major Israeli military acquisitions.
In 2006, it agreed to cover up to a third of the cost of an
Israeli contract for two German-built Dolphin-class submarines.
Israel already has three Dolphins, acquired at deep discounts.
If the Mekos are bought, Israel would plan to add as many as
eight more of the ships to its fleet in the future. An Israeli
official suggested that his country's battle-hardened reputation
would serve as a useful endorsement for the German-made ship.
"The Germans have a domestic-industrial interest in helping
us with this deal. There's also the prestige element, which
would enhance the interest of other foreign customers."
(Editing by Mark Trevelyan)
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