U.S. defense aid to Israel is likely to increase after 2017, sources on both sides said on Thursday, seeing a possible link to Washington's efforts to assuage its ally's fears over nuclear diplomacy with Iran. A current package worth $3 billion a year expires in 2017. A U.S. official, speaking to Reuters on condition of anonymity, said negotiators were close to a new deal that would bring annual payouts to $3.6 billion to $3.7 billion on average. Responding to the Reuters report that an increased defense aid package was in the works, Israeli Prime Minister Benjamin Netanyahu confirmed there were such discussions with the Americans but said he would keep campaigning against Iran.
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