The Bush administration has proposed a major new arms deal with Saudi Arabia and greatly boosting military aid to Israel as part of an effort to counter Iran by arming its regional rivals. President Bush wants to sell $20 billion worth of high-tech weapons to Saudi Arabia and other Gulf states. The sale could help spur a new arms race in the Middle East as the Bush administration is proposing to give $30 billion in new aid to Israel and $13 billion to Egypt. Historically, Israel has opposed U.S.-Saudi arms deals, but Israeli Prime Minister Ehud Olmert said on Sunday that he understands Washington is planning to supply the state-of-the-art weapons to Riyadh as a counterweight to Iranian influence.

Ehud Olmert: “In addition to the huge increase of the security aid (to Israel) this was a renewed, explicit and detailed commitment to keep Israel’s advantage over the Arab states. We understand the need of the U.S. to assist the moderate Arab states which are in one front with the U.S. and us in the fight against Iran, and on the other hand we appreciate the renewed and re-emphasized support for Israel’s military and security advantage.”

Under the plan, U.S. aid to Israel will increase by 25 percent. The deal is expected to be officially announced today after Secretary of State Condoleezza Rice and Defense Secretary Robert Gates arrive in the Middle East for joint meetings in Saudi Arabia and Egypt.