Binyamin Netanyahu
Binyamin Netanyahu Amos Ben Gershom/GPO

Prime Minister Binyamin Netanyahu told the World Economic Forum in Davos on Thursday that Israel will need more US military aid because of the nuclear deal with Iran, the world's leading state sponsor of terror.

Israel is currently negotiating a new 10-year military aid package with Washington that it says will need to grow beyond the $3.1 billion yearly currently provided by the United States.

The figure excludes US spending on projects including Israel's Iron Dome missile defense system.

Netanyahu reiterated his argument that the nuclear deal that has seen sanctions lifted against Tehran would require Israel to increase spending to maintain its military edge.

The influx of cash, he said, would allow Iran to further back proxy terrorist organizations, including Hezbollah which has an estimated 150,000 missiles pointed at Israel from the Lebanese border.

Netanyahu said it would be important to "resist Iranian aggression in the region, which continues and might even accelerate given the amount of funds that they're going to get with the lifting of sanctions."

"And the strongest way to stop Iranian aggression is to bolster America's allies, first and foremost (of) which is Israel."

He added that "we're talking about a bigger package. But remember that even over a 10-year period, it pales in comparison to the enormous funds that Iran gets."

The United States has unblocked an estimated $100 billion of Iranian assets held abroad, and settled a long-running international dispute that will see Iran get $1.7 billion directly from Washington following the implementation of the nuclear deal.

Netanyahu has strongly opposed the accord and labelled it a "historic mistake," noting among other things that the deal allows Iran to inspect its own covert nuclear facilities such as Parchin, and that Iran can simply wait for limitations to expire in 15 years.

His outspoken criticism, including in an address to the US Congress, has seen a backlash by US President Barack Obama, as tensions between the two have soared.

He has since scaled back his rhetoric and visited Washington in November as part of efforts to move past the rift.

A US delegation is due in Israel next week as part of discussions over the new military package, with the current agreement due to expire in 2017.

Israel's total defense budget amounts to some $16 billion, excluding the US aid.

Netanyahu's Davos appearance was dominated by issues such as Iran and Syria, but he briefly addressed the conflict with the Palestinian Arabs.

Noting on the wave of Arab terrorism that has left 29 murdered since last September, Netanyahu said, "I think we've been careful to enable the (Palestinian Authority's) economy to continue even as we have this wave of stabbings because we don't want the overall population to fall into that trap."

AFP contributed to this report.

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