Germany and Israel have failed to agree on the sale of a German submarine to the Jewish state, Reuters quoted Berlin as saying on Friday. Israel had hoped Germany would give it a large discount after a year of talks. But, with Germany reining in public finances in its biggest post-war austerity drive, Berlin has made clear it can grant no additional military aid. "There is no financial commitment," said German government spokesman Ulrich Wilhelm. "There are no concrete negotiations with Israel over a sixth submarine. As for whether there are informal talks -- because of the nature of the matter, I can make no statement on this." Germany had granted Israel significant discounts in previous transactions but Israel would now find it hard to buy the vessels without German subsidies, having decided last week to trim its defence budget by 5 percent in 2011 and in 2012. The U.S. journal Defense News reported this week that Chancellor Angela Merkel's government had turned down Israel's request for a discount of up to one-third on the price of a $1.6 billion package including two other warships and torpedoes. Israel's Defense Ministry said in a statement there are no negotiations between the countries over the sale of an additional submarine, "and therefore the subject of assistance in such a purchase is irrelevant". The full cost of the diesel-powered Dolphin class submarine would be some $700 million.
