TEL AVIV - Germany and Israel are intensifying negotiations over a nearly 1 billion euro ($1.45 billion) naval procurement package, a considerable portion of which Israel hopes to fund from a combination of German and U.S. aid.

The Israeli-proposed arms-aid deal - to be discussed Jan. 18 in Berlin at a special joint meeting of the German and Israeli cabinets - involves an additional Dolphin diesel-electric submarine, torpedoes and two German-built warships.

The ships - stretched, 2,200-ton versions of the Meko A-100 - are the Israel Navy's preferred alternative to the U.S.-built Littoral Combat Ship (LCS), which the service rejected last year as unaffordable because of cost growth. At first, Israel lobbied to build the German ships under license at home, with the Israeli Treasury footing initial costs to establish a local warship-building industry.

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