EXHIBIT
      4(4) 

     

    December
      28, 2006

     

    Ministry
      of Finance

    Government
      of Israel

    1
      Kaplan
      Street

    Hakirya,
      Jerusalem 91008

    ISRAEL
      

     

    
      
        
          	
                	Re:	
                  The
                    State of Israel (Registration
                    333-139481)

                


        

      

    

     

    Ladies
      and Gentlemen: 

     

         We
      have acted as special United States counsel for the Government of Israel
      (“Israel”), in connection with the preparation of the registration statement
      under Schedule B (the “Registration Statement”), filed with the Securities
      and Exchange Commission (the “Commission”) under the Securities Act of 1933, as
      amended (the “Act”), pursuant to which Israel is registering U.S.$1,650,000,000
      aggregate principal or maturity amount of its Bonds (the “Bonds”) to be offered
      and sold from time to time as set forth in the Registration Statement and the
      prospectus (the “Prospectus”) contained therein and any amendments or
      supplements thereto. We are also familiar with the form of Underwriting
      Agreement and the Master Fiscal Agency Agreement, including the amendments
      thereto (together, the “Agreements”) filed with the Commission and made a part
      of this Registration Statement. 

     

         In
      rendering the opinion expressed below, we have examined such certificates of
      public officials, corporate documents and records and other certificates and
      instruments, and have made such other investigations, as we have deemed
      necessary in connection with the opinion set forth herein. Furthermore, we
      have
      assumed the genuineness of all signatures, the authenticity of all documents
      submitted to us as originals, the authority of Israel to enter into the
      Agreements and cause the issuance of the bonds, and the conformity to authentic
      originals of all documents submitted to us as copies. As to any document
      originally prepared in any language other than English and submitted to us
      in
      translation, we have assumed the accuracy of the English translation.


     

         This
      opinion is limited to the federal laws of the United States and the laws of
      the
      State of New York, and we do not express any opinion herein concerning the
      laws
      of any other jurisdiction. Insofar as the opinion set forth herein relates
      to
      matters of the law of Israel we have relied upon the opinion of the Legal
      Advisor to the Ministry of Finance of the State of Israel, a copy of which
      is
      being filed as Exhibit 4(3) to the Registration Statement, and our opinion
      herein is subject to any and all exceptions and reservations set forth therein.
      

     

         Based
      upon and subject to the foregoing, we are of the opinion that when the Bonds
      have been duly authorized, issued, and executed by Israel and authenticated,
      paid for and delivered as contemplated by the Agreements, the Prospectus and
      any
      amendment and supplement thereto, the Bonds will constitute valid and legally
      binding direct and unconditional obligations of Israel under the laws of the
      State of New York, subject to bankruptcy, insolvency, reorganization, fraudulent
      conveyance, moratorium, receivership and similar laws relating to or affecting
      creditors’ rights generally and to equitable principles (regardless of whether
      enforcement is sought in a proceeding in equity or at law). 

     

         We
      are also of the opinion that the principal anticipated federal income tax
      consequences of the purchase, ownership, and disposition of the Bonds are as
      set
      forth in that section of the Prospectus entitled “United States Taxation.”


     

         We
      hereby consent to the filing of this opinion as an exhibit to the Registration
      Statement and to the reference to this firm under the headings “United States
      Taxation” and “Validity of the Bonds” in the Registration Statement. In giving
      the foregoing consent, we do not thereby admit that we are in the category
      of
      persons whose consent is required under Section 7 of the Act or the rules
      and regulations of the Commission thereunder. 

     

    


     

    Sincerely,

     

    /s/
      Arnold & Porter LLP