Israel: The Arms Dealer

To help nudge Israel toward a withdrawal agreement with Lebanon, the U.S. government has told it that it would cooperate on its plans to design and build a new fighter aircraft called the Lavi. The move has raised concern among those in Washington who believe that Israel's burgeoning arms industry has already caused political and commercial harm to the United States.

In what has been dubbed the "Dear Misha" letter by columnists Rowland Evans and Robert Novak, Secretary of State George Shultz wrote Israel's Defense Minister, Moshe Arens ("Misha," to friends), in mid-April to say that three long-awaited licenses for parts and technology for the Lavi had been approved. The Administration had been withholding approval of the licenses for several months, but had apparently decided that the time was ripe to offer them in the hope that they would help lead Israel to sign a withdrawal agreement with Lebanon. After informing Mr. Arens of the approval of the Lavi licenses, Mr. Shultz added: "I hope your meetings with Phil Habib will bring us closer to reaching an agreement (on an Israeli troop withdrawal from Lebanon)..." An agreement was signed by the two countries on May 17. The State Department has since confirmed that a total of 25 licenses have been approved for exporting U.S. parts and technical data for the Lavi.

Israel is hoping to have the aircraft—which is similar to the latest version of the American-made F-16—in production in the early 1990's. But many observers believe that Israel will be able to finance production only if it uses funds it receives annually from the U.S. under the Foreign Military Sales (FMS) program—funds which are supposed to be spent in the U.S. on American-made, off-the-shelf military hardware. Last year former Secretary of State Alexander Haig made an exception to this rule when he approved a purchase by Israel of $180 million in Pratt & Whitney engines for use in the Lavi, using funds provided under the FMS program. The Carter Administration also approved an exception by allowing Israel to use $107 million of its FMS aid to help develop its Merkava tank, making it no longer necessary to fulfill an order for 175 American-made M-60 tanks. Critics charged that not only was Israel getting preferential treatment, but also that taxpayer dollars were being spent to help Israel develop planes and tanks which were some day likely to compete with U.S. companies for markets.

These critics point to the present state of Israel's arms industry as evidence that it needs no further help from the U.S. It has grown by quantum leaps to where it is now the 7th largest exporter of armaments in the world, after the U.S., the Soviet Union, France, Britain, West Germany, and Italy. For example, last year Israel sold over $1.2 billion in military-related equipment—double what it had sold five years earlier. It sells everything from helmets to modified versions of the French-made Super-Mystere jet aircraft, with patrol boats, helicopters, armored personnel carriers, and the well-known Uzi submachine gun in between.

The markets for these arms include just about all the countries in Central America and several in South America, as well as South Africa, Zaire, Taiwan, Thailand, Iran and others. Israeli arms dealers and government officials openly admit that they will sell their military wares to just about any government that requests them. Said one Israeli official: "When a country asks for help, we don't ask whether it is democratic or non-democratic and we don't ask about its motives."

The trouble is that this single-minded drive for sales has frequently embarrassed U.S. Administrations. At a time when the Somoza regime in Nicaragua and Guatemala were on the U.S. arms blacklist because of human rights violations, the U.S.'s ally, Israel, went right on selling arms to them—arms such as fighter and transport planes, communications and anti-terrorist equipment, mortars, submachine guns, and Galil assault rifles. The apartheid government of South Africa has long been relying heavily on Israel to help it build up its navy, purchasing, among other equipment, patrol boats and gunships equipped with Gabriel missiles (between 1970 and 1979 it bought 35 percent of all the seacraft manufactured in Israel). It also bought 105 mm. howitzers, air-to-air rockets, anti-tank missiles, assault rifles, radar and other surveillance equipment.

A little over a year ago, U.S. customs agents found Israeli military equipment on board an Ecuadoran cargo plane which was refueling at New York's Kennedy Airport. Administration officials said that the plane was destined for Argentina, which at the time was in a war with Britain over the Falkland Islands and in desperate need of war supplies. Argentina, together with Peru, purchased close to $150 million from Israel's munitions factories last year. Yet the U.S. had made it clear that it was backing Britain in the war.

Through the late 1970's Iran was Israel's biggest customer, but since the overthrow of the Shah in 1979 Israel has only been able to export to the Khomeini regime supplies such as aircraft tires and small arms. However, it was still selling them to Iran even during the period when American diplomats were being held hostage.

This vast trade in war supplies keeps 20 percent of Israel's workforce in jobs related directly or indirectly to the production of weapons—and provides cash flows on which the nation's finances are heavily dependent. Israel obviously intends to keep the arms industry growing.

Anticipating Israel's increased arms trade, a special assistant to Mr. Begin, Ya'acov Meridor, suggested to a group of Israel Bond officials in 1981 how, with U.S. cooperation, Israel would continue to enjoy markets for its military goods; "We're going to ask ... the U.S. government not to compete with us in arms. We are very strong in arms production, not like the United States, but for the Third World and even for Europe we are starting to be strong. We are going to say to them, the Americans don't compete with us in Taiwan, don't compete with us in South Africa, don't compete with us in the Caribbean or in any other countries where you couldn't directly do it... Let us do it. I even use the expression, 'You sell the ammunition and equipment by proxy, your proxy.' And this would be worked out with a certain agreement with the U.S. where we will have certain markets ... which will be left for us."

SIDEBAR

Correction

In a Trade and Finance story in our issue of May 30, 1983, two words were mistakenly dropped out. A sentence should have read: "The Saudis have decided to bridge the problems of price and production cuts in part by drawing down their reserves..." Like most other Gulf countries, Saudi Arabia has also been making adjustments in domestic spending.