Washington Report on Middle East Affairs, June/July 1997, pgs. 70-72

Middle East History—It Happened in June

U.S. Had to Wage Long Battle Against Israel's Technology Transfers to China

By Donald Neff

It was seven years ago, on June 13, 1990, that the Los Angeles Times reported Israel had become the largest supplier of advanced military technology to China since the United States banned military sales in the wake of the Chinese suppression of the democracy movement a year earlier. An unnamed U.S. official told the newspaper that Israel was a "back door to U.S. technology that the United States won't sell them."¹

The meaning was that Israel was not only breaching America's embargo, but selling to China technology that the United States had given to it for the Jewish state's own defense. With the technology came restrictions that Israel would not re-export. What was especially interesting about the Times account was that it cited anonymous U.S. sources. There had been stories over the past decade about the growing Sino-Israeli relationship but few, if any, came from recognizable U.S. sources, who usually hesitated to criticize Israel, even anonymously.

The story was a strong indicator that Israel's relations with China had grown so massive and intimate that they were becoming too close for comfort for the administration of President George Bush. This was particularly so at a time when China was under worldwide criticism for its antidemocracy policy. Washington was especially loud in its condemnation of China.

Nonetheless, Israel was not deterred. Shortly before the Times report, Israel, which had no official diplomatic relations with China, opened an office of the Israeli Academy of Sciences in Beijing. It was no doubt that blatant act that caused U.S. officials to begin leaking information. The Times' source said Israel's supposedly academic office in Beijing was actually "facilitating a whole range of military-to-military cooperation between Israel and China."

The newspaper said intelligence experts in the West and Asia believed Israel in recent years had provided China with some of the advanced technology needed to modernize China's jet planes and missiles. It said U.S. officials had told Israel they strongly opposed the military cooperation because it undercut the intended effect of U.S. sanctions against China. "This is over our objections," a senior administration official told the newspaper. U.S. officials insisted that Israel was not operating as a proxy for the United States in the military sales, as it did when it supplied arms to Iran during the Iran-Contra arms-for-hostages affair.

The story had no discernible impact on Israel, perhaps because the administration had decided to take a low-profile approach by leaking it to a West Coast newspaper rather than The New York Times or Washington Post. Over the next few years an undeclared battle raged as Washington, in its frustration, became increasingly aggressive in its criticism and Israel went on blithely selling arms technology to China and upgrading relations between the two countries.

The U.S. had more than enough evidence to convict Israel, if it had the political will to do so.

A year after the Times report, in June 1991, China and Israel signed a bilateral agreement on scientific cooperation, the only area in which they had official relations. Israel was represented in Beijing by a liaison officer of its Academy of Science office in Beijing.²

On Nov. 20, 1991, the East Coast press finally caught up with the story. Israeli Defense Minister Moshe Arens was reported to have made a secret official visit to China in early November, the first Israeli minister to visit China. The four-day visit gave an unprecedented boost to the rapidly growing relations.³ By the end of 1991, China's Deputy Foreign Minister Yang Fuchang visited Israel, the highest Chinese official to do so.⁴

How fast Sino-Israeli relations were increasing became apparent on Jan. 24, 1992, when China and Israel established formal diplomatic relations in ceremonies in Beijing. The occasion was attended by Chinese Foreign Minister Qian Qichen and Israeli Foreign Minister David Levy.⁵

The Sino-Israeli relationship was a strange one. China traditionally favored the Arabs in the Arab-Israel conflict, and just the day before the establishment of full relations, Chinese spokesman Wu Jianmin said: "It has been China's consistent position that the legitimate rights of the Palestinian people should be restored, the Arabs' occupied territories should be returned, and the sovereignty and security of all the Middle East countries, including Israel, should be guaranteed and respected."⁶ Moreover, while Israel based its pleas for enormous amounts of U.S. aid on the danger from Arab countries, its selling of weapons technology to China was indirectly helping strengthen the Arabs because China was a major supplier of missiles to Iran and such Arab countries as Saudi Arabia and Syria.⁷

Stepped-Up Leaks

In an obvious effort to dampen the burgeoning Sino-Israeli relationship, U.S. officials stepped up their leaks. Unnamed officials revealed in early March 1992 that there was "overwhelming" evidence of Israel's cheating on written promises not to re-export U.S. weapons technology to Third World countries, including China.⁸ They added there was well-founded suspicion that Israel was also selling secrets of America's vaunted Patriot anti-missile missile to China.⁹ The issue was so serious that a U.S. team of experts was dispatched to Israel in late March but it failed to find any proof of Israeli cheating. The State Department said on April 2 that "the Israeli government has a clean bill of health on the Patriot issue."¹⁰

But there was clearly disagreement in the government. Defense Secretary Dick Cheney said there remained "good reason" to believe a diversion had taken place.¹¹ CIA Director Robert Gates agreed, saying, "There is some indication that they [the Chinese] have some of the [Patriot] technology."¹²

About the same time a study by the Pentagon-supported think tank RAND Corp. became public with the conclusion that Israel had become "China's leading foreign supplier of advanced technology." It said there had been reports that Israel had helped China develop the HQ-61 surface-to-air missile, the CSS-2 intermediate missile, the PL-8 air-to-air and surface-to-air missile as well as advanced armor for battle tanks and an air-borne early warning radar system. It added Israel was currently cooperating with China to develop an advanced fighter jet.¹³

These disclosures were followed by a major report in The Wall Street Journal that significantly broadened the scope of the charges. It mentioned illegal Israeli re-exports of an array of technology to a number of countries beyond China, including Chile, Ethiopia, South Africa and Thailand. The story said there was "no doubt in the U.S. intelligence community that Israel has repeatedly engaged in diversion schemes."¹⁴ The Washington Post joined the fray by adding that one official said there were "lots and lots of clear-cut cases." The clear impression was that the U.S. had more than enough evidence to convict Israel, if it had the political will to do so.¹⁵

The leaks by unnamed but official sources came just days before Israeli Defense Minister Moshe Arens was due to meet on March 16, 1992, in Washington with his counterpart, Dick Cheney. Arens' initial public reaction was outrage: "There is not a grain of truth. No truth in it at all." But as the volume of charges grew, his statements changed to questioning the motives of the leakers: "The real story is who are these unnamed individuals who are floating these malicious rumors?"¹⁶ Defense Secretary Cheney and his spokesmen declined any comment.¹⁷

Israel was hit with another major blow on April 1, 1992, when the State Department released a report by its inspector general charging that a "major recipient" of U.S. military aid was engaged in a "systematic and growing pattern" of selling secret U.S. technology in violation of U.S. law. The public report did not directly name Israel, but officials left no doubt that it was the subject of the report. The report said Israel's violations began about 1983 and that Israel sought to conceal the violations. A secret version of the report allegedly identified Chile, China, Ethiopia and South Africa as among the recipients of Israel's sales.¹⁸

State Department Inspector General Sherman M. Funk said he notified Secretary of State James A. Baker III about intelligence reports of Israel's violations in June 1991 and that new procedures to prevent future violations were then put in force under an operation called Blue Lantern. Funk said U.S. officials previously had depended on verbal assurances from Israel that it was not retransferring, adding that such assurances from Israel "are not an effective mechanism for providing end-use verification. We identified instances where U.S. items and technology were retransferred or were used in violation of the assurances."

He added that he had recommended that Israel be forced to repay the money illicitly earned from the transfers but Deputy Secretary of State Lawrence S. Eagleburger rejected the proposal as being an impossible chore. Eagleburger was a protégé of former Secretary of State Henry Kissinger and a strong supporter of Israel.

The succession of charges sent a shockwave through Israel, as they no doubt were intended to, because the subject went to the heart of the economic prosperity of the Jewish state. Arms sales of around $1.5 billion annually accounted for 40 percent of Israel's exports and were based almost entirely on U.S. technology.¹⁹

A Revealing Study

The background on how Israel became so advanced in technology was revealed in a study by the General Accounting Office.²⁰ They began in 1970 with the signing of an important and far-reaching Master Defense Development Data Exchange Agreement that provided for the greatest transfer of technology to Israel, or any other country, ever undertaken. Transfer of U.S. technology was provided by what was known as Technical Data Packages, the entire complex of blueprints, plans and types of materials required to actually construct new weapons.

More than 120 such packages were given to Israel over the next eight years, according to a 1979 study by the official Middle East Arms Transfer Panel.²¹ Such a massive infusion of technology provided a boon to Israel's economy. By 1981, Israel had emerged from being a technologically backward arms importer to the seventh largest exporter of military weapons in the world, with overseas sales of $1.3 billion.²²

An Israeli writer observed, "The Americans have made virtually all their most advanced weaponry and technology, meaning the best fighter aircraft, missiles, radar, armor, and artillery, available to Israel. Israel, in turn, has utilized this knowledge, adapting American equipment to increase its own technological sophistication, reflected tangibly in Israeli defense offerings."²³

Despite the number of reports over the years that Israel was illicitly profiting from U.S. technology at the cost of American companies and U.S. security, Washington continued providing ever-increasing amounts of technology to Israel. According to a report in 1992, there were 322 separate cooperative U.S.-Israeli ventures at that time, valued at $2.9 billion. In addition, there were 49 country-to-country programs involving Israel in co-development or co-production and research with the United States, and there existed 36 active data exchange agreements and 11 new proposed accords. The report concluded: "The magnitude of existing cooperative efforts with Israel is extensive and growing rapidly."²⁴ Despite that magnitude, when Bill Clinton became president in 1993 he promised to lift the "technological barrier" by granting Israel even more sophisticated technology.²⁵

Meanwhile Sino-Israeli relations flourished. Israeli President Chaim Herzog visited China between Dec. 24 and 30, 1992. In January 1993, with the administration of President Bill Clinton taking over in Washington, Israel and China signed a contract permitting Israel to buy Chinese coal. On Feb. 14, 1993, the two countries signed a scientific agreement for joint research projects in electronics, medical technology, renewable energy, agriculture and civilian uses of space technology.²⁶

On Oct. 12, 1993, the CIA added its weight to the controversy by revealing to the Senate Governmental Affairs Committee that Israel had been selling advanced military technology to China for more than a decade. Central Intelligence Director R. James Woolsey estimated that the trade "may be several billion dollars." Woolsey added: "Building on a long history of close defense industrial relations, including work on China's next-generation fighter, air-to-air missiles and tank programs, and the establishment of diplomatic relations in January 1992, China and Israel appear to be moving toward formalizing and broadening their military technical cooperation."²⁷

Israeli Prime Minister Yitzhak Rabin denied that the trade reached billions of dollars, adding that the figure for 1992 was about $60 million. "All these stories of billions of dollars of arms business in the past 10 years are total nonsense," he said. "We have made it clear time and again that we have never done a thing against American law...never transmitted items of technology that we got from the United States. We are not stupid enough" to endanger Israel's annual $3 billion in U.S. aid. He issued his statement in Beijing, where he was on an official four-day visit, the first public visit by Israel's prime minister.²⁸

The CIA said that new indications of stronger Sino-Israeli ties were the opening of a number of Israeli military sales offices in China, the Feb. 14, 1993 signing by the two countries of an agreement to share technology, and the current visit to Beijing of Rabin. The report stated: "We believe the Chinese seek from Israel advanced military technologies that the U.S. and Western firms are unwilling to provide. Beijing probably hopes to tap Israeli expertise for cooperative development of military technologies, such as advanced tank power plants and airborne radar systems, that the Chinese would have difficulty producing on their own."²⁹

In 1994, another serious report documented Israel's sales to China. Professor Duncan L. Clarke of The American University in Washington, DC reported in a study: "For years, Israel had violated the Arms Export Control Act and related executive agreements.³⁰ Israel has employed U.S. weaponry contrary to U.S. law and policy, incorporated U.S. technology into Israeli weapons systems without prior approval, and made improper transfers of U.S. missile and other defense systems and technologies to other countries, including Chile, China, and South Africa."³¹

The issue climaxed in early 1995 with yet another series of media reports on Israel's China trade. These led to official denials by Israel. David Ivri, the director-general of the Israeli Defense Ministry, admitted on Jan. 3 that Israel had sold China "some technology on aircraft" but added that it was not U.S. technology and that the contracts were "very small in magnitude."³²

State Department spokesperson Michael McCurry said the next day that "those types of reports concern us very much....This has been an item on our agenda for some time....This has been going around for some time." He said Undersecretary of State for International Security Lynn E. Davis had had "substantive discussions with the government of Israel on a range of these types of issues." McCurry added that he was unaware of any authorization being given to Israel to share any U.S. technology with China.³³

On Jan. 6, Aded Ben-Ami, the spokesperson for Prime Minister Yitzhak Rabin, again denied that Israel had illegally transferred any U.S. technology to China. "Israel did not transfer any American technology or American components to China," he said.³⁴ Two days later Defense Secretary William Perry discussed the issue with Prime Minister Rabin in Jerusalem, but the Israeli leader again denied any U.S. technology was involved.³⁵

Then, suddenly, the issue disappeared from the public eye.

The controversy had visibly begun in 1990 with anonymous leaks and had grown into official charges by the United States, culminating at the beginning of 1995 with serious discussions between the two countries at the highest levels. After Perry's meeting with Rabin, the subject dropped from public sight. Whatever action, if any, was taken was not announced. But that was not uncommon. Washington would not want to embarrass its "most reliable" Middle East ally.

RECOMMENDED READING:

Black, Ian, and Benny Morris, Israel's Secret Wars: A History of Israel's Intelligence Service, New York, Grove Weidenfeld, 1991.

Beit-Hallahmi, Benjamin, The Israeli Connection, New York, Pantheon Books, 1987.

Brecher, Michael, Decisions in Israel's Foreign Policy, London, Oxford University Press, 1974.

*Cockburn, Andrew and Leslie, Dangerous Liaison: The Inside Story of the U.S.-Israeli Covert Relationship, New York, HarperCollins Publishers, 1991.

El-Khawas, Mohammed and Samir Abed-Rabbo, American Aid to Israel: Nature and Impact, Brattleboro, VT, Amana Books, 1984.

*Findley, Paul, Deliberate Deceptions: Facing the Facts about the U.S.-Israeli Relationship, Brooklyn, NY, Lawrence Hill Books, 1993.

*Hersh, Seymour M., The Samson Option: Israel's Nuclear Arsenal and American Foreign Policy, New York, Random House, 1991.

Klieman, Aaron S., Israel's Global Reach: Arms Sales and Diplomacy, Washington, DC, Pergamon-Brassey's, 1985.

*Ostrovsky, Victor and Claire Hoy, By Way of Deception, New York, St. Martin's Press, 1990.

*Raviv, Dan and Yossi Melman, Every Spy a Prince: The Complete History of Israel's Intelligence Community, Boston, Houghton Mifflin Company, 1990.

*Available from the AET Book Club.

FOOTNOTES

1 United Press International, #0543, 6/13/90.

2 Jackson Diehl, Washington Post, 11/20/91. Also see Israeli Foreign Affairs, "Defense Minister Arens Visited China,"Vol. VII, No. 10-11 (Special Double Issue), 12/16/91.

3 Jackson Diehl, Washington Post , 11/20/91; Clyde Haberman, New York Times, 1/9/92.

4 Clyde Haberman, New York Times, 1/9/92.

5 Lena H. Sun, Washington Post, 1/25/92. A discussion of early Sino-Israeli relations is in Brecher, Decisions in Israel's Foreign Policy, pp. 111-172. For more recent relations, see Beit-Hallahmi, The Israeli Connection, pp. 36-37.

6 New York Times, 1/24/92.

7 Richard A. Bitzinger, "Chinese Arms Production and Sales to the Third World," RAND Corp., 1991.

8 Edward T. Pound, Wall Street Journal, 3/13/92; David Hoffman and R. Jeffrey Smith, Washington Post, 3/14/92. For a survey of U.S. support of Israel's arms industry, see Bishara A. Bahbah, "The US Role in Israel's Arms Industry," The Link, Vol. 20, No. 5, December 1987.

9 Bill Gertz and Rowan Scarborough, Washington Times, 3/12-13/92.

10 David Hoffman, Washington Post, 4/3/92.

11 Bill Gertz, Washington Times, 4/9/92.

12 Bill Gertz, Washington Times, 1/5/93.

13 Richard A. Bitzinger, "Chinese Arms Production and Sales to the Third World," RAND Corp., 1991.

14 Edward T. Pound, Wall Street Journal, 3/13/92.

15 David Hoffman and R. Jeffrey Smith, Washington Post, 3/14/92.

16 Thomas L. Friedman, New York Times, 3/15/92.

17 Eric Schmidt, New York Times, 3/17/92.

18 David Hoffman, Washington Post, 4/2/92.

19 Cockburns, Dangerous Liaison, p. 7.

20 See "U.S.Assistance to the State of Israel, Report by the Comptroller General of the United States,"GAO/ID-83-51, June 24, 1983, U.S. Accounting Office. The report was up to 1983 the most comprehensive survey ever made of the extraordinary special arrangements provided for Israel's profit. When it was released, the report was heavily censored, but uncensored versions quickly leaked to such organizations as the American-Arab Anti-Discrimination Committee. An uncensored early draft of the report can be found in El-Khawas and Abeh-Rabbo, American Aid to Israel, pp. 114-91.

21 Middle East Arms Transfer Panel, "Review of Israel's Military Requirements, 1979-84"; prepared in 8/79; secret.

22 Drew Middleton, New York Times , 3/15/81. For a report on the state of Israel's arms industry in 1986, see Thomas L. Friedman, New York Times, 12/7/86.

23 Kleiman, Israel's Global Reach, p. 175.

24 Near East Report , 2/10/92.

25 Clinton press conference, C-SPAN, 11/12/93; Thomas L. Friedman, New York Times, 11/13/93.

26 Israeli Foreign Affairs, 2/26/93.

27 Michael R. Gordon, New York Times , 10/13/93.

28 Patrick E. Tyler, New York Times, 10/14/93.

29 Bill Gertz, Washington Times, 10/13/93; Michael R. Gordon, New York Times, 10/13/93.

30 The act, PL 94-329, requires that no defense article or service shall be transferred by the U.S. to a foreign country unless that country agrees not to transfer the article to a third country or use it for purposes other than those for which it was furnished, without prior approval of the U.S.

31 Duncan L. Clarke, "The Arrow Missile:The United States, Israel and Strategic Cooperation," Middle East Journal, Summer 1994, pp. 483-84.

32 Associated Press, Washington Times, 1/4/95.

33 Ibid., 1/5/95.

34 Washington Times, 1/7/95.

35 Associated Press, Washington Times, 1/9/95.