A Mix of Business, Diplomacy : Arms Sales Case Putting Focus on Israel’s Policies

Confined to a desolate prison fortress on the wind-swept edge of this resort island, a distinguished Israeli military figure and decorated war hero awaits U.S. extradition in a case that has brought uncommon scrutiny to the shadowy world of Israeli arms trading.

Retired Brig. Gen. Avraham Bar-Am, one-time commander of victorious Israeli armored units in the wars of 1967 and 1973, is the latest--and perhaps most prominent--suspect snared by undercover U.S. investigators looking into illicit arms shipments to Iran.

Justice Department officials in New York charge that Bar-Am and 16 others were engaged in a conspiracy to divert $2 billion in restricted American-made military equipment to the Ayatollah Ruhollah Khomeini’s regime, including missiles and used fighter jets owned by Israel.

The arrest of such a high-ranking Israeli military official did not surprise veteran American investigators, who say Israel has long been regarded as a conduit for secret arms sales.

“What the American public doesn’t seem to realize is that the Israelis have these retired military people scattered all over the world, acting as brokers and middlemen, setting up import-export companies, making introductions, making deals . . . much of it to help move arms,” said a federal undercover agent who has investigated other Israeli-linked arms cases in the United States and Europe.

“They’re all on the same team; they all know who’s negotiating with whom,” added the agent, who asked not to be identified.

Arms sales, says Aaron S. Klieman, professor of international relations at Tel Aviv University, is “a central component” of Israel’s foreign policy--a policy that mingles business opportunities with diplomatic goals and does not always discriminate against customers, even the avowed enemies of Israel.

Bar-Am, in fact, is one of 800 retired military officers with formal clearance from the Israeli government permitting them, among other activities, to negotiate with arms buyers around the world. The certificate, which is not a license for any specific sale, provides entree to the highly secretive Ministry of Defense where such deals must be approved.

Says Deal Was Not Secret

The former general, who was a branch chief of staff for the Israeli Defense Forces until his 1984 retirement, said after his arrest that the military Establishment there knew about the arms transaction in which he described himself as “an adviser.”

From Casemates Prison here Bar-Am also has threatened to “give myself up to the United States” if Israel failed to come to his aid. The first call after his arrest was to the Israeli defense attache in Washington.

What remains unclear two weeks later is whether Bar-Am and his colleagues might have been operating quietly on behalf of Israel, a nation that one Israeli defense source said requires government approval or “you can’t even take a match out” of the country. Also intriguing to U.S. investigators is the claim by Bar-Am’s group that they had been assisted by Israeli intelligence agents in checking the backgrounds of fellow conspirators.

Officials in Israel, however, deny that the deal was sanctioned by the government.

While the Bar-Am criminal case revolves around an alleged plot to make illegal sales of U.S.-made weapons, the case has renewed general debate in Tel Aviv about a wide range of Israeli arms trade policies and, especially, about its reliance on the growing and largely unregulated network of private arms merchants.

Israeli Control Discounted

Military affairs analyst Zeev Schiff of the prestigious Israeli newspaper Haaretz complained in a column, for example, that “legally, Israel has virtually no control over the activity of these (arms brokers) abroad and cannot impose sanctions against them if their actions sully the country’s reputation.”

And Klieman reiterated his warnings that the proliferation of government-authorized arms merchants threatens to undermine Israel’s foreign military assistance goals by failing to adequately screen those receiving Israeli arms.

“With so many representatives in the field and such large quantities of Israeli conventional weapons circulating, the policy threatens to get out of hand and to inflict damage upon Israel,” Klieman wrote in his recently published book, “Israel’s Global Reach: Arms Sales as Diplomacy.”

But he noted that “Israel has a considerably narrower field of formal, regularized diplomatic activity and government-to-government relations than its rivals,” making it necessary that “a good part of its arms negotiations must be conducted through . . . back-door channels, most of which are officially sanctioned, although some are not.”

Estimates in Israel are that about one-third of the nation’s $1-billion annual arms exports are arranged through these private arms dealers who command substantial commissions ranging from 5% to 18%.

Earlier Transaction Cited

This is not the first or most serious example of conflict between U.S. and Israeli authorities over arms transactions. In the early 1980s--shortly after the American hostages were released--Israel’s shipments of arms to Iran prompted a U.S. protest. Before officially cutting off the flow of materiel, however, Israel reportedly transferred refurbished jet engines, spare parts for U.S.-built M-48 tanks, aircraft tires and ammunition through indirect channels to the Khomeini government.

And there is little question that the flow to Iran of Israeli arms, at least, has continued. In fact, over the last five years--a time when the United States was committing increasing law enforcement resources to its campaign to block Iranian access to American military supplies--one West German newspaper estimates that Israel has sold the Khomeini government about $500 million in military equipment for use in its war against Iraq.

Two years ago former Israeli Defense Minister Ariel Sharon acknowledged during a speaking appearance in Connecticut that Israel sold arms to Iran because “if the Iraqis win, we will find the Soviets on the border with Iran.”

Efraim Poran, then military adviser to former Prime Minister Yitzhak Shamir, said the government made a decision “not to sell any American things to Iran” after the United States requested that its allies refrain from aiding the Khomeini government. However, Poran, who was military secretary to prime ministers Yitzhak Rabin and Menachem Begin, acknowledged that there was no Israeli commitment to stop selling the nation’s own weapons to Iran.

Served Israel’s Interest

Poran--a friend of Bar-Am and a retired army general certified by the Israeli government to engage in arms negotiations--said in an interview that weapons sales to Iran have served Israel’s interest by aiding Khomeini’s war against neighboring Iraq.

“Iraq took part in all the wars against Israel . . . but the war in Lebanon, when they were occupied with the Iranians,” Poran said. “There is a rule that the enemy of your enemy is your friend. So, basically, for Israel I think Iran is doing, if I may say so, a positive job.”

Klieman says the current Israeli government has a policy, however, not to sell to Iran. Prime Minister Shimon Peres has said that Israel not only wants to avoid flouting America’s wishes but it now perceives Iran as a greater threat. Israeli officials cite the increasing activity of Khomeini-inspired, anti-Israeli Islamic fundamentalists in southern Lebanon, for example.

In fact, Klieman said he believes the only way the Israeli government might have given the go-ahead to the kind of arms deal that Bar-Am and company were trying to put together would have been if the United States had quietly approved of it for its own reasons.

A number of London-based arms brokers interviewed last fall by The Times expressed virtually unanimous--though unsupported--beliefs that American intelligence agencies might have an interest in allowing some military supplies to reach Iran. U.S. sources denied those assertions.

No Way to Bypass Authorities

Both Klieman and Poran agreed that, whatever was the case, it would have been impossible for Bar-Am’s group to actually ship such a large order of weapons out of Israel without the government’s approval.

“No arms can leave the country without authorization,” Klieman said. While some small amounts might slip through the system, it certainly couldn’t happen on such a large scale, he said.

Certificate Needed

But Poran said it is not that difficult to circumvent U.S. prohibitions against the re-export of American-made weapons from countries like Israel.

The key, he said, is to acquire an “end user certificate” indicating the weapons are going to a customer acceptable to Washington. That’s not a problem in what Poran called “a corrupted country” like the Philippines where he said the key export document can be bought for a fee--maybe $100,000.

In fact, the federal complaint against Bar-Am and the others claims that the group had arranged for a Philippine end user certificate--indicating that much of the weapons cargo intended for Iran would actually be going to the Philippines--but that it was canceled a few days after the Marcos regime collapsed.

“With this paper you go to the United States, you buy the things, you put it on a ship and in the middle of the ocean you change the papers of the ship and she goes instead to Iran or Iraq or any other country and you make the deal,” Poran said.

Cooperation Seen Necessary

“This is the way that things are done,” he said. Poran added that he doubted any Israeli citizen would lie to his own government about such export documents. “He has to cooperate with the government,” he said.

The former military adviser also said that not all 800 former military officers officially cleared to engage in the arms trade actually do. Poran, for example, has done consulting work for private munitions manufacturers and government agencies in Israel, Singapore and Belgium, he said, and is now involved in “the underwear” business in South Africa.

“I’m not an arms seller; I’m not in this type of business,” he said.

But American court records show that Poran played a key role in introducing American arms dealer Abbot vanBacker to potential Middle East and European customers and that he encouraged them to steer business to the American at a time when VanBacker was trying to expand his operation.

Later, stemming from transactions unrelated to Poran, VanBacker was convicted of conspiring to sell illegally more than $1 billion in U.S. arms to Iran. Poran, however, said he has no recollection of VanBacker.

He called the arrest of Bar-Am “a trap” unfairly baited with millions of dollars in potential profits that would entice “even the best of men.”

‘Setup by the Americans’

“I know him, and he is a good guy--he is a hero here in Israel,” Poran told The Times. “I’m sorry he fell into such a trap . . . . The whole thing was a setup by the Americans.”

There’s no question that Bermuda was a trap carefully set to lure Bar-Am and his colleagues within legal reach of American authorities.

Bar-Am and his partners--Israeli businessmen William Northrop, Guri Eisenberg and Israel Eisenberg and a London-based American attorney, Samuel Evans--agreed to meet in this British colony to conclude a $250-million portion of the arms deal.

But even as the five were flying out over the Atlantic from London, Bermuda officials were adding their names to an immigration “stop list,” a roster of undesirables who are not permitted on the islands.

Ignored Departure Order

Faced with an order to return to the jetliner next bound for Baltimore--and certain arrest in U.S. jurisdiction--Bar-Am and his associates chose to violate Bermuda immigration laws and ignore the departure order.

Held as illegal aliens pending a trial on July 1, the five now share a single cell in the 125-year-old stone prison. In the United States, meanwhile, authorities ponder amending charges against Bar-Am to include mail fraud allegations since Bermuda--like America’s European allies--does not recognize most export violations as extraditable crimes.

And Israeli officials insist that “whatever was done was done by a private citizen acting on his own responsibility and behalf.”