Israel Asks U.S. to Relax Rules on Its Dealings in Military Hardware

Times Staff Writer

Israel is asking the United States to eliminate certain restrictions governing its ability to buy and sell military hardware in the United States and allied countries so that it would enjoy something closer to NATO status, according to U.S. and Israeli sources.

The sources said the subject has already been broached with members of Vice President George Bush's staff, who are in Israel on the first leg of a three-country Middle East tour.

The Hebrew-language Maariv newspaper on Monday quoted "authoritative sources in Jerusalem" as saying Bush would announce during his visit that Washington is "prepared to consider the possibility" of changes in the rules that currently apply to such deals.

The groundwork for the announcement was supposedly laid during an advance trip here a month ago by Donald Gregg, Bush's national security adviser.

While cautioning that the subject is "not formally on the agenda" for the vice president's talks with Israeli leaders, officials in the Bush party said Monday that the issue may come up and that "we're willing to study it." They stressed, however, that discussions about any change are "at a very preliminary stage."

The U.S. sources explained that the members of the North Atlantic Treaty Organization, by the nature of the alliance, enjoy certain advantages in military trade with each other. They can buy military supplies from each other at more favorable prices than those charged to non-members, for example, and they also give other members preference in bidding for military contracts within the alliance.

Those advantages do not apply to Israel, which, while it cooperates closely with the United States in military and political matters, does not have a formal alliance with Washington.

Israel and the United States signed a strategic cooperation agreement in 1983, but that pact falls short of the sort of mutual defense treaty that binds NATO members.

While there is no such U.S.-Israeli treaty, "in a variety of ways, we have a relationship that looks like an alliance," commented one official in the Bush party. And the Israelis argue that more preferential terms for arms deals would merely be a reflection of its de facto identity with U.S. strategic interests.

"Israel has no desire to join NATO because that would be openly baiting the Russians," said a senior Israeli government source. Among other concerns, Israel is worried about the impact that a formal alliance with the United States would have on up to 2 million Jews thought to be living in the Soviet Union.

However, the Israeli source confirmed, "Israel may have interest in obtaining discounts and conditions in the purchases of weapons similar to those of NATO."

Another Israeli source close to official thinking noted that the country's economic problems have put a severe strain on its critical defense budget. Also, an increasingly large share of that budget must be devoted to development of the new Lavi multipurpose jet fighter program--by far the largest military-industrial project ever undertaken in Israel.

Defense officials here hope that if Washington gives Israel something more akin to NATO status in arms procurement and sales, it will be able to stretch its limited military budget further. "Otherwise, we will collapse," said one Israeli source.

U.S. officials said the size of the possible dollar impact of any rule change is unclear because there has been no detailed study of the problem yet. They said it is also uncertain how many restrictions and exclusions might affect Israel and which of them could be waived or relaxed.

As an example, however, the officials said that security restrictions currently forbid Israel to manufacture certain items of military equipment for NATO members because to do so would require access to highly classified information.

Israel's strategic relationship with the United States has been the subject of considerable controversy in recent months because of the Jonathan Jay Pollard spy affair, the involvement of Israeli arms merchants in supplying weapons to Iran and investigations into allegedly illegal Israeli acquisition of American military technology.

Israel contends that the Pollard affair involved a "rogue" intelligence operation that has since been disbanded; that any arms transfers to Iran violate Israel's policy and were carried out without its knowledge, and that the government is innocent of any wrongdoing in the technology transfer investigations.

Israel, which currently receives more than $3 billion annually from Washington in military and other grants, is the largest recipient of U.S. aid.

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