Stung by Criticism, Israel Reviews Its Arms Industry

Times Staff Writer

The following article was submitted to the Israeli censor, who ordered significant deletions.

Jarred by a series of embarrassing scandals abroad and mounting criticism at home, Israel is reviewing procedures within its controversial armaments industry but not its fundamental commitment to the business.

The review involves both Israel's international arms sales and its acquisition of technology and equipment to support its own weapons production.

In an interview here, Defense Minister Yitzhak Rabin said that specific steps include:

--Changes in a system under which certain former Israeli military officers are authorized to seek out and negotiate foreign arms deals.

--Exercise of greater care in filing applications for defense-related U.S. products and know-how.

--A shift, wherever possible, to non-American suppliers of military equipment and technology in order to avoid the restrictions of doing business with the United States.

While acknowledging that the changes result in part from a recent series of scandals and accusations in the United States related to the Israeli arms industry, Rabin dismissed charges of Israeli wrongdoing.

The defense minister also said Israel's main motive for making arms is not to sell them abroad but to defend itself. However, he acknowledged that, because of the restrictions the ailing domestic economy has placed on Israel's defense budget, he has urged the country's arms manufacturers to make up for the drop in government sales by stepping up their export efforts.

" . . . We cut our orders in our military industries . . . and I told them quite frankly: 'Either you'll fire people or find export markets,' " Rabin said.

Rarely since its inception in the pre-independence Jewish underground has Israel's armaments industry fallen under such intensive public scrutiny, here and abroad, as it has in the last year or two.

A special Israeli television report titled "Merchants of Death" recently examined the underside of this country's efforts to sell both arms and anti-terrorist know-how.

In the report, the owner of one private Israeli arms company, interviewed in deep shadow to conceal his identity, described the climate in which weapons sales are negotiated.

"The decision-makers in various countries meet arms dealers outside their country. And it is a matter of caring for various things they need--good hotels, good restaurants and whatever your imagination can conjure in this field."

For their efforts, the arms merchant said, he and his peers take a 10% to 15% agent's fee, known in the trade as schmear .

Israel's latest military export, according to the television report, is anti-terrorist expertise. Twenty companies, usually headed by former senior officers from elite Israeli army and secret police units, offer such services.

As a promotional film for one of them revealed, their sales approach is direct: "Organized. Ruthless. Terror is an untamed menace threatening to disrupt the order of society--unless society decides to meet the threat with order and method; with intelligent analysis and diligent preparation; with the Israeli fighters who have been battling terror for two decades, who have studied it, learned its weaknesses and participated in a triumphant campaign against it.

"These are the men of Atlas--the professionals," intones the promotional film's narrator against the backdrop of men firing at human-shaped targets on a practice range. "They know the tricks of the trade.

"They know the training, down to the little details," the narrator adds as one "professional" runs up and shoots a mannequin in the head from point-blank range.

Noting that Israel's arms trade has seen itself linked with assorted military and anti-democratic regimes, from the Ayatollah Ruhollah Khomeini's Iran to the notorious deposed Emperor Bokassa I of the Central African Republic, the respected military affairs analyst for the newspaper Haaretz, Zev Schiff, recalled an old Russian proverb: "A person who sleeps with dogs shouldn't be surprised to find himself covered with fleas."

While the Israeli media are in the forefront, they are not alone in questioning various aspects of the arms business.

Exposed Economically

There are now so many Israeli weapons salesmen in the field and such large quantities of Israeli weaponry in circulation around the world that what should be an important tool of the country's foreign policy "threatens to get out of control," according to Aaron Klieman, Tel Aviv University arms sales expert and author of "Israel's Global Reach: Arms Sales as Diplomacy."

Some economists say that with more than $1.25 billion in annual arms sales abroad, constituting about 25% of total Israeli industrial exports, the country is dangerously exposed economically.

And still others, such as former Deputy Defense Minister Mordechai Tsipori, question the morality of having reserve Israeli army officers involved in the shadowy world of international weapons transactions.

"As I know exactly the approach and how you get customers, I am not happy with the fact that officers who are responsible for . . . putting an example to the soldiers will be (part) of this group who are privately promoting and selling arms," Tsipori said in an interview.

The criticism also extends to Israeli purchases of military technology and equipment. Recalling a case earlier this summer when Israel was accused of trying to illegally smuggle cluster bomb manufacturing technology out of the United States, Schiff commented: "It is very doubtful whether Israel took all the required precautions. . . . It is not enough that the government of Israel acts according to American law. It must be absolutely precise because of the Pollard affair. . . ."

Schiff referred to the case of Jonathan Jay Pollard, a U.S. Navy intelligence analyst who pleaded guilty earlier this year to spying on behalf of a previously undisclosed Israeli intelligence operation known by its Hebrew acronym as Lekem.

Strained Relations

Israel subsequently apologized publicly for the incident, which officials here said was unauthorized, and stated that the intelligence unit had been disbanded.

The Pollard affair put a severe strain on Israeli-American relations, however, and in the months after Pollard's arrest in November, 1985, a series of other scandals and accusations further damaged Israel's image in the United States.

In addition to the cluster bomb affair, there were investigations into the possible illegal transfer of sensitive nuclear data, along with high-altitude photography and tank gun barrel-coating technologies to Israel. As far as is known, no Israeli government involvement in wrongdoing has ever been proven in those cases.

Amid a series of public disclosures about those investigations, a retired Israeli general and three other Israeli citizens were charged by U.S. authorities last spring with being part of a large ring that conspired to sell $2.5 billion worth of American-made arms to Iran in contravention of a U.S. embargo. Much of the weaponry was allegedly to come from Israel.

Israel has repeatedly denied that it had anything to do with the deal or that the retired Israeli general, Abraham Bar-Am, had authorization to sell any such weapons from Israeli stockpiles.

Union Charges

"They had a capability to sell what they claimed to sell, like me claiming now that I can sell the Empire State Building," Rabin said in the interview.

Most recently, the Danish Sailors Union charged last weekend that Israeli weapons dealers had shipped at least 3,600 tons of American-made weapons to Iran between May and August this year in violation of U.S. restrictions.

Four shipments from the Israeli port of Eilat to Bandar Abbas in Iran were involved, according to union spokesman Henrik Berlau. "We have the documentation, the log and the testimony of the sailors on board," Berlau said. "We have the exact dates. There is absolutely no doubt."

A spokesman for the Israeli Defense Ministry categorically denied the report but would not elaborate.

The Israeli arms industry began in the pre-1948 Jewish underground of what was then Palestine, among fighters who improvised weapons that could not be bought. Today, it numbers about 130 companies reportedly employing 140,000 people. Their primary customer is the Israeli Defense Ministry, with an annual budget of nearly $5 billion, including $1.8 billion in American military grants.

An Israeli Defense Procurement Mission in the United States employs about 200 people whose job is to negotiate purchases of American equipment and services under the U.S. military aid program.

Particularly in the last decade, Israel's armaments industry has become a major exporter, with some companies selling up to 70% of their production abroad.

The Defense Ministry's 20-person Office of Defense Sales, known by its Hebrew acronym as SIBAT, is charged with administering and promoting Israeli arms sales. It has two full-time representatives in Europe and one each in North and South America. In addition, SIBAT director Zvi Royter said, military attaches in all of Israel's more than 30 embassies abroad are responsible at least in part to his office.

Letters of Authorization

About two-thirds of Israeli arms exports is said to involve direct government-to-government deals. But another one-third, worth more than $400 million, is handled through independent agents, many of whom are retired military men.

Royter said that his office has issued about 800 letters authorizing corporations or individuals to seek new arms deals, including one to Gen. Bar-Am, who, under the terms of his bail, is confined to the New York City area.

However, both Royter and Rabin stressed that these letters are not authorizations to negotiate specific sales and that each transaction--"from one pistol," Rabin said--must be specifically approved by a Cabinet committee.

Rabin said the Defense Ministry authorizations, which are issued over his signature, were never intended to be letters of introduction. They are only required of arms dealers who are military reservists, and they are intended as a special control mechanism because of these officers' knowledge of defense secrets, he said.

The institution of these letters of authorization, required under a 1977 Israeli law, is one of the areas now under review, Rabin said.

"As a result of the Bar-Am case and other cases, we came to the conclusion that (the letters) might be interpreted not as additional limitation but as . . . a letter of introduction," the defense minister said in an interview. "And we are in the process to change the system and to make it clear it's (an) additional burden rather than a letter of introduction."

Resale of U.S. Arms Barred

Royter said in a separate interview that he believes the letters should be issued over a signature other than the defense minister's in order not to mislead potential buyers.

Rabin noted that Israel is committed not to resell any American arms or even American components of Israeli-made arms without explicit U.S. permission. "And we have kept this commitment through the years," he said. "If you can give me one example through the history of our relation that Israel sold (even) a wing that was produced in the United States without American approval, I'll swallow everything."

He said, for example, that Israel has sold only 12 Israeli-made Kfir fighters overseas instead of "more than 100" that it could have sold if Washington had not withheld approval. The Kfir has an American engine.

"We are not so stupid to endanger the very generous and vital American assistance to Israel . . . and the capability to purchase in the United States the bulk of our armament," Rabin stated.

Regarding the purchase of U.S. military technology or production equipment, the defense minister said that "we try to be more careful in filing all our requests" in Washington. Also, he added, "we prefer whatever can be purchased out of the United States to (be bought) outside the United States."

Rabin revealed that since the questions were raised in the United States about cluster bombs, Israel has arranged to buy the equipment that it wanted in Europe.

He said the procedures were "not worse" than those in the United States and "we don't need all this trouble of getting approval. In Europe, you can buy them (such technology) freely, without any government complications."

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