Israel to End Arms Sales to S. Africa : U.S. Threat to Stop Military Aid Spurs Move to Phase Out Deals, Sources Say

Responding to a threatened cutoff of U.S. military aid, top Israeli officials have quietly agreed to phase out existing agreements on arms sales and the transfer of military technology to South Africa, informed government and other sources said here Wednesday.

The agreement was reportedly worked out by Prime Minister Yitzhak Shamir, Foreign Minister Shimon Peres and Defense Minister Yitzhak Rabin, and it is seen as representing a compromise between those Israelis who want their country to take a much more aggressive anti-apartheid stance and others who defend the status quo in Israeli-South African relations.

Shamir is expected to outline the approach in private meetings with Reagan Administration officials and congressional leaders next week during his first visit to Washington since taking over as prime minister of Israel’s so-called national-unity coalition government last October.

Hope to Defuse Crisis

By so doing, Shamir and his colleagues in the Israeli leadership hope to defuse a potential crisis with the U.S. government over its complex and controversial relationship with South Africa.

“The South African thing will be a major issue” during the visit, predicted one senior Israeli official.

In the past, Israel is said to have supplied South Africa with the technology to build missile-firing boats, missiles and avionics systems for fighter aircraft. Most recently, according to some reports, it has helped South Africa develop air-to-air refueling capability and a surveillance aircraft for its air force.

No Announcement Expected

While some American Jewish leaders have urged Israeli officials to take a stronger public stance against the South African regime, Shamir is not expected to publicly announce the reported policy shift so as not to unduly antagonize Pretoria.

Under the Comprehensive Anti-Apartheid Act passed by the U.S. Congress last October, President Reagan is to receive by April 1 a report from the State Department’s Bureau of Intelligence and Research outlining arms sales to South Africa by other nations. Those countries found to be selling military equipment to Pretoria face a possible cutoff of U.S. military aid.

Informed sources in Jerusalem said that an investigator from the bureau was here in late January to probe Israel’s arms relationship with South Africa, and there is widespread concern here that the final report will name Israel as a prominent military supplier to the white-minority government in Pretoria.

Backlash Feared

While few expect that Congress would cut off Israel’s $1.8 billion in annual U.S. military aid as a result, Israeli officials fear that the political backlash could nonetheless be very damaging. Shamir and his colleagues hope that both the Reagan Administration and Congress will stop short of any public condemnation of Israel based on assurances that it will gradually end its military relationship with South Africa.

A government official said that while Israel is no longer making new arms deals with South Africa, there are agreements regarding the transfer of military technology and expertise that are still in force from “the 1960s.”

Another source said that these agreements frequently involve large-scale funding of Israeli research and development projects in return for data and know-how.

“What the troika (Shamir, Peres and Rabin) has come up with in Jerusalem is to phase out these agreements,” this source said. Asked how long that would take, the source added, “I’ve heard three years.” The question, he said, is “will that be fast enough to satisfy Congress?”

Report Confirmed

The government official confirmed the report but would not comment on the three-year timetable, saying only that the plan was to phase out the agreements “gradually.”

The agreements are important economically to Israel, this official added, saying that the South African investments and purchases support “a huge infrastructure that includes thousands of families. You can’t overnight become pious and say, ‘We’ll feed these people with ideology.’ ”

In addition to the report expected from the State Department bureau, a blue-ribbon government commission urged Reagan on Tuesday to prevent other countries from shipping U.S. arms and military technology to South Africa, and the panel singled out Israel in its report.

Commission’s Mandate

The 12-man commission, appointed by Secretary of State George P. Shultz on orders from Reagan to examine U.S. policies toward South Africa, said Reagan should “adopt measures to prevent countries such as Israel that import U.S. arms and defense material from transshipping such goods to South Africa and selling to South Africa technology and material critical to its efforts to attain military self-sufficiency.”

Israel is frequently condemned for what is perceived as its close ties to South Africa, and the issue is admittedly an extremely sensitive one here.

It involves a classic argument within the society that one source characterized as “moralism vs. realpolitik. The moralists argue that a country founded on the ashes of racism has no business being involved with a racist regime.”

As the source put it: “The realpolitik argument is: ‘We’re isolated, and they are too. We don’t have the luxury of choosing our allies. Moreover, there is a large Jewish community in South Africa to think about. And besides, what Israel is doing is small potatoes relative to others.’ ”

Violations Denied

Peres echoed some of those arguments in remarks he made Wednesday to the Knesset, Israel’s Parliament. He expressed abhorrence of South Africa’s apartheid system and denied allegations that Israel has supplied any American arms and technology to South Africa in violation of U.S. laws. But he also said that Israel is in no position to lead the world’s struggle against the South African regime. And he added, “I do not understand why there is a tendency among us to emphasize Israel’s role as though she were the main actor in the piece.”

While Peres did not refer to the reported decision to phase out existing military agreements with South Africa, he said Israel will in the future maintain a lower profile in its relations with that country.

According to Israel radio, a Peres aide explained later that this meant a reduction in official visits between Pretoria and Jerusalem but no change in the level of Israel’s diplomatic relations with South Africa.

Also, officials here have said, they are not in favor of publicly declaring trade sanctions against South Africa.

Numerous Joint Ventures

On the non-military side, Israel and South Africa have been involved in numerous joint commercial ventures. South Africa has provided Israel with uranium and in return has received Israeli assistance in nuclear power development. Israel imports South African coal and steel, among other products. One of Israel’s major export earners is marketable diamonds, which are mostly imported as uncut stones from South Africa.

A Foreign Ministry official said here Wednesday that Israel’s two-way trade with South Africa amounts to about $160 million a year. However, the official said, this is only one-fifteenth of the volume of trade between the United States and South Africa and only one-tenth of Britain’s trade with South Africa.

These figures do not include Israel’s military transfers to South Africa, the value of which is a state secret.