Lavi Fighter Cost Estimates Called ‘Groundless’

Israel’s state comptroller charged Tuesday that a series of Cabinets have voted to pursue the multibillion-dollar Lavi jet fighter project on the basis of “groundless, insufficient, tendentious and incorrect assessments of cost.”

Such a “faulty process of decision-making is something which our country cannot afford,” Yaakov Maltz said in his annual assessment of government performance to the Knesset, Israel’s Parliament.

His unusually sharp attack on the controversial Lavi project was set out in a 33-page supplement to his regular report and at a news conference.

Silent on Basic Question

Maltz refused to comment specifically on whether he thought it was a mistake to undertake the Lavi project, which is by far the most ambitious industrial project in Israel’s history, or whether it should be abandoned before production commitments are made.

“All I’m saying is that decisions of this magnitude should not be taken hastily,” Maltz said.

Nevertheless, his criticism is considered certain to raise new questions about a project that has run into increasing opposition in Israel and in Washington. The United States has financed virtually the entire cost of development--$1.5 billion to date.

100% Overrun

It is now clear that the Lavi will cost twice as much as expected and $2.5 billion more than if Israel were to buy U.S.-built F-16s. The Reagan Administration has indicated that, because of budgetary constraints, it will not increase its military aid to Israel beyond the present level.

Michael Bruno, governor of the Bank of Israel, told a conference in Tel Aviv last week that “on the basis of economic analysis, there is no justification whatsoever for continuing the (Lavi) project.”

He said that even if new sources of financing are found, the money can be put to better use in other areas of the ailing economy.

“There is no choice but to immediately halt the project,” Bruno said. “Such a bold step would be seen positively by the public as a sign of the government’s determination to make fundamental changes in the structure of the economy.”

Another Chance Sunday

Prime Minister Yitzhak Shamir’s Cabinet has debated the question several times in recent weeks and is scheduled to take it up again Sunday. According to a senior Shamir aide, the Cabinet ministers are divided as the result of confusing views presented by different factions of the nation’s defense establishment.

Critics in the military argue that the Lavi project, which has taken up a large share of the defense budget, will starve other branches of needed funds for training and weapons development.

Proponents contend that in addition to providing the nation with an advanced fighter, the project will eventually boost the entire economy, as the space program did in the United States.

“It can go either way,” the Shamir aide said of the decision on whether to continue the project.

To cancel it would cost thousands of jobs and deliver a blow to national pride, he said, but to go ahead with it could risk economic disaster and weakening, at least temporarily, the country’s defenses.

Unhappy Choice

“It’s damned if you do and damned if you don’t,” he said.

Defense Minister Yitzhak Rabin arrived in Washington on Tuesday on a hastily scheduled trip to sound out the Reagan Administration and congressional leaders on the consequences of abandoning the project.

“I want to know,” he told reporters here before his departure, “what the American side thinks about this before making our decision. We must remember we are dealing with a project which requires another $6 billion to $8 billion and which has to be carried out over a period (of 10 to 17 years) without any ability of predicting what will happen in the Middle East.”

Shamir said Tuesday that Rabin’s findings will be presented at Sunday’s Cabinet meeting and that perhaps a decision can then be reached.

Among other things, Rabin is believed to be seeking a U.S. pledge to help offset economic penalties stemming from an Israeli cancellation of Lavi-related contracts. U.S. Ambassador Thomas R. Pickering said at a news conference in Tel Aviv on Tuesday that Israel could use part of its regular $1.8-billion annual military grant to cover such penalties but should not count on Washington for any supplemental funds.

Comptroller Maltz said in his report that such penalties could have been avoided if there had been proper cooperation from the start between the defense establishment and the Finance Ministry.

The original Cabinet decision to earmark money for the Lavi was made in 1980. Then, in 1981, the government decided to turn the Lavi into a much larger aircraft.

Project in Pipeline

This and other “significant and weighty decisions were made on the basis of groundless, insufficient, tendentious and incorrect assessments of cost,” Maltz said, and added that “by the time better-founded estimates were arrived at in 1985, agreements had already been signed, the project was already in full force and tremendous sums had already been invested--a considerable portion of which is liable to go down the drain if it’s decided to discontinue the project.”

Maltz charged that alternatives to the Lavi and their costs “were not properly examined” and that no attempt was made to determine the influence of the Lavi decision on the overall defense establishment.

Responding to the report, Moshe Dovrat, director general of the Ministry of Economic Planning, said the government is trying to improve coordination on such vital national decisions.