Israel: Case study for International Missile Trade and Nonproliferation Project

Published in The International Missile Bazaar: The New Suppliers Network, Project edited by William Potter and Harlan Jencks, Westview Press, 1993.

I. Capabilities

Israel has been active in research and development of ballistic missile technology, as well as production, testing, and deployment of such systems for many years. The Israeli government created a Science Corps in the military in 1948, and this group was active in developing the technological base for the components necessary for missile production. The Science Corps evolved into the National Weapons Development Authority (Rafael), which developed and launched sounding rockets. More advanced experimental systems, incorporating solid state electronics and telemetry, were tested in the late 1950s and early 1960s.

The indigenous scientific and technological base for the development of missile technology grew throughout this period. The Technion (Israeli Institute of Technology) in Haifa specialized in aeronautical and missile engineering, and the activity at the Weizmann Institute and other Israeli universities and research institutions added to this foundation. Research and applications for military requirements took place in the laboratories of Rafael, the Israeli Aircraft Industry (IAI), Israel Military Industries (known in Hebrew as Ta'as) and many other smaller firms. Between 1955 and 1967, cooperation with France, and particularly with the firm Marcel Dassault, led to development of technology to manufacture solid rocket motors, and these became the foundation of the Israel tactical as well as strategic missile program. Later, Israel developed the technology for the inertial guidance systems which are necessary for navigating the warhead to its target. The various tests and engineering models of air-to- ground, air-to-air, and surface-to-surface missiles were known under the generic name of Luz.0 According to reports, the MD660 surface to surface missile was produced under a co-production agreement with Dassault.1

In 1967, the first Israeli-made tactical missiles (the Shafrir air-to-air system) were tested in combat. Other tactical missiles, such as the Gabriel ship-to-ship missile (with radar homing) were also developed. These systems were used by Israeli forces in the wars against the Arab states during this period, and, in the mid- 1970s, became a major source of export income. Based on the lessons learned from the use of these weapons in combat, other highly advanced tactical systems, including the Shafrir 2 and Python 3 AAMs, the Popeye air-to-ground missile, and Barak naval missile defense system were developed in the 1980s.2 According to a report in Jane's Weapons Systems, in the 1970s, Israel produced a short range rocket known as the Ze'ev (Wolf) with a range of less than 5 kilometers, and a warhead of 70 kilograms.3

The technology base which led to the production of a wide range of tactical missiles also served as a foundation for strategic intermediate-range ballistic missiles (IRBMs). No official Israeli source has acknowledged the existence of these weapons, but they are widely referred to in the press as the "Jericho". The Jericho I is believed to have been deployed in the early 1970s, when Syria, Egypt, and other Arab states began to receive Soviet Scud missiles. After the 1973 war, in which Syrian and Egyptian forces made substantial progress, Israel sought to reinforce deterrence and reestablish escalation dominance. In 1975, the US refused to sell Israel the Pershing-1A, and while Washington agreed to provide Lance battlefield missiles, these did not solve the strategic problems. In response, Israel proceeded in the development of an indigenous IRBM capability. The Jericho I is reported to have a payload of 1000 kilograms and a 500 kilometer range.4

According to published reports, the more advanced and longer- range Jericho 2 was tested and deployed beginning in 1987. The Jericho 2 is credited with a range of 2000 to 2800 kilometers, and, according to Fetter, the Jericho 2 "can probably deliver at least 2 tonnes on any Arab country".5

Israel is also developing a ballistic missile defense system known as the Arrow. Although most of the funding is being provided by the United States, research and development are taking place in Israel, and the Israel Aircraft Industry is the prime contractor. The Arrow is designed to destroy incoming warheads at an altitude of 20 to 40 kilometers, and is expected to cost $2 to $5 billion.6 After three tests that ended in at least partial failures, on September 24, 1992, a fully successful test of the Arrow was conducted. The sophistication of the Arrow program and technology provide additional evidence of the overall Israeli capability to develop and produce ballistic missiles. Israeli firms have also developed and produced the Barak ship-defense missile system.

The Israeli Space Program

In September 1988, Israel launched its first satellite into orbit. The Ofek (Horizon) 1 satellite, which weighed 156 kilograms, was launched by the three-stage solid fuelled Shavit (Comet). Although few details regarding the launch vehicle were released, it is likely that the Shavit is based on or identical to the Jericho 2 missile.7 (The United States, Soviet Union, and China also used modified ICBMs for space launchers.) Ofek 2, with similar characteristics, was launched in April 1990, and a third satellite was expected to be launched in the Spring of 1992.

The Israeli space program is likely to grow in the near term, with an increasing emphasis on military applications. In a Knesset discussion following the intelligence failures preceding and during the Iraqi war (and the failure of the United States to locate the Iraqi nuclear facilities and missile launchers), Israeli Defense Minister Moshe Arens announced plans to develop reconnaissance satellites.8

Israel has also expressed interest in commercial space activities, including the provision of launch services for small payloads in low-earth orbit. IAI has advertised the capabilities of the Shavit (apparently despite the misgivings of the Defense Ministry and the military, who opposed the publicity and feared that public discussion would compromise national security). An Israeli communications satellite is scheduled for launch aboard a European Space Agency Ariane launcher in 1994.

A civilian organization, the Israeli Space Agency (ISA), was created in 1983, to support scientific and engineering activity. The ISA has developed working relationships and agreements with NASA, the European Space Agency, and other countries. In 1989, a cooperation agreement was reached with the Soviet Union, and joint projects have continued with the Commonwealth of Independent States. Israel, Denmark, and the CIS signed an agreement to launch a scientific research satellite from Baykanur in 1995. The Israelis team is developing an ultra-violet telescope for the system.9 In the longer term, the Israeli space program can be expected to expand to include larger launchers, capable of placing larger payloads into low-earth orbit, and, ultimately, into synchronous orbits. II.Transactions

A. Motivations

In general, Israeli exports of military technology and weapons are driven by a combination of security and economic requirements. Israel is a extremely small country, with very limited resources, and threats to security and national survival are primary considerations. Economically, Israel cannot compete with theweapons purchased by the Arab oil exporters, and the United States is the only major source of weapons or military technology. To provide an assured and independent source of weapons, Israel has developed a highly sophisticated and technologically intensive arms industry.10 Like other states which produce major weapons systems, Israel seeks to reduce the costs of this development by exporting, licensing and co-producing indigenously developed weapons and technology.11 According to an Israeli government source, over 20% of total industrial exports come from weapons and military technology, and Israel Aircraft Industry, which is the country's largest industrial firm, is reported to be dependent on exports for up to 80% of its revenues.12

The development and production of ballistic missile technology is closely linked to Israeli military doctrine and policy. The Israel Defense Forces (IDF) have always sought to offset the overwhelming quantitative advantage of the Arab states by emphasizing advanced weapons. This technology was also an important element in the development of the Israeli deterrent capability. In the 1950s, Prime Minister David Ben-Gurion was concerned that the Arab nations would eventually be able to develop a conventional force sufficient to overrun the Jewish state. In response, he embarked on the development of a deterrent capability capable of inflicting "massive retaliation" to any Arab state or coalition which threatened Israeli survival.13 The development of missile technology, in general, and strategic ballistic missiles in particular, were essential elements in this deterrence strategy.

The events of 1967 accelerated the development of the Israeli deterrent, including ballistic missiles. In May 1967, massive tank and infantry forces were mobilized along Israel's borders with Egypt, Syria, and Jordan, and Egypt's President Nasser threatened "a war of annihilation". Although an Israeli pre-emptive attack removed this threat, at least for the short term, the fear of a multi-front Arab attack has remained. This fear was reinforced in the 1973 Yom Kippur War, when Egyptian and Syrian forces penetrated Israeli defenses in the Sinai and Golan Heights.

The effort of the Arab states to develop ballistic missiles provided a second motivating factor for the Israeli program. In the late 1950s and early 1960s, Egypt obtained the assistance of German scientists in developing liquid fuelled missiles.14 Outside pressure forced an end to this effort, but in 1970, Egypt received a shipment of Scud missiles from the USSR. In the mid-1980s, the Egyptian effort to manufacture missiles, code-named Badr 2000, was resumed with participation in the Condor missile project, along with Iraq and Argentina.15 An Egyptian official was arrested in the US for attempting to smuggle carbon-carbon materials used for warheads. There are also reports that North Korea has provided help in indigenous production.16 (Links between these states go back to the 1970s, when Egypt supplied some Scuds to North Korea, which "reverse-engineered" a local production plant, and then exported the missiles and technology to Iran and Syria.)17

In the 1970s and 1980s, many other Arab and Islamic states sought and many obtained ballistic missiles. Libya financed the West German OTRAG group's testing efforts in Zaire,18 and purchased Scuds from the USSR, and Iran obtained Scuds from Libya, Syria, and North Korea. Saudi Arabia bought 30 to 50 CSS2 ICBMs from China. Following the signing of the Camp David accords in 1978, Syria became the primary threat to Israel, and Damascus obtained ballistic missiles during this period. In the 1973 war, Syrian forces fired some short-range FROG-7 missiles air bases, but missed their targets. The first Scuds arrived in 1974 from the USSR, and following the 1982 war, the Soviets supplied SS-21 missiles.

Iraq began to purchase Scud missiles from the Soviet Union in 1976.19 Saddam Hussein also sought longer range SS-12 missiles from the USSR and was an active partner in the Condor project. With significant foreign assistance, the Iraqis were also able to extend the range of the Scud-B, which they called the al-Hussein missile. During the 1991 Gulf war, Iraq launched 39 such missiles at Israeli cities. A larger missile, the Tammuz, was tested in December 1989.

Thus, the major Arab states surrounding Israel all obtained ballistic missiles during the 1970s and 1980s. Many also developed chemical arsenals for these weapons. These threats increased the motivation for Israeli deployment of ballistic missiles for deterrence purposes. The Israeli ballistic missile arsenal was not designed for the purposes of war-fighting, nor for prestige.20

B.Major Purchasers

For Israel, as for most other arms producers, exports are of major economic and political importance. Lacking assured suppliers, Israel was forced to invest scarce resources in indigenous production of weapons. Some 20 to 25% of the Israeli industrial workforce is employed in this sector and IAI is the largest firm in the country, with over 15,000 employees. Economically, exports of weapons and technology provide a vital means to offset these costs.21

However, most of the most lucrative markets for arms exports are closed to Israel. With the exception of Iran under the Shah, the Arab and Islamic states in the Middle East, which are the major importers of weapons from the United States and Western Europe, do not purchase any Israeli products, including weapons.22 (As long as these states maintain a state of war, there is also no Israeli interest in arming them further.) While billions of dollars of oil revenues go to pay for arms purchases from the rest of the world's weapons makers, the Israeli industry must find other purchasers and partners for joint production. Arms sales and military links were also seen as a means for developing political ties to countries with which Israel did not have diplomatic relations, such as Iran, China, and Ethiopia.

Arms sales are also very important for the Israeli economy. By volume, the bulk of Israeli arms sales involve small arms and ammunition, but the most profitable exports are those systems which have the highest value added. Advanced technology in general, and missiles in particular, (for which there are few alternative suppliers,) can be a major source of revenue. Thus, there are many reports of Israeli exports of technology and joint research programs applicable to missile development. However, a Congressional Research Service report of February 1989 notes, "there are no indications to date of any exports of either Jericho or Jericho II" missiles.23

  1. Iran:
    In the 1970s, Iran was a major market for Israeli arms and technology. During this period, when the Jericho was under development, the Shah of Iran was seen as a potential partner for this very costly project. Iran was a source of petroleum (the Arab oil exporters refused to sell to Israel, and Jerusalem has always sought to develop a long-term relationship with a major producer in the region). Iran is a non-Arab state, a would-be regional power, and seen as a counter to Iraq, which has always been a leader of the radical Arab anti-Israel coalition. Under the Shah, Iran became a tacit ally and part of the peripheral strategy pursued by the Israeli leadership. According to documents taken from the Israeli and American embassies in Teheran after the revolution, Iranian military officials were briefed on the Jericho and viewed test launches.24 According to some reports, Project Flower, as the joint venture was named, was designed to produce a short-range tactical missile (150-200 kilometers), but the evidence is unclear.25 With the fall of the Shah in 1979, the project ended. Although some arms sales took place to Iran after the revolution, these consisted of spare parts, and no missile technology was involved.

  2. South Africa:
    The collapse of the Shah's government forced Israel to expand the search for alternative partners to offset the high costs of military research, development, and production. Israeli links with South Africa apparently began after 1973 Yom Kippur war. African states with which Israel had trade and military relationships were pressured by the Arabs to break all contact with Israel. Here, as in the case of Iran, energy imports also played a role, and Israel purchased coal and other goods from South Africa. Israeli exports reportedly included military technology and arms, including small arms, licensing agreements to produce the Reshef missile gunboats, and perhaps ship-to-ship missiles. Most of these long-term agreements were concluded in the mid-1970s, prior to the United Nations embargo on weapons (but not technology or components) of 1977, but continued for many years thereafter.

    The details of the Israeli-South African military relationship, including reports regarding missile technology, are largely speculative and often inaccurate.26 For example, numerous reports claiming that Israel had sold Kfir combat aircraft to South Africa have proven to be false. (The South African Cheetah is similar to the Kfir, but as both are based on the French Mirage, and since the extent of French arms sales to South Africa is far greater than that of Israel, there is no conclusive link between the two aircraft.) In April 1987, the US government estimated that Israel delivered $400-800 million worth of military technology to South Africa, indicating the size of the market, but these reports are also highly uncertain.27 A report published by the Stockholm International Peace Research Institute concluded, "Contrary to what is often claimed, the Israeli government formally adhered to the mandatory embargo of 1977 [on arms sales to South Africa...]"28 However, since the embargo covered weapons but not technology, Israel, like many other suppliers, could have transferred technology without actually violating the embargo.

    In recent years, many of the reports of Israel-South Africa links focused on missile technology. South Africa has conducted a research and development program in the area of surface-to-surface ballistic missiles, and has acquired components and know-how from many sources. (According to reports in the Financial Times, South Africa may also have sold missile technology to Iraq.29) Israel is reported to be a supplier, although, as Landgren notes, "The foreign technology needed for the missile industry was acquired from FR Germany, France, Israel, and possibly the United States, in that order."30

    The links with Israel in this area apparently date to the 1970s, when the South African Skerpioen (Scorpion) ship-to-ship missile first appeared. Analysts notes that "The actual identity of this missile is not quite clear - Jane's Fighting Ships says it is 'believed to be' the South Africa name for Gabriel 2. Skerpioen has also been described as a joint venture by Israel and South Africa, presumably based on Gabriel 2."31

    Since then, there have been increasing reports of joint Israeli-South African development and testing of ballistic missiles. A missile test was reportedly conducted in July 1989, off the coast of South Africa. The Washington Post cited reports (apparently leaked by US intelligence officials) that the plume "bore a striking resemblance to that of an Israeli Jericho missile, and testing equipment at the site also resembled that known to be used by Israel."32 A study published by a group from Stanford University claims that the test was conducted from Overberg, a test range in the southern Indian Ocean, and suggests that this was a test of a South Africa version of the Jericho.

    In October 1989, NBC News ran a story which purported to show links between Israel and South Africa in missile development and testing. This report provided no "hard" evidence, showing pictures of South Africa launch sites, but no indication of Israeli involvement. This story was also based entirely on a combination of speculation and leaks from US government officials, whose access to information was limited and whose assessments have not always been accurate. (In March 1992, the same reporter, Fred Francis, was a channel for other claims regarding Israeli arms transfers. These assertions were later acknowledged by the State Department to be entirely false.) In 1989, a United Nations investigation, which could have been expected to be the most critical of Israeli policy and to provide detailed evidence of Israeli sales to South Africa, found no direct evidence of an Israeli link with South African missile development. Its authors could only note that, like many other countries, "Israel has the know-how to have helped". Other reports allege that in November 1988, US Customs inspectors conducted a "sting" operation in which a South African arms merchant with ties to Israel tried to illegally export gyroscopes from the US, using a fictitious Israeli firm as a conduit. Although there was no claim of Israeli government involvement, the United States reportedly placed the export of gyroscopes to Israel under careful scrutiny.33

    Jerusalem either denies the allegations regarding cooperation with South Africa, asserting that they are part of the Arab political campaign to delegitimize Israel, or refuses comment (this is the Israeli policy regarding all arms sales). In March 1987, following numerous published reports on military ties, the Israeli cabinet publically reiterated its adherence to the UN embargo, extended export limits to include new contracts involving military technology and components. On September 16, 1987, the embargo was extended to include civilian contracts and goods. However, government officials and defense-industry personnel pointed out that the costs of these policies for the Israeli economy will be very great. The daily newspaper, Ha'aretz, warned that the economic impact could potentially result in the loss of hundreds or even thousands of jobs and even in the closure of major firms.34

    In July 1991, after another round of leaks from the US, senior Israeli defense ministry officials declared that Israel was following American policy with respect to South Africa, and will not "implement an independent policy in this subject". They indicated that even if economic sanctions and social contacts are relaxed, the restrictions on military links remain in effect.35

    On October 27 1991, the Washington Post reported that "U.S. Intelligence agencies recently determined that Israel exported key ballistic missile components to South Africa..."36 Another American publication reported that Israel and South Africa had conducted joint tests of the Barak naval anti-missile system off the Natal coast in August 1991.37 This test may be evidence of broader Israeli-South African military links, or may indicate that intelligence analysts are confusing tactical ship protection missiles with tests of ballistic missiles. In any case, as Aaron Karp notes, "South Africa does not have a mature long-range rocket programme, nor is it investing in one."38

  3. China:
    In the 1980s, the sale of Israeli arms and military technology to the People's Republic of China also grew. Like Iran and South Africa, China was a source of energy (oil and coal). China was also an emerging world power, and military links were seen as a means of developing political ties, and of diminishing the extent of Chinese support for the PLO and the radical Arab states.

    The Chinese were impressed by the high level of Israeli military technology, and the ability to upgrade and extend the useful lifetimes of outdated Soviet-designed weapons. A series of high-level visits and exchanges followed, and this apparently led to contracts for the sale of Israeli weapons and technology. In 1983, the Israeli daily Davar published a story on an Egyptian military delegation which was in China to purchase upgraded Soviet tanks, and found out they had been upgraded in Israel, and killed the deal. By the mid-1980s, published reports claimed that in this period, Israel had sold $3 billion in weapons and military technology to the PRC.39 Like Iran under the Shah, and South Africa, the PRC had limited access to other sources of weapons, and could provide the Israeli arms industry with the export contracts necessary for survival.

    In 1988, reports surfaced alleging that Israel had sold missile-related technology to China. The London Sunday Times reported that Israel had signed a contract worth "a few hundred million dollars" to provide China with sophisticated warheads for missiles.40 During this period, China began to develop a new generation of more accurate solid-fuelled ballistic missiles and IRBMs, such as the M-7 and M-9. HuaDi, reported to be a Chinese missile engineer, claimed that Israel had provided guidance technology to China,41 and a report published in the Economist on March 23 1991, claimed that Israel also helped China improve the accuracy of the CSS-22 (sic) ICBM.42 In November 1991, Defense Minister Moshe Arens went to Beijing, and analysts speculated that he sought to persuade the Chinese to halt the sales of missiles and nuclear technology to hostile Arab and Islamic states.43 Since the Chinese are dealing with both sides, it is possible that they provided technical specifications of the missiles sold to the Arab states, which would help Israel in developing counter systems and ballistic missile defense.

    In March 1992, the Auditor General of the US State Department issued a report asserting that a "major recipient of American military aid" had illegally transferred weapons with American components, or based on technology developed in the US, to third parties, including China.44 The unnamed state was clearly Israel. At the same time, the US press published a series of reports based on leaks from "senior intelligence sources" claiming that Israel had also transferred components from the Patriot BMD system (or even a Patriot missile) to the PRC. The US government teams dispatched to check the Patriot batteries in Israel determined that the reports were false. Israel disputed the claims, and based on the State Department Auditor's report, that weapons developed and produced in Israel, such as the Python 3 and Popeye tactical missiles, were based on "American" weapons, such as the Sidewinder and the Maverick. Although the overall approach is similiar in many cases, as could be expected from operational requirements, Israel claims that, as noted above, the first air-to-air missiles, on which the Python is based, were developed and tested before the Python. Similarly, although one version of the Maverick and the Popeye are both television-guided air-to-ground missiles, the Maverick has a much shorter range, small warhead, and entirely different mission (which explains the American decision to purchase the Popeye.) Assistant Secretary of State Richard Clark noted "there is a history that goes back at least ten years of reports of such violations ... Many of them were specious on their face. Many others were investigated by intelligence agencies for many years, without any smoking guns ever being shown to us."45 Although personel conflicts between State Department officials seem to have been involved, some Israeli analysts also saw these reports as politically motivated and designed to weaken support in the US for military aid. This case provides a clear illustration of the caution which must be exercised in attempting to evaluate such reports.

C.Evaluation and Assessment

As long as Israel is forced to maintain a strategic deterrent to insure national survival, development and production of advanced weapons, including missiles and technology will continue. In a broad sense, exports of these products are necessary to offset the high cost of this activity, and the overall cost of maintaining Israel's technology-intensive weapons industry. This income is necessary to maintain the Israeli military industry, and without it, firms such as IAI, Ta'as and Rafael might not survive.

Although sales of small arms and ammunition to a number of states in Asia and Western Europe provide some income, but are not nearly as profitable as advanced weapons and technology. (Iran reportedly provided Israel with $280 in oil as a first payment for the short-lived joint venture known as Project Flower in the late 1970s.46) The market for these systems, however, is limited. With the exception of the Arab and Islamic states, the number of countries which have a need for advanced weapons and related technology, as well as the resources to pay for them, is minimal.

As seen in this study, advanced systems such as missiles and related technology, are primarily of interest to "pariah" states such as South Africa and China.47 These customers, however, are inherently risky, and carry high political costs. These markets are also unstable, and, as in the case of Iran under the Shah, the current regimes in Pretoria and Beijing may not survive in the long term. Furthermore, their successors (particularly in the case of South Africa) are likely to be hostile to countries that supplied arms and technology, such as Israel.

Reports of sales to China and South Africa have indeed been politically costly to Israel. Such reports were leaked, apparently deliberately, by the US government in order to increase pressure on Israel. This activity was reported to be an obstacle to the agreement on American participation in the Arrow project.48 Following the publication of a series of intelligence leaks, President Bush was asked about these reports in a press conference held on October 28 1989. In his reply, he stated his opposition to the "transfer of any military technology that should not be transferred. And if that's taken place, it would not enhance relations between us, or any country that does that."49

In 1990, the US Congress enacted the Missile Technology Control Act, creating penalties for foreign firms that violate the MTCR guidelines. This provided the Administration with additional leverage to use against Israel. In October 1991, the Washington Post reported that "A U.S. official confirmed in Washington that State and Defense Department officials have cited the risk of Israeli missile technology transfers in seeking to bar Israel Aircraft Industries and other firms from competition for U.S. defense contracts or approval of import licenses for military technology."50 The penalties were waived by the Bush Administration (as provided for under the legislation) when Israel signed a bilateral agreement with the US that included the MTCR guidelines. (see discussion below). In addition, as noted, the transfer or sale of Israeli technology also carries the risk that it will be retransferred to the Arab states, as reported in the case of the Chinese missiles sold to Saudi Arabia.

Economically, civilian space exports and continued American funding for the development and production of ballistic missile defense systems such as the Arrow provide potential alternatives. Both programs could provide employment and growth in the Israeli aerospace industry, and allow for the maintenance of the infrastructure for the development and production of ballistic missiles. However, either alternative requires a long-term contract to insure continuation of the program for many years. If the United States commits itself to funding for the Arrow over a period of seven to ten years, including production, maintenance, and upgrading, this could provide a substantial alternative to the sale of missile technology. Similarly, if the Israelis were able to obtain a major contract for commercial launch services, this would also allow for the end to the sale of missile-related technologies to other countries. III. Export Structure

Historically, the framework for Israeli arms exports has been relatively loose. As is the case with other arms producers and exporters around the world, the emphasis is on sales over regulation. Most of the major firms and producers, and thus exporters, are government owned and are closely linked to and funded by the Ministry of Defense. The MOD operates SIBAT, the agency responsible for exporting arms and technology. In addition, each major firm, such as IAI, IMI, and Rafael has its own marketing unit, which often operates independently of SIBAT. Hundreds of retired generals are also involved in military exports, either as licensed agents, or representatives of Israeli and foreign firms. This multi-tiered structure was developed to encourage exports, and has been generally successful.

Formally, there have been a variety of mechanisms designed to regulate the sale of military technology and weapons, but in practice these frameworks have had a limited impact on policy. Since a leak could easily lead a potential customer to withdraw, secrecy is very important, and the number of people involved in decision making is very limited. In theory, all applications for exports require a MOD license, but these are often granted routinely after the negotiations have been completed, (except were a sale might compromise military secrets).

In 1983, a joint committee including representatives from the MOD, Foreign Ministry, and Ministry of Industry and Commerce was created. This committee, however, was dominated by the MOD, and there is little evidence that the Foreign Ministry played a significant role. In most cases, agreements were presented for formal approval once negotiations were completed and contracts had been initialled.51 (Ben-Gurion declared that arms sales would be approved 'in all cases where the Ministry of Foreign Affairs has no objection", placing the burden of proof on this ministry.)52

In 1986, following revelations about the role of private Israeli arms merchants in the Caribbean and Israeli connections to the Iran-Contra affair, the regulations were tightened. A permit from the Ministry of Defense is now required before negotiations can begin or exports can take place.53 As noted above, in March 1987, the Israeli government announced that no new contracts involving military sales and technology would be signed with South Africa. A subcommittee of the Knesset Committee on Defense and Foreign Affairs was created to exercise legislative oversight, but this subcommittee has only three members, and appears to have played a very limited role, if any.54

The sale and transfer of sensitive technologies involving the major firms is generally handled at a very high level, with the direct involvement of the Minister of Defense and even the Prime Minister. The negotiations with Iran and South Africa in the 1970s, and with China in the 1980s, were all under the direct control of the Minister of Defense. In 1991, Defense Minister Arens went to China, even before the establishment of diplomatic relations between the two states. The MTCR

Israeli research, development, and testing of ballistic missiles, as well as the transfer of technology have been a source of conflict with the United States for many years. Much of this conflict has been centered on the MTCR. Since this regime was created in 1987, the US government has pressured Israel to join, and to accept the limits on the transfer of ballistic missile technology as called for by this agreement. Israel, however, has resisted on the grounds that acceptance of the limitations of the MTCR was in its national interest. The economic cost would be substantial, and, proportionately, far greater than for any other country that has accepted the MTCR. In addition, there was no evidence that the MTCR was effective in stopping the flow of missiles to Israel's enemies in the region. Indeed, the technology and assistance provided by MTCR signatories such as Germany, Britain, and the US were instrumental in the development of the Iraqi missile program.55 The US government licensed the transfer of technology from Hewlett-Packard, Honeywell, Rockwell, and Tektronix for sale to Saddam Hussein's government. This technology was reportedly used in the Saad-16 complex where Iraq developed the technology and produced the extended-range Scud-B missiles that were fired at Israeli cities during the war.56 Other major suppliers were not members of the MTCR, including the Soviet Union, China, and North Korea.

Nevertheless, American pressure continued, and, in October 1991, after the US government threatened to ban Israeli firms such as IAI from conducting operations in the United States, the Israeli government agreed to accept the terms of the MTCR and signed a bilateral agreement with the U.S. to this effect. According to reports published in Israel, the government initially agreed to implement the terms of the agreement by the end of 1992, but the Bush Administration demanded implementation beginning at the end of 1991. Here again, the US position prevailed. In December 1991, the arms exporting agency of the Ministry of Defense (SIBAT) published regulations which required special Ministry of Defense approval for all missile technology, and a license from the Ministry of Commerce and Trade for potential dual-use technology.57

Acceptance of the terms of the MTCR, regulations which were issued, and the accompanying regulation and licensing mechanisms, created Israel's most extensive control system for exports of arms and military technology. The regulations are very specific and wide-ranging, and include limitations on the activities of Israeli nationals with experience in military technology from accepting employment in foreign-owned firms, (such as National Semiconductor and Motorola), which operate in Israel. SIBAT sent copies of the regulations to exporting firms, along with forms for the managers of these firms to sign and return. These forms include an acknowledgement of the receipt of the regulations, and a pledge to inform the Ministry of Defense of intentions to produce or export MTCR-related technologies.58

There has been criticism of the impact of the MTCR limitations on Israeli industry and science. One critic wrote that "Israel has an interest in exporting know-how. It would therefore have been expected that the authors of the regulations would have phrased them in a way which would have minimized the coverage [of the limitations]. But this is not the case. ... According to the regulations, an Israeli scientist working in the area of solid fuel for rockets would be prohibited from lecturing abroad about his research, even if this research had been published."59 In the Jerusalem Post, another author wrote that as a result of the bilateral agreement, "The bureaucratic procedures are tremendous. ... In a country where defense exports comprise a major segment of the national economy, the need for responsible export controls must be carefully weighed against the importance of preventing bureaucratic barriers from becoming too stringent."60

At the same time, the acceptance of the terms of the MTCR and their enforcement created expectations in Israel regarding the behavior or other supplier states, and the US in particular. Washington was expected to take more active military and diplomatic measures to stop proliferation of missiles to Arab states and to Iran. This proliferation became a major issue in Israel after the Gulf war, because of the terror which remained after six weeks of Iraqi missile attacks on Israeli cities and the constant threat of chemical weapons.

However, in the months which followed the Israeli agreement regarding the MTCR, the actions of the US and the other suppliers have not met the Israeli expectations. In March 1992, North Korean ships carrying Scud-C missiles, launchers, and equipment to manufacture these missiles, reached Iran and the missiles and launchers were transshipped to Syria. (The Syrian government received $2 billion from Saudi Arabia for joining the anti-Iraqi coalition, and used this money to purchase weapons. While the US was actively pressuring Israel to accede to the MTCR, the Syrian activity was not forcefully criticized in public by the Bush Administration. Economic sanctions on Syria were meaningless as the economic links with the US are minimal.) In August 1992, Israeli Prime Minister Rabin revealed that the missiles had already been deployed and tested.

The failure to prevent the delivery of these missiles or to respond to the tests was followed closely in Israel. The threat posed by the proliferation of missiles in the Middle East continues, and the failure to slow this process could have an important impact on the future of the MTCR in the region. (Another point of contention involves Israel's status in the MTCR structure. Some Israelis officials apparently expected the bilateral agreement to lead to formal membership in this regime.61 Israel applied for membership in 1992, but the US government did not provide the expected support. Thus, some Israelis noted that they were forced to pay the costs of the limitations, without gaining the political and other benefits.

Israel has also followed the "cat and mouse" game between Saddam Hussein and the UN inspectors which has taken place since the end of the Gulf War. Prior to and during the war, the US asked for Israeli "restraint" in response to the Scud missile attacks. The Bush administration pledged to destroy Iraqi missiles and chemical weapons. The cease-fire agreement of April 1991 specified a period of 120 days in which all of Iraq's non-conventional weapons, related materials, and production facilities would be destroyed under the verification of the United Nations. However, the speed with which the American troops withdrew from the area removed the incentives for Saddam Hussein to comply. Over a year passed, and the Iraqi capability, including hundreds of Scud missiles, an unknown number of launchers, and large-scale production facilities continue to exist. Although the UN inspectors made some apparent progress in March 1992, following the renewed threat of bombing, the Israeli concern will continue as long as the verified destruction of these weapons is incomplete.

The major achievement of American efforts with regard to missile proliferation in the Middle East appeared to be with respect to China, which had agreed to sell advanced solid-fuelled M- 9 missiles to Syria. The cost of the transaction is reported to be $285 million.62 The mobile launchers for these missiles were reported to have been delivered to Syria in 1991 or 1992, but the missiles did not appear.63 Repeated American pressure and threats of sanctions seemed to have persuaded Beijing to refrain from providing these missiles. The Chinese were also participating, albeit with apparent reluctance, in the Middle East arms control talks of the five permanent members of the UN Security Council (the "P-5").

In September 1992, however, George Bush suddenly announced the sale of 150 combat aircraft to Taiwan, in order to seek support in his reelection campaign. The Chinese responded angrily, and the Chinese Foreign Minister declared that his country was withdrawing from the P-5 talks. There were also reports that China would suspend limitations accepted under the MTCR guidelines, and might reinstate the sale of M-9 missiles to Syria. A few days later, Bush announced the sale of F-15s to Saudi Arabia, further undermining Middle East arms control efforts and the prospects for Chinese restraint.

Conclusions

The morality of arms sales to countries such as Iran under the Shah, South Africa, and China has been criticized, both within Israel and outside. Israeli government officials have rejected these moral accusations as hypocritical, charging that the billions of dollars of arms, including fighter aircraft, ballistic missile technology, and even materials for chemical and nuclear weapons which are sold by the US and Western European states to the Arab countries at war with Israel are morally unjustifiable. Indeed, Israelis note that their economic and military requirements provide a far stronger rationale for arms exports than can be found for American, German, or French sales. Israel would not need to develop ballistic missiles if other states did not continue to arm the Arabs with massive quantities of both conventional and unconventional weapons. Without the need for the Jericho, there would also be no exports.

Israel continues to be faced with clear threats to national survival, and these threats are expanding to include countries such as Iran, Libya, and Algeria. As long as the Arab and Islamic world denies the legitimacy of the Jewish state, and is able to acquire advanced weapons, including massive quantities of conventional arms, as well as non-conventional weapons and technology, the threat to Israel will continue. Israel will therefore rely on deterrence and the threat of massive retaliation to offset this threat of annihilation.

Ballistic missiles are an important aspect of this strategy, and the expense of these weapons will also force Israel to seek a means to recover some of the cost. Alternatives could be found, such as long-term joint development of the Arrow ATBM, or the availability of civil space contracts, but at present, neither can be considered likely.

Similarly, Israel continues to view regimes such as the MTCR with skepticism. The MTCR provides a global framework, designed to slow or stop the proliferation of missile technology over a period of years and even decades. In contrast, Israel's perspective is short-term and focused specifically on the Middle East. National security concerns are based on immediate threats to survival resulting from the proliferation of long-range ballistic missiles and weapons of mass destruction in the region. To date, global regimes, such as the NPT, the London Supplier's group, and the MTCR have not succeeded in preventing proliferation in the Middle East. Iraq acquired a significant nuclear threat while under IAEA inspections. Since the MTCR was created in 1987, the signatories, led by the United States, have failed to prevent Iraq, Syria, Saudi Arabia, or Iran from acquiring long-range ballistic missiles.

The Israeli ballistic missile capability, and thus, the need to export this technology, is the result of the threat to national survival posed by the Arab and Islamic states. Ultimately, the reduction or even end to the military threat is the best and only sure means of preventing Israeli missile development and exports. References and Notes:

0- Munya Mardor, Rafael (Hebrew), Ministry of Defense Publishers, Tel Aviv, 1981, p.225-294; see also Stewart Reiser, The Israeli Arms Industry, Holmes and Meier, New York, 1989, pp.60-63

1- "Missile Proliferation: Survey of Emerging Missile Forces", Congressional Research Service, Washington D.C., February 9, 1989, p.56

2- See Gerald Steinberg, "Israel: high technology roulette" in Arms Production in the Third World, edited by Michael Brzoska and Thomas Ohlson, Stockholm International Peace Research Institute (SIPRI), Stockholm, Sweden, Taylor and Francis, 1986, pp. 163-193; also Stewart Reiser, The Israeli Arms Industry.

3- Jane's Weapons Systems,1981-2, p.373, cited by Reiser, fn. p.224

4- Steve Fetter, "Ballistic Missiles and Weapons of Mass Destruction", International Security, Summer 1991, Vol.16, No. 1

5- Fetter; see also "Missile Proliferation: Survey of Emerging Missile Forces", CRS, Washington D.C., February 9, 1989

6- Marvin Feuerwerger, The Arrow Next Time? Israel's Missile Defense Program for the 1990s, The Washington Institute for Near East Policy, Washington DC 1991.

7- Steve Fetter, "Ballistic Missiles and Weapons of Mass Destruction". Fetter assumes that the Jericho 2 consists of the first 2 stages of the Shavit.

8- Jane's Defence Weekly, March 16, 1991, p.379

9- Ha'aretz, March 27, 1992

10- For a history of the Israeli defense industry, see Shimon Peres, David's Sling, New York, Random House, 1970; Yigal Allon, Shield of David: The Story of Israel's Armed Forces, London, Widenfield and Nicolson, 1970; also Stewart Reiser, The Israeli Arms Industry, and Gerald Steinberg "Israel: High-Technology Roulette".

11- See Aharon Klieman, Israel's Global Reach: Arms Sales as Diplomacy, New York, Brassey's, 1985.

12- Aharon Klieman, Israel's Global Reach: Arms Sales as Diplomacy, p.97; and Ian Anthony, editor Arms Export Regulations, SIPRI, Oxford University Press, 1991.

13- For an analysis of Israeli deterrence policy, see Avner Yaniv, Deterrence Without the Bomb, Lexington Books, Lexington, Mass., 1987; and Shai Feldman, Israeli Nuclear Deterrence, New York, Columbia University Press, 1982.

14- Assessing Ballistic Missile Proliferation and Its Control, Center for International Security and Arms Control, Stanford University, November 1991, p.68. See also Aaron Karp, "Ballistic Missile Proliferation", 1990 SIPRI Yearbook, Oxford University Press, 1990, pp. 376-7.

15- Martin Navias, Ballistic Missile Proliferation in the Third World, Adelphi Ppaer 252, IISS, London, Summer 1990.

16- Assessing Ballistic Missile Proliferation and Its Control, Center for International Security and Arms Control, Stanford University, November 1991, pp.68-69. See also Navias, p.30, and the chapters on Egypt and Korea in this volume.

17- Aaron Karp, "Ballistic Missile Proliferation", SIPRI Yearbook, 1991, World Armaments and Disarmament, Oxford University Press, 1992

18- Gerald Steinberg, "Two Missiles in Every Garage: The Proliferation of Ballistic Missile Technology", Bulletin of Atomic Scientists, Vol. 29, No. 8, October 1983, pp. 43-48.

19- Ibid. See also the chapters on Iraq in this volume.

20- For war fighting, the Israelis continue to rely on their air force, which is more cost effective. The absence of any public discussion about ballistic missile capability eliminates the potential role of prestige as a motivating factor.

21- For a detailed analysis of Israeli arms exports, see Klieman, Israel's Global Reach.

22- After the Iranian Revolution and the overthrow of the Shah, there were a few small Israeli arms shipments, largely in the context of the "Iran-Contra" affair. The objective of these transactions was not commercial, but rather was essentially political. The Israeli government sought to reestablish links with Iran, despite the Islamic fundamentalist government, and to provide military support for Iran to prevent an Iraqi victory in the Gulf War.

23- CRS, February 1989

24- Text of the minutes of a meeting between Israeli Minister of Defense Ezer Weizmann and Iranian Minister of War Toufanian on 18 July 1977, reproduced by the Iranian government in Den of Spies from documents found at the U.S. Embassy and the Israeli Interests Office, Teheran. The Hebrew translation was published in Ma'ariv on April 18, 1986.

25- See Chapter on Iran in this volume.

26- The Israeli government maintains very strict control on official publication or public statements regarding exports of military technology in general, and missiles and missile-technology in particular. As a result, most of the information which exists on this subject is based on non-Israeli sources. Many of these are inaccurate, and false information is deliberately planted as part of the anti-Israeli political campaign of the Arab states and the Palestinians. Reports of journalists and intelligence services, including the CIA, have often proved inaccurate or distorted.

27- Report of Secretary of State George Schultz to the US Congress, cited by Landgren; see also R. Pedhazur, Ha'aretz, Nov. 10, 1991, p.3

28- S. Landgren, Embargo Disimplemented: South Africa's Military Industry, SIPRI, Oxford University Press, 1989, p.103

29- Financial Times, May 24 1991, p.1,6

30- Landgren, Embargo Disimplemented, p.103

31- Landgren, p.109

32- Washington Post, October 27 1991, p.1

33- Ha'aretz, March 20, 1992, p.1

34- Ha'aretz, 26.10.1987, p.9

35- Ha'aretz, July 15, 1991, p.3B

36- Washington Post, October 27 1991, p.1

37- See NAVINT, Vol. 3, No. 22 Nov. 8, 1991, p.1

38- Aaron Karp, "Ballistic missile proliferation", SIPRI Yearbook: World Armaments and Disarmament, Oxford University Press, 1981.

39- Davar, October 24, 1986 pp. 5-7, citing Jane's Defense Weekly, December 1984

40- Cited by Al-Hamishmar (Hebrew), April 3 1988

41- Ha'aretz December 19 1991

42- Economist, March 23 1991, p.50

43- Jackson Diehl, Washington Post, November 20, 1991

44- United States Deparment of State Office of Inspector General, Report of Audit: Department of State Defense Trade Controls, Washington DC, March 1992

45- Report of Audit, p.36

46- See Chapter on Iran in this volume.

47- While there are some Israeli sales to Taiwan, Singapore and Sri Lanka, these are limited to small arms and do not include major systems or ballistic missile technology. Similarly, Israeli firms have sold ammunition and spare parts to Western Europe, but again, these sales are limited in scope.

48- Reuven Pedhazur, Ha'aretz, July 15, 1991, p.3

49- Transcript, NBC Nightly News, Defense-Dialog, US Department of Defense, Washington DC, October 30, 1989.

50- Washington Post October 4 1991

51- Klieman, pp.92-122

52- New York Times, Dec. 7, 1986, cited by Anthony

53- Kleiman, pp.94-96; see also Ian Anthony, SIPRI

54- See Ha`aretz, 17 March, 1992, p.5a

55- Mike Eisenstadt, "The sword of the Arabs: Iraq's Strategic Weapons Washington Institute for Near East Policy, Washington DC 1990

56- Gary Milholin, "Building Saddam Hussein's Bomb", New York Times Magazine, March 8, 1992

57- Ha'aretz, April 12, 1992

58- Ha'aretz, April 12, 1992

59- Arye Niger, "Not Every Detail Requires a Permit", Ha'aretz, March 19, 1992

60- Brent C. Mitchell, "Giving arms exporters a helping hand", Jerusalem Post, April 23, 1992

61- There is a great deal of confusion regarding the MTCR and Israeli expectations. Apparently accepting the American position, Defense Minister Arens said that "We are not talking exactly about joining it, but about declaring that we adopt its principles." (JPRS-TND-91- 016 Near East and South Asia 29 October 1991, p.40) However, a few months later, Israel did apply for membership, and Israeli officials expected American support.

62- Milavnews, March 1991, p. 23

63- Ha'aretz, July 7, 1992