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The U.S. Role in Israel's Arms Industry
Research and Development The United States has promoted, and at times even funded, Israeli military research and development. Annex A of the March 1979 U.S.-Israeli Memorandum of Agreement provided for cooperative research and development programs, while the 1984 Memorandum of Agreement provided for cooperation with the U.S. Air Force on air-to-air and air-to-surface weapons, electro-optic technology, tactical communications, chemical warfare defenses and electronic warfare. According to Lt. Gen. Louis Wagner, Army deputy chief of staff for research, development and acquisition.24 U.S. Army cooperative efforts, under the terms of the MOA, centered on data exchanges and government-to-government programs. In order to facilitate and explore the potential of U.S.-Israeli cooperation in the area of R&D, the Israeli Embassy in Washington, D.C., organized a two day conference in June 1986. The conference, hosted by the Israeli military attache, Maj. Gen. Uri Simchony, brought together Israeli and American speakers who addressed a selected group of U.S. businessmen interested in promoting R&D cooperation in electronics, electro-optics, metal work, lasers, computers and computer software.25 A month later, Israel revealed that it was seeking R&D funding from the U.S. similar to that granted to NATO countries.26 Part of the U.S. funding of Israeli R&D comes from the recycling of a portion of Israel’s loan payments. In addition, since 1977 the U.S.-Israeli Binational Research and Development Foundation, commonly nicknamed Bird-F, has been a major conduit of financing for Israeli companies interested in developing and manufacturing products specified by U.S. business.27 Other funding has been traced directly to the U.S. military establishment. In an April 1986 interview, the President of the Technion, Israel’s leading institute of technology, stated that “for years Technion research has been funded by the U.S. Air force ...”28 A potentially large source of funding for Israeli R&D presented itself when, in March 1983, President Ronald Reagan formally announced plans for the Strategic Defense Initiative (SDI), commonly known as Star Wars. The U.S. invited 18 countries to participate in the $26 billion SDI research program, aimed at establishing a deterrent force to protect against enemy missile attacks. In May 1986, Israel became the first non-NATO and only the third country, in addition to Britain and West Germany, to agree to participate in the program. A Memorandum of Understanding (MOU) was then signed between the countries governing Israel’s participation. The MOU gave Israel the right to compete with other participating countries for SDI research contracts. Shortly after the signing of the MOU, Lt. Gen. James Abrahamson, director of SDI, announced that two research contracts had been signed with Israel and three were expected to be signed soon afterwards for a total of approximately $10 million. More importantly, no ceiling was set for the monetary value of the research contracts that Israel could compete for.29 By mid-1987, Israel was about to win the largest-ever defense contract from the U.S. The $100 million contract would involve the development of a new anti-tactical ballistic missile (ATBM). Israel Aircraft Industries (IAI) and a host of other smaller Israeli companies would be the main contractors for what is officially called the “Arrow” project. U.S. sources considered the contract a major breakthrough in U.S.-Israeli military cooperation, since the deal involved the latest defense technology of SDI.30 Aside from keeping abreast of the technologies central to a tactical missile system (perceived by Israel as vital because of Syria’s acquisition of highly accurate SS-21 missiles, which are capable of reaching Israeli targets), Israel believes that participation in the SDI research will greatly enhance its industrial future. Being at the forefront of the SDI technological revolution could have positive spinoff effects on new computer systems, energy sources, communication devices and many other consumer products.31 Joint Ventures and Subsidiary Relationships
U.S. technology has been instrumental in the development of Israel’s domestic arms industry. According to Aaron Klieman, author of Israel’s Global Reach: Arms Sales as Diplomacy: The Americans have made virtually all their most advanced weaponry and technology--meaning the best fighter aircraft, missiles, radar, armor, and artillery--available to Israel. Israel, in return, has utilized this knowledge, adapting American equipment to increase its own technological sophistication, reflected tangibly in Israeli defense offerings.32 The basis for the technology transfer is set out in the Master Defense Development Data Exchange Agreement, which was signed by the U.S. and Israel in December 1970. Under the terms of this and other forementioned agreements, the U.S. has provided Israel with an unspecified but substantial number of complete technical data packages, at no charge or at nominal prices.33
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