Negative Impact of US Defense Aid On Israel

IMRA
By Nino Levy, PhD, Professor of Systems Engineering

At first glance, the article “Poland to buy US Patriot system with Israeli-made David’s Sling missiles” by Udi Etzion, published on 09.07.17 (Ynet News) looks like excellent news for Israel, for its defense industry and as a source of pride for the Israeli people.

In fact, it proves the disastrous effect of the long-standing addiction of all Israeli administrations to the “generous American foreign military aid”.

Israel did not need American knowhow to develop “David’s Sling” or the Arrow missile defense systems. The Israeli defense industry is perfectly competent do this on its own, as demonstrated by the successful development of “Barak 8”, “Iron Dome” or the “Phalcon” AWACS system.

Instead of funding the development of David’s Sling” and “Arrow”, the Israeli administrations prefer seeking American funding for “Joint Development” of these systems “with American companies Like Raytheon, Lockheed and others.

Since the development of complex systems in the US costs often 10 times more than in Israel, it is a very relevant question whether the fraction of the Israeli funding of the program is not more expensive than the cost of doing the whole R&D work alone?

One thing is certain: the moment American funding is involved, the American administration will always protect the interests of the American industries. It will ban Israeli companies from offering jointly developed systems, that may compete with American companies in the world markets.

In the case of Poland, the article states:

… “while David’s Sling interceptor missiles will be included in the deal, the missile defense system itself, as well as the Israel Aerospace Industries’ (IAI) Arrow system, were barred by Washington from bidding in the Polish tender. The American administration, which funded the development of both Israeli-made systems, did not approve their export to Warsaw”.

So, Rafael got a contract for one billion dollars and lost the opportunity to sale the “David’s Sling” system for at least 4 billion. Could Rafael compete successfully against Raytheon that won the contract for 7.6 billon dollars? In a fair competition, the answer is definitely yes. Quote:

“Poland demanded the Israeli interceptor missile, which was developed with Raytheon and is marketed in the world under the name “SkyCeptor,” because of its better performance compared to the American Patriot interceptor and its considerably lower price, which stands at only 10 percent of the price of the American counterpart—$450,000 compared to $4.5 million”.

The other two major sub-systems of “David’s Sling”; the Radar and the Command and Control Center are as good or better than Raytheon’s and certainly less expensive.

The case of the lost opportunity in Poland is just one of many cases of opportunities, worth tenths of billions of dollars, lost because of our addiction to American Military Aid. Depending on it might have been necessary in the 1980’s with the state of Israeli economy at that time. It’s not economically justified today.

In the 1980’s American administration supported the joint funding of the “Lavi” fighter aircraft until it became apparent that the “Lavi” may become a serious competitor to “Lockheed”.

Similarly, the American administration did not object to the sale of the “Phalcon” AWACS system to China, until it became apparent that it may become a serious competitor to “Boeing”. In that case, no American funding was involved.

However, the American administration objected the transfer of American technology to China.

Being intimately involved with the development of the “Phalcon”, I am sure that no proprietary American technology was used in this program. What is certain is that Israel lost the opportunity to sale number of such systems to China, valued at billions of dollars.

We should have learned by now that the American administration will always take care of the interest of the American industries, and rightly so.

The question is when the Israeli administration will learn to take care of the long-term interests of the Israeli industries?

I don’t think that our administration is full of the “penny wise- dollar stupid” types. Most people probably see and some even understand the picture described above. However, there are strong political obstacles that no administration dares to challenge.

First, adding close to one billion dollars to the defense annual budget for the development of advanced weapon systems can hardly be accepted by the prevalent public opinion demanding to restrain defense expenditures.

Using American Foreign Aid money works like opium drugs to calm the public and prevent painful debates about the need to rationalize the defense expenses. Politicians prefer short term populistic attitudes rather than engagement in a tough campaign to defend the long term economic benefits of independence in this strategic field.

Second, politicians shy from the possibility of offending our American friends by competing with the American industry. No one doubts the importance of keeping strong friendly relations with the US. The question is why England, France and Germany can have strong friendly relations with the US and at the same time have no restrains in competing with US firms?

The answer is our dependence on the American Aid opium. Detoxification is a painful but necessary process to cure the body from the effects of the addiction. The process needs to be gradual to avoid the shock of an abrupt interruption. But it must be defined within a reasonable time frame and leading to the firm objective of zero foreign military aid.

Our economy can afford the detoxification even today. The American Military Aid Israel gets is widely known to be the highest any country receives from the American tax payer. But it amounts to less than 2% of our GDP. With determination and good will it can be absorbed within our budget.

The sooner we step down from the back of the American tax payer, the better our image in the American public opinion. This will be an important step to strengthen our independence and gain the respect of friends and enemies abroad.

It might be disturbing to some American politicians to lose a most convincing argument about their support to Israel, but they will have ample opportunity to demonstrate their friendship to Israel in other fields, and we shall always be grateful for their support.