The Undercurrents of the Submarine Affair
The so-called Submarine Affair, regarding which the Attorney General has ordered a police investigation this week, is a mixture that combines rumors, suspicions and speculations with facts. Amir Rapaport puts some order into the details through a series of Q&A
Amir Rapaport
| 25/11/2016
Photo: IDF
The new submarine transaction with Germany was reported here for the first time on October 14, and has evolved into an obsessive witch hunt pursuant to the revelations by journalist Raviv Drucker regarding the involvement of the Prime Minister's personal attorney, David Shimron. As in previous affairs, the submarine transaction has also evolved into a red-hot political and media issue that combines rumors, suspicions and speculations with facts. Some of the real details will only be disclosed in future revelations by the media or through police investigations, but things must be put in proper order right now, as to which of the numerous reports are truthful and what the proper context of the facts really is.
1. The current submarine transaction – is it one of those rare situations where the political echelon decides contrary to the position of the defense establishment?
This repeated allegation is false for two main reasons. First of all, such things have happened before, more than once. It is a recurring pattern: with regard to mega-transactions, the political echelon imposes its position on the military echelon. If the objection is tactical and stems from budget-related considerations – the defense establishment will always prefer to have such transactions financed by special government-issued budgets rather than by their current budget. In the event that the objection stems from purely substantial and professional considerations, past experience has shown that the inherent tendency to prioritize urgent, concrete needs had sometimes yielded absurd situations: the Arrow system, for example, and even the Iron Dome system were forced on the IAF.
Moreover, none of the previous submarine transactions were supported by the military. IDF had purchased the first three submarines toward the end of the previous millennium and two additional submarines in 2012, with submarines #4 and #5 delivered in the last year. The transaction regarding the sixth submarine, scheduled to be delivered in 2019, was concluded despite the strong opposition of the IDF Navy, but was a reasonable implementation of a financial option.
2. The manner in which the submarine transaction was decided upon raises suspicions.
Admittedly, the process was "unusual". A Rashomon effect of multiple conflicting versions is under way, but a comparative analysis of the various versions indicates that the issue was addressed by the National Security Council (NSC), subordinated directly to the Prime Minister, in December 2015. In a discussion attended by the representative of the defense establishment, the position of that establishment, led by Minister of Defense Moshe Ya'alon, according to which IDF were not interested in more than five submarines simultaneously, was voiced very clearly. Accordingly, the oldest submarine should be phased out when the sixth submarine has been delivered. The position voiced at that meeting was that additional submarines would be acquired when submarines #2 and #3, delivered in 2000, have approached the end of their service life, namely – in 2030, and that it was too early to address the issue.
Nevertheless, the Prime Minister intended to conclude a deal with Germany for the acquisition of three additional submarines during his visit to Berlin in February of this year. According to the people of Ya'alon, the Minister of Defense prevented that in an angry telephone conversation, after having been informed at the very last moment by the National Security Council. The conversation started while Netanyahu was boarding his aircraft. The two agreed that no binding agreement regarding the acquisition would be signed with Germany and that at most – a memorandum of understanding would be signed. Eventually, no document was signed during that visit. By May, Ya'alon was out of the picture as Avigdor Lieberman had replaced him as Minister of Defense.
This conduct raises suspicions as with other mega-transactions, the processes took much longer to complete. For example, in the context of the transaction involving the F-35 future fighters designated Adir, scheduled to arrive at Nevatim IAF base in about two weeks, numerous meetings had been held, including cabinet meetings. Additionally, a transaction that is much smaller than the submarine transaction – the one involving the acquisition of self-propelled gun systems at the cost of one billion ILS, has been under discussion in IDF for many years. It is ironic that over the last few days, the Israel Ministry of Defense has consolidated a recommendation to purchase the new gun system from Elbit Systems of Israel, rather than from KMW of Germany, which offered a competing gun system through a joint venture with IAI.
3. Is there any particular reason to sign an agreement with Germany years prior to the actual need to replace the first-generation Dolphin-class submarines, according to the position of IDF?
Yes, only if it is intended to increase the submarine fleet from 5 to 8 submarines – a completely unreasonable move according to the IDF Navy – or to take advantage of the fact that the current German government, headed by Chancellor Angela Merkel, is very sympathetic to Israel. That government is prepared to finance one third of the cost of the transaction, estimated at 1.5 billion US dollars. No one can guarantee that future German governments will be equally sympathetic to Israel.
4. What is the German interest behind their intention to give Israel such a generous gift?
The German objective is to keep the shipyards working. Incidentally – the German shipyards in question have been acquired by an Arab consortium from the Persian Gulf. Traditionally, Germany's submarine building capabilities – and the need to maintain these capabilities – are conceived as a strategic interest. Additionally, the present German government is truly sympathetic to Israel's national security needs, especially with regard to a weapon system which, according to foreign reports, should provide Israel with a 'second strike' capability using nuclear missiles from the sea, in the event that it had come under a nuclear attack by Iran. Chancellor Merkel is deeply committed – based on her profound religious faith – to securing Israel's survival.
5. So what is Israel actually acquiring in Germany these days?
Owing to Ya'alon's objection in that telephone conversation, the intention to acquire two Anti-Submarine Warfare vessels was taken off the agenda, but two weeks ago a memorandum of understanding – not an agreement – was signed with Germany regarding the acquisition of three submarines. As it is merely an MOU, negotiations with the Germans have not started yet – neither with regard to cost nor with regard to the characteristics of the future submarines. According to the position of the IDF Navy, the future submarines will not be the same as the Dolphin-class submarines currently in use. Instead, they will have completely new specifications which are yet to be determined.
According to foreign sources, Israel's Dolphin-class submarines possess a 'second strike' capability, namely – they can launch nuclear missiles into enemy territory even if Israel had been attacked by nuclear weapons and its ground bases were destroyed. The new and improved version is ten meters longer than the older version, and the extension accommodates state-of-the-art combat management systems and enables longer underwater endurance.
The Dolphin-class submarines have a displacement of about 1,900 tons. They are based on the German A212 submarine and fitted with 10 torpedo launchers. According to reports in the foreign press, they can accommodate underwater vehicles. Based on the same reports, Israel adapted the 650mm torpedo tubes of the Dolphin-class submarines so that they may be used to launch cruise missiles fitted with nuclear warheads. As stated, the future submarines will be built according to new specifications.
6. Is Brig. Gen. (res.) Avriel Bar-Yosef, who's currently the subject of an investigation by the Israel Police, a key figure in this affair?
Apparently, yes. The questions begin with the very decision to appoint Bar-Yosef as the next head of NSC. As we reported last March, this appointment was delayed pursuant to a document submitted by the OMETZ Movement prior to the media investigation in this matter. Bar-Yosef served as deputy head of NSC in the past, and prior to that he had served as a consultant to the Knesset Foreign Affairs & Defense Committee. During his IDF service, he was head of the IDF Navy Equipment Division. His resume does not measure up to the records of former heads of NSC, including such former Major-General officers as David Ivry, Giora Eiland and Yaakov Amidror or prominent former Mossad figures like Uzi Arad and Yossi Cohen.
The letter protesting Bar-Yosef's appointment was based on the testimony of an Israeli businessman who was the representative of a German businessman. According to the Israeli businessman, Bar-Yosef had replaced him in that position, and received various benefits from that businessman while he was serving as deputy head of NSC. He further alleged that at the same time, Bar-Yosef was deeply involved in activities in which the German businessman could be keenly interested, like the establishment of a gas liquefaction facility on the Israeli shore and transactions involving the acquisition of submarines and surface vessels from Germany. The document included various other severe allegations, and it was forwarded to the State Comptroller as well. These allegations are currently at the center of the police investigation regarding Bar-Yosef, who waived his appointment last summer. Consequently, throughout 2016 the National Security Council has not had a permanent head. The business dispute that yielded the documents that implicated Bar-Yosef now yields documents regarding the Submarine Affair.
7. Who should deal with the acquisition of submarines, the National Security Council at the Prime Minister's Office, or the IDF Planning Division?
The National Security Council should consolidate broad-perspective recommendations for the Prime Minister and the cabinet, which are to include the military considerations. The above notwithstanding, the number of submarines in IDF service, viewed through a long-term perspective, is clearly an issue to be addressed by the IDF Planning Division, as submarines are the IDF's costliest weapon system. Nevertheless, the last time when the submarine issue was addressed by the IDF Planning Division was in the context of the 'Gideon' long-term plan that came into effect in 2014. According to the 'Gideon' plan, IDF were not intended to initiate any new submarine acquisition plan beyond the sixth submarine that had already been decided upon.
8. Is the involvement of Attorney David Shimron in the transaction improper?
An attorney may be involved in such a transaction. Suspicions of corruption arise with regard to most major arms transactions worldwide, including transactions by Israeli parties operating overseas, which were reported quite often by the media in various countries and even generated investigations – as in the case of the mega transactions Israel made with Kazakhstan and Georgia.
The real problem concerns the involvement of a private law firm in sensitive affairs of state. In this context, a cause of particular discomfort is the fact that Shimron's partner, Attorney Yitzhak Molcho, serves as the Prime Minister's personal envoy in highly sensitive diplomatic situations worldwide, particularly in the Arab world, and possibly opposite Germany as well.
9. Who are you, Miki Ganor?
Ganor is the Israeli representative of the ThyssenKrupp Group of Germany, the manufacturer of the submarines. Ganor is one of thousands of agents, many of whom are former functionaries of the defense establishment, from Israel and around the world, who broker deals, utilize their connections and generate handsome profits from transactions such as the previous submarine transaction. Unlike the usual profile of such agents, Ganor is involved primarily in real estate. In many cases, there is 'bad blood' between rival agents. The police investigators can count on that rivalry for the purpose of collecting information regarding the current affair.
10. Is there a connection between the Submarine Affair and the transactions involving the acquisition of four surface vessels from Germany, for the purpose of defending Israel's economic waters? This week, Channel 10 reported the contents of an E-Mail message sent by the legal counsel of IMOD, in which he reported to the Director General the involvement of Attorney Shimron on behalf of the German corporation.
There is no connection to the submarine transaction, but Attorney Shimron represented agent Miki Ganor in the context of the economic water transaction, too. For that transaction, an international tender was conducted, but the German shipyards were selected despite the fact that they had not participated in the tender – because it agreed to make a better offer. The document implies that Attorney Shimron had mentioned the Prime Minister in his contact with IMOD on behalf of the German shipyards. Officials involved in the transaction now claim that "The surface vessel transaction also involved some irregular processes" (Shimron's response to Channel 10: "I said nothing about the Prime Minister to Attorney Ben-Ari, and I had no idea of the Prime Minister's involvement in the matter of the surface vessels.")
11. What is the scope of the surface vessel transaction?
According to various estimates, the scope of the surface vessel transaction is about 430 million Euro. About one third of that amount will be financed by a special grant from the German government in the amount of 115 million Euro. Not only will one third of the cost be financed by German taxpayers' money, but the German government has an interest in providing work to the shipyards in Kiel, and that is another reason for the generous gift. The Germans also committed to offset purchasing (industrial cooperation) transactions in the amount of 700 million ILS from Israel. Incidentally, the German government was furious about the way the Israeli negotiators conducted themselves with regard to this transaction, which the Germans regarded as "extortionate", and almost withdrew their support.
12. Was the Prime Minister aware of Shimron's involvement in the submarine transaction?
That is the most pressing question of all. Both the Prime Minister and his attorney have promptly denied this allegation.
The so-called Submarine Affair, regarding which the Attorney General has ordered a police investigation this week, is a mixture that combines rumors, suspicions and speculations with facts. Amir Rapaport puts some order into the details through a series of Q&A
Photo: IDF
The new submarine transaction with Germany was reported here for the first time on October 14, and has evolved into an obsessive witch hunt pursuant to the revelations by journalist Raviv Drucker regarding the involvement of the Prime Minister's personal attorney, David Shimron. As in previous affairs, the submarine transaction has also evolved into a red-hot political and media issue that combines rumors, suspicions and speculations with facts. Some of the real details will only be disclosed in future revelations by the media or through police investigations, but things must be put in proper order right now, as to which of the numerous reports are truthful and what the proper context of the facts really is.
1. The current submarine transaction – is it one of those rare situations where the political echelon decides contrary to the position of the defense establishment?
This repeated allegation is false for two main reasons. First of all, such things have happened before, more than once. It is a recurring pattern: with regard to mega-transactions, the political echelon imposes its position on the military echelon. If the objection is tactical and stems from budget-related considerations – the defense establishment will always prefer to have such transactions financed by special government-issued budgets rather than by their current budget. In the event that the objection stems from purely substantial and professional considerations, past experience has shown that the inherent tendency to prioritize urgent, concrete needs had sometimes yielded absurd situations: the Arrow system, for example, and even the Iron Dome system were forced on the IAF.
Moreover, none of the previous submarine transactions were supported by the military. IDF had purchased the first three submarines toward the end of the previous millennium and two additional submarines in 2012, with submarines #4 and #5 delivered in the last year. The transaction regarding the sixth submarine, scheduled to be delivered in 2019, was concluded despite the strong opposition of the IDF Navy, but was a reasonable implementation of a financial option.
2. The manner in which the submarine transaction was decided upon raises suspicions.
Admittedly, the process was "unusual". A Rashomon effect of multiple conflicting versions is under way, but a comparative analysis of the various versions indicates that the issue was addressed by the National Security Council (NSC), subordinated directly to the Prime Minister, in December 2015. In a discussion attended by the representative of the defense establishment, the position of that establishment, led by Minister of Defense Moshe Ya'alon, according to which IDF were not interested in more than five submarines simultaneously, was voiced very clearly. Accordingly, the oldest submarine should be phased out when the sixth submarine has been delivered. The position voiced at that meeting was that additional submarines would be acquired when submarines #2 and #3, delivered in 2000, have approached the end of their service life, namely – in 2030, and that it was too early to address the issue.
Nevertheless, the Prime Minister intended to conclude a deal with Germany for the acquisition of three additional submarines during his visit to Berlin in February of this year. According to the people of Ya'alon, the Minister of Defense prevented that in an angry telephone conversation, after having been informed at the very last moment by the National Security Council. The conversation started while Netanyahu was boarding his aircraft. The two agreed that no binding agreement regarding the acquisition would be signed with Germany and that at most – a memorandum of understanding would be signed. Eventually, no document was signed during that visit. By May, Ya'alon was out of the picture as Avigdor Lieberman had replaced him as Minister of Defense.
This conduct raises suspicions as with other mega-transactions, the processes took much longer to complete. For example, in the context of the transaction involving the F-35 future fighters designated Adir, scheduled to arrive at Nevatim IAF base in about two weeks, numerous meetings had been held, including cabinet meetings. Additionally, a transaction that is much smaller than the submarine transaction – the one involving the acquisition of self-propelled gun systems at the cost of one billion ILS, has been under discussion in IDF for many years. It is ironic that over the last few days, the Israel Ministry of Defense has consolidated a recommendation to purchase the new gun system from Elbit Systems of Israel, rather than from KMW of Germany, which offered a competing gun system through a joint venture with IAI.
3. Is there any particular reason to sign an agreement with Germany years prior to the actual need to replace the first-generation Dolphin-class submarines, according to the position of IDF?
Yes, only if it is intended to increase the submarine fleet from 5 to 8 submarines – a completely unreasonable move according to the IDF Navy – or to take advantage of the fact that the current German government, headed by Chancellor Angela Merkel, is very sympathetic to Israel. That government is prepared to finance one third of the cost of the transaction, estimated at 1.5 billion US dollars. No one can guarantee that future German governments will be equally sympathetic to Israel.
4. What is the German interest behind their intention to give Israel such a generous gift?
The German objective is to keep the shipyards working. Incidentally – the German shipyards in question have been acquired by an Arab consortium from the Persian Gulf. Traditionally, Germany's submarine building capabilities – and the need to maintain these capabilities – are conceived as a strategic interest. Additionally, the present German government is truly sympathetic to Israel's national security needs, especially with regard to a weapon system which, according to foreign reports, should provide Israel with a 'second strike' capability using nuclear missiles from the sea, in the event that it had come under a nuclear attack by Iran. Chancellor Merkel is deeply committed – based on her profound religious faith – to securing Israel's survival.
5. So what is Israel actually acquiring in Germany these days?
Owing to Ya'alon's objection in that telephone conversation, the intention to acquire two Anti-Submarine Warfare vessels was taken off the agenda, but two weeks ago a memorandum of understanding – not an agreement – was signed with Germany regarding the acquisition of three submarines. As it is merely an MOU, negotiations with the Germans have not started yet – neither with regard to cost nor with regard to the characteristics of the future submarines. According to the position of the IDF Navy, the future submarines will not be the same as the Dolphin-class submarines currently in use. Instead, they will have completely new specifications which are yet to be determined.
According to foreign sources, Israel's Dolphin-class submarines possess a 'second strike' capability, namely – they can launch nuclear missiles into enemy territory even if Israel had been attacked by nuclear weapons and its ground bases were destroyed. The new and improved version is ten meters longer than the older version, and the extension accommodates state-of-the-art combat management systems and enables longer underwater endurance.
The Dolphin-class submarines have a displacement of about 1,900 tons. They are based on the German A212 submarine and fitted with 10 torpedo launchers. According to reports in the foreign press, they can accommodate underwater vehicles. Based on the same reports, Israel adapted the 650mm torpedo tubes of the Dolphin-class submarines so that they may be used to launch cruise missiles fitted with nuclear warheads. As stated, the future submarines will be built according to new specifications.
6. Is Brig. Gen. (res.) Avriel Bar-Yosef, who's currently the subject of an investigation by the Israel Police, a key figure in this affair?
Apparently, yes. The questions begin with the very decision to appoint Bar-Yosef as the next head of NSC. As we reported last March, this appointment was delayed pursuant to a document submitted by the OMETZ Movement prior to the media investigation in this matter. Bar-Yosef served as deputy head of NSC in the past, and prior to that he had served as a consultant to the Knesset Foreign Affairs & Defense Committee. During his IDF service, he was head of the IDF Navy Equipment Division. His resume does not measure up to the records of former heads of NSC, including such former Major-General officers as David Ivry, Giora Eiland and Yaakov Amidror or prominent former Mossad figures like Uzi Arad and Yossi Cohen.
The letter protesting Bar-Yosef's appointment was based on the testimony of an Israeli businessman who was the representative of a German businessman. According to the Israeli businessman, Bar-Yosef had replaced him in that position, and received various benefits from that businessman while he was serving as deputy head of NSC. He further alleged that at the same time, Bar-Yosef was deeply involved in activities in which the German businessman could be keenly interested, like the establishment of a gas liquefaction facility on the Israeli shore and transactions involving the acquisition of submarines and surface vessels from Germany. The document included various other severe allegations, and it was forwarded to the State Comptroller as well. These allegations are currently at the center of the police investigation regarding Bar-Yosef, who waived his appointment last summer. Consequently, throughout 2016 the National Security Council has not had a permanent head. The business dispute that yielded the documents that implicated Bar-Yosef now yields documents regarding the Submarine Affair.
7. Who should deal with the acquisition of submarines, the National Security Council at the Prime Minister's Office, or the IDF Planning Division?
The National Security Council should consolidate broad-perspective recommendations for the Prime Minister and the cabinet, which are to include the military considerations. The above notwithstanding, the number of submarines in IDF service, viewed through a long-term perspective, is clearly an issue to be addressed by the IDF Planning Division, as submarines are the IDF's costliest weapon system. Nevertheless, the last time when the submarine issue was addressed by the IDF Planning Division was in the context of the 'Gideon' long-term plan that came into effect in 2014. According to the 'Gideon' plan, IDF were not intended to initiate any new submarine acquisition plan beyond the sixth submarine that had already been decided upon.
8. Is the involvement of Attorney David Shimron in the transaction improper?
An attorney may be involved in such a transaction. Suspicions of corruption arise with regard to most major arms transactions worldwide, including transactions by Israeli parties operating overseas, which were reported quite often by the media in various countries and even generated investigations – as in the case of the mega transactions Israel made with Kazakhstan and Georgia.
The real problem concerns the involvement of a private law firm in sensitive affairs of state. In this context, a cause of particular discomfort is the fact that Shimron's partner, Attorney Yitzhak Molcho, serves as the Prime Minister's personal envoy in highly sensitive diplomatic situations worldwide, particularly in the Arab world, and possibly opposite Germany as well.
9. Who are you, Miki Ganor?
Ganor is the Israeli representative of the ThyssenKrupp Group of Germany, the manufacturer of the submarines. Ganor is one of thousands of agents, many of whom are former functionaries of the defense establishment, from Israel and around the world, who broker deals, utilize their connections and generate handsome profits from transactions such as the previous submarine transaction. Unlike the usual profile of such agents, Ganor is involved primarily in real estate. In many cases, there is 'bad blood' between rival agents. The police investigators can count on that rivalry for the purpose of collecting information regarding the current affair.
10. Is there a connection between the Submarine Affair and the transactions involving the acquisition of four surface vessels from Germany, for the purpose of defending Israel's economic waters? This week, Channel 10 reported the contents of an E-Mail message sent by the legal counsel of IMOD, in which he reported to the Director General the involvement of Attorney Shimron on behalf of the German corporation.
There is no connection to the submarine transaction, but Attorney Shimron represented agent Miki Ganor in the context of the economic water transaction, too. For that transaction, an international tender was conducted, but the German shipyards were selected despite the fact that they had not participated in the tender – because it agreed to make a better offer. The document implies that Attorney Shimron had mentioned the Prime Minister in his contact with IMOD on behalf of the German shipyards. Officials involved in the transaction now claim that "The surface vessel transaction also involved some irregular processes" (Shimron's response to Channel 10: "I said nothing about the Prime Minister to Attorney Ben-Ari, and I had no idea of the Prime Minister's involvement in the matter of the surface vessels.")
11. What is the scope of the surface vessel transaction?
According to various estimates, the scope of the surface vessel transaction is about 430 million Euro. About one third of that amount will be financed by a special grant from the German government in the amount of 115 million Euro. Not only will one third of the cost be financed by German taxpayers' money, but the German government has an interest in providing work to the shipyards in Kiel, and that is another reason for the generous gift. The Germans also committed to offset purchasing (industrial cooperation) transactions in the amount of 700 million ILS from Israel. Incidentally, the German government was furious about the way the Israeli negotiators conducted themselves with regard to this transaction, which the Germans regarded as "extortionate", and almost withdrew their support.
12. Was the Prime Minister aware of Shimron's involvement in the submarine transaction?
That is the most pressing question of all. Both the Prime Minister and his attorney have promptly denied this allegation.
