Will the Submarine Affair Affect Israel's Defense Industries?

As the investigation into the "Case 3000 Affair" intensifies and suspicions of corruption continue to surface, chances increase that within months, new regulations will be consolidated that would change the "rules of the game" for the Israeli defense industries. Amir Rapaport's weekly column

Israeli submarine (Photo: Ariel Shalit, AP)

The worst part of the storm is still ahead of us: sources in the defense establishment estimate that the "Submarine & Naval Vessel Affair" will have far-reaching effects on the future sales of the Israeli defense industries.

As the investigation into the offices of top defense and political officials intensifies and more and more suspicions of corruption continue to surface, chances increase that strict supervision will be imposed on the manner in which retired officials of the defense establishment would be allowed to operate in the defense market in the future. "The defense industries can expect a difficult period of readjustment," said a senior source from one of the industries earlier this week.

To understand the reason for this estimate, the "star of the week" of the "Case 3000 Affair", Brig. Gen. (res.) Shaike Brosh, may serve as a test case. Brig. Gen. Brosh was described by the media this past week as the "former commander of the IDF Naval Commando Flotilla", but after concluding his term as the commander of that unit, he continued to advance through the ranks until his career came to a halt in connection with the disastrous operation of the Naval Commandos in Ansariya, Lebanon ("Operation Shirat HaTzaftzafa"), exactly 20 years ago.

At the time of that disastrous operation, Brosh served as the Head of the IDF Navy Intelligence Division, and was forced to leave that office a short while after the incident. The circumstances of that disaster are still a matter of controversy to this day. Many elements had a reason to claim that the Naval Commando force ran into a "random ambush" by Hezbollah. The truth, which has been known for quite some time (although no one has thus far assumed responsibility for it) is that it was a colossal intelligence and operational blunder. Hezbollah placed an explosive charge ambush setup at the location through which they had estimated that the IDF unit would pass, based on the imagery produced by an Israeli UAV that had scanned the area prior to the operation. The UAV transmitted the imagery in an unencrypted format, although another unit, Sayeret Matkal, was already using a different UAV with an encrypted transmitter.

Either way, the circumstances of that disaster never clouded Brig. Gen. Brosh's business activities, and he became involved, without any doubt or hesitation, in consulting activity that offered lucrative rewards. Among other things, he placed his military experience at the disposal of Michael Hertzog, a Jewish-German businessman, so as to explain to the Zemach Committee why the State of Israel should install a gas liquefaction facility at sea, opposite the Israeli shore. That was precisely the installation Hertzog wanted to sell, and it was also the solution supported by Brosh's former Navy colleagues, Miki Ganor and Avriel Bar-Yosef, both of whom are now implicated in the same affair with him.

As this column has already reported over the last few months, the transaction involving the naval vessels purchased from Germany reeks much worse and generates more suspicions than the "Submarine Affair" or the gas rig affair, and is the one drawing most of the public attention, but as a matter of fact, the interface between the defense organs and the political echelon, past and present, is the element expected to come under strict supervision.

The public outrage could lead to an outcome where, in an attempt to remedy the situation, decisions will be made that would "throw the baby out with the bathwater." In this context, it should be noted that the unique link that exists in Israel between the defense establishment, the defense industries and the technology companies has made a substantial contribution to the Israeli economy and even to national security.

Former members of military technological units establish start-ups that lead to the growth of the national economy and contribute ideas and technological solutions used by the defense establishment as well as by the civilian market. Additionally, engineers and executives in the defense industries find revolutionary solutions to problems they personally encounter while serving as military reservists. For example, Elbit Systems' recently unveiled SkyEye system, which could lead to the prevention of numerous terrorist attacks owing to its ability to monitor and record a large area and analyze whatever takes place in that area even in retrospect, was the brainchild of a company employee who's an IDF reservist.

Other great ideas were presented earlier this week in a rare briefing session held by IMOD's Directorate of Defense Research & Development (DDR&D, aka MAFAT), headed by Brig. Gen. (res.) Daniel Gold. Gold had personally given up the opportunity of doing business in civilian life in order to remain a civil servant and serve as the Head of MAFAT.

On the other hand, the scope and extent of corruption suspected in the Navy-related affairs is reminiscent of the Rami Dotan Affair. Dotan was the Head of the IAF Equipment Division and the recipient of a substantial bribe in connection with a jet engine transaction more than a generation ago.

Pursuant to the Rami Dotan Affair, IMOD established a procurement delegation for the USA and the two countries set forth strict procurement procedures, intended to prevent similar scandals in the future. These procedures still have far-reaching effects, but they do not apply to defense trading with other countries.

Are strict procedures, along the lines of the "USA Delegation" to be expected with regard to all other transactions worldwide?

Minister of Defense Avigdor Lieberman has already appointed a committee that would examine the conflicts of interests and consolidate new procedures. Heading the committee is former Judge Hila Gerstel, and the committee members are the former Director General of IMOD, Brig. Gen. (res.) Pinchas Buchris, former Civil Service Commissioner Shmuel Hollander, and former Deputy Chief of Staff, Maj. Gen. (res.) Moshe Kaplinsky.

For the time being, the committee's operations have been suspended in accordance with an instruction by the Attorney General, but this suspension is to last only until the police investigation into the affair has been concluded.

In any case, within the next few months, new regulations will be formulated that would change the "rules of the game" for the Israeli defense industries, and they are expected to have a severe effect on Israeli defense sales.

The Largest Training Exercise Ever?

This also made the headlines in the last week: reports of a massive IDF training exercise to be conducted by IDF Northern Command. The exercise simulates domination and overbalance in Lebanon (rather than just creating deterrence).

Well, the exercise is, indeed, substantial, but until about 15 years ago, the IDF had regularly conducted such exercises at least once a year. Substantial exercises have also been conducted in recent years, although they had different characteristics.

The exceptional thing about the reports of the last week was the actual reporting. Two main reasons can explain the massive amount of information the IDF has voluntarily provided – with no censorship, as applied to reports regarding past training exercises.

The first reason may be attributed to information warfare. The report stating that the IDF is preparing to achieve overbalance, which actually means occupying substantial areas in Lebanon, may have been intended to enhance deterrence.

The other reason may be an attempt to prevent any "misunderstandings". In the last few months, tensions in the north ran high against the background of Israel's attempts to prevent Iran and Hezbollah from consolidating their positions in Syrian territories. Public statements made by the Israeli Prime Minister and Iranian leaders have shown a verbal escalation and even included an exchange of verbal threats. Misunderstanding emanating from the erroneous analysis of training exercises led to escalation on numerous occasions in the past, even when the air was far less saturated with fuel emissions.

To prevent any kind of misunderstanding, the recent reports made it perfectly clear to all of the parties on the other side of the northern border that "this is only an exercise."

Against the background of the messages conveyed by the IDF, this has happened, too: according to foreign reports, a Syrian facility for the development of missiles and chemical warfare agents was attacked during the night between Wednesday and Thursday. The Syrian Army pointed the finger at Israel, threatening that this attack would have serious consequences. Jerusalem has not commented on these foreign reports. 

Are these events connected? The timing is certainly interesting.


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