In the late 1960s and early 1970s, Israel manufactured the Nesher fighter aircraft that were based on the French Mirage design. These aircraft were supplied to IAF until 1974. In the early 1970s, concurrently with the manufacture of the Nesher aircraft, an effort to characterize and design a more advanced fighter aircraft was initiated. The new aircraft was designated Kfir.
As far back as mid-1974, just before the development of the Kfir aircraft was completed and serial production began, IAI proposed to develop an advanced fighter aircraft designated Arie. In 1975, the commander of IAF in those days, Maj. Gen. Benny Peled, authorized the planning of the new aircraft. The aircraft was intended to be the spearhead of the IAF OrBat in the 1980s, alongside (and possibly instead of) the US-made F-15 and F-16. The design process of the Arie continued until 1979 through a total investment of US$ 40 million from IAI’s own capital. This aircraft was never actually developed.
The Birth of the Lavi
Over the course of 1979, the Israeli defense establishment reviewed the future OrBat of IAF. The decision makers faced three alternatives regarding the acquisition of fighter aircraft: to develop and manufacture an original Israeli fighter; to participate in the manufacture of a US-made fighter or to base the OrBat of IAF exclusively on aircraft acquired overseas.
In those days, the US government established a special team to consolidate the American position regarding the various alternatives for the new fighter aircraft of the IAF, including the alternative of jointly manufacturing a new fighter for IAF in the 1980s. The US team was intended to complete its work in early 1980. This proposal was not reviewed in depth, as stated by the report of the State Comptroller, who investigated the issue.
“The Lavi project began in the early 1980s. We were in the course of the IAF five-year acquisition plan,” recounts Maj. Gen. (res.) David Ivry. “I was the commander of IAF, Ezer Weizman was Minister of Defense, Raful (Rafael Eitan) was IDF Chief of Staff. We sought a replacement for the Phantom fighters. We never mentioned an Israeli-made aircraft. We regarded the Kfir as a platform that could be improved further.”
In that year, IAI came up with a proposal designated "Layout 33" – it was not yet designated "Lavi". The aircraft in that proposal, contrary to the Arie, was to be a single-engine, small and inexpensive design that would replace the ageing Kfir and Skyhawk aircraft that IAF intended to phase out. In terms of its position within the IAF OrBat, the Lavi was intended to be a "complementary" aircraft. It was not to be designed for air superiority missions but mainly for strike and airspace defense missions, to be employed alongside the more advanced F-15, F-16 and F-18 fighters. The decision to develop the Lavi aircraft was made in February 1980 by Ezer Weizman, who was Minister of Defense in those days.
“The general atmosphere in the State of Israel was that we should aspire for defense independence, including a locally-manufactured fighter aircraft,” Ivry continues. “(Originally) it was a very small aircraft that IAI claimed would replace the Skyhawk. That aircraft was too small and could not carry the munitions we wanted. My feeling was that we needed to acquire aircraft that offered a more substantial carrying capacity to a longer distance. I felt that our future challenges would involve longer distances. In the new characterization, we opted for a larger engine”.
Apparently, the problem with the Lavi project was not about technological know-how, but about money – and a lot of it. In December 1980, IAI submitted a long-term work plan and budget for the development effort which amounted to US$ 805.9 million (in 1980 prices). “Israel has no problem developing a fighter aircraft, neither back then, nor today. The problem is money,” says Ivry. “A country of 8 million citizens cannot develop a fighter aircraft. We are not the USA, Russia or China.
“There is one other point that needs to be clarified in this context. In reality, there is no such thing as defense or economic independence. Even the USA depends on (the supply of) titanium from Russia. No country is truly independent. You cannot do everything on your own. The USA is more independent than any other country, that much is true, but it is still relative. Even when you consider the Lavi aircraft project, the engine was American.
“The State of Israel should retain its qualitative advantage, and that can be achieved by upgrading certain elements of the platform, like upgrading the ECM (suit) and the Radar. The important thing is for us to have the necessary infrastructures – mainly laboratories. If we have such infrastructure in this country, we will be able to retain the primary elements that would provide us with the advantage on the battlefield.”
With regard to the Lavi project, Ivry reveals that no one had the money for it. “At the outset of the project, no one had calculated how much it would cost and where the money would come from. A larger aircraft costs more. The IDF (authorities) strongly opposed the Lavi project as they did not want anyone touching the defense budget,” says Ivry. “As far as I was concerned, as commander of IAF, I wanted a good aircraft. If they could provide me with an Israeli-made aircraft – excellent. Eventually, the money was raised by Moshe Arens, who managed to obtain assistance from the USA for the development of the aircraft. On average, the USA invested US$ 450 million in the Lavi project each year, of which US$ 200 million were invested in Israel, and all the rest in the USA.
“It is important to point out that the idea was not to shake off our dependence on the USA. Back then, the USA did not believe that we were able to develop a fighter aircraft (and that is why they gave us the money). (As far as they were concerned,) the money was intended to ‘let them play with it’. When the project began to shape up, the Americans realized that we were going toward highly advanced concepts. The American industries realized that we were going to have an aircraft that would be superior to the F-16 of those days, and started to oppose the project. The US industries could not understand why the USA financed an aircraft that would compete with the F-16.”
In 1982, a project administration was established at IMOD under Brig. Gen. Amos Lapidot, and the aircraft that started to shape up was not bad at all. Until the termination of the Lavi project in 1987, three prototypes were developed. “We made amazing progress with regard to the trial method. We established a large computer center that promptly analyzed all of the data received from the aircraft during the test flight and compared them to the planning, so we could make corrections during the actual test. In other words – we managed to do more in the context of the same flight. That shortened our trials significantly,” explains Ivry.
“We also developed a passive and active airborne Radar, electronic systems and even the pilot helmet currently manufactured by Elbit Systems was conceived in those days. These were all Israeli designs. Some of the manufacturing was carried out in the USA. We had a suitable conceptual infrastructure in Israel, but we lacked the laboratory infrastructure and other elements that were necessary for the development of the aircraft. The money for the Lavi project was invested in those elements, and served the State of Israel long after that project had been eliminated. For example – laboratories for the development of airborne Radars. The total investment in the Lavi project amounted to US$ 1.5 billion until the stage when the first two prototypes actually flew. That gave a tremendous boost to the defense industries.”
The Lavi flew for the first time in December 1986. In that year, the Americans began asking questions. Dov Zakheim, US Deputy Undersecretary of Defense for Planning and Resources, ruled out that Israel had underestimated the aircraft development cost, and that in effect its cost would reach US$ 22.1 million. Israel estimated the cost of the aircraft to be about US$ 17 million.
Overseas, Tom Jones, Chairman of the Board of Directors of Northrop, sent a letter to George Schultz, US Secretary of State, and to Casper Weinberger, US Secretary of Defense, claiming that it was ironic for the USA to financially support an Israeli rather than an American aircraft. In those days, Northrop was developing the F-20 aircraft. Both officials, who were swayed by the pressure exerted by the US defense industries, sent letters to Israeli Defense Minister Yitzhak Rabin.
“The Deputy Secretary of State arrived with all sorts of ideas in order to exert pressure to terminate the project. They spoke to us about additional funding for the Arrow, for the submarines and for other projects,” says Ivry. “There was also an offer for a price of US$ 14.9 million for the F-16. Naturally, they forgot to mention that those were 1978 figures. The Lavi turned out to be more expensive. Subsequently, the price of the F-16 rose to US$ 21 million. The game was about how many aircraft the IAF needed. The calculations were based on a minimum of 210 and a maximum of 300 (aircraft). The IDF said that if we wanted more money, the project should be defined as a national project and the money should not be taken from the defense budget.
“The Americans did not officially demanded that we terminate the project. They stated very subtly that we would not be able to implement the project, mainly owing to the financing problem. There were diplomatic letters with an implied threat between the lines that they would stop their aid. The letters were sent to Rabin, who was Minister of Defense in those days. Even before the year ended, IAI demanded an additional US$ 50 million per year for the project, on top of the American money. The funds were to come from the national budget, and that raised the threshold of the opposition to the project.”
The Termination of the Lavi Project
On August 30, 1987, by a single vote (12 against 11), the Shamir government decided to stop the Lavi project. “Admittedly, the project was terminated on the vote of (Minister of Health Shoshana Arbeli) Almozlino, but that was just the tip of the iceberg,” says Ivry. “Under the surface, several processes had drained into the same spot. If that had not happened at that time, the USA would have shut off the financing for the project some time later. Anyone who says that the project was terminated because of her (Minister Almozlino) misses the bigger picture.”
“In those days, about 5,000 people were working on the project directly. The IDF authorities said they could find employment for all those directly involved in the project. The State of Israel used some of the funds that continued to flow into the project from the USA to finance the severance pay. At that time, the entire defense industry experienced a violent jolt, not just IAI. During that period, the defense industry of Israel shrank almost by half, but became more business-oriented.
“The Lavi project propelled the industry to a higher league, with regard to the business thinking aspect as well as to the aspect of the R&D infrastructure established in Israel,” explains Ivry. “When we started out, I could not understand how we would manage to do it. There was no money. Toward the end of the project, I even had a chance to fly the Lavi, and it was a shame having to terminate the project. We truly achieved a very nice result. The Lavi made a contribution to the industry that has lasted to this day. Thanks to the Lavi project, the industry could undertake aircraft upgrading projects overseas, structured knowledge centers were established by the industries and various measures were developed that are still in service in IDF to this day.”