How the US Blocks a Mega-Deal for Rafael

The United States provides generous defense aid to Israel, but also blocks it from making major defense export deals. Is the massive US defense aid really worth it for Israel? Special column by Amir Rapaport

Is the massive US defense aid really worth it for Israel? Apparently, no one can disparage a gift of $3.8 billion per year. Nevertheless, the case outlined below might raise some questions. The US currently exerts serious pressure on the Swiss government to prevent it from acquiring a David's Sling missile defense system by Rafael of Israel. The American interest is obvious: to sell US-made systems to Switzerland. The direct loss incurred by Rafael, a government-owned company, is not less than $1.5 billion, and this has not been the first time such things happened. The US had already compelled Poland to acquire US-made systems instead of Rafael's David's Sling system.

A Fly in the Ointment

How can the US prevent the exportation of a primary Israeli system? Meet the US Aid mechanism. According to a 10-year agreement signed near the end of Barack Obama's presidency, Israel receives $3.8 billion per year in US defense aid. This is a massive amount, $200 million per year higher than the previous agreement, but the increase involved the revocation of the option the Israeli defense establishment had, of changing nearly one billion dollars a year to ILS for direct procurement from Israel's defense industries. Now, the US Aid funds can be used only to acquire products and systems manufactured on US soil. The only exception to the rule involves $500 million out of the annual $3.8 billion, intended for two joint US-Israeli projects: the Arrow-3 project and the David's Sling project. The two countries share the expenditure on these projects. The Arrow missile defense system is developed by IAI and manufactured by Boeing. The David's Sling project is a joint effort of Rafael and Raytheon. Conversely, the Iron Dome short-range missile defense system is developed in Israel by Rafael, which is the prime contractor, and manufactured jointly in Israel and the US (Barack Obama had decided, magnanimously, to finance Israel's acquisition of seven Iron Dome batteries).

The change of government in the US has not affected the manner in which the US Aid is delivered. The agreement with the Obama administration was reaffirmed by President Donald Trump in 2018 and became fully effective this year. Admittedly, President Trump supported the Israeli claim for sovereignty on the Golan Heights and stepped out of the JCPOA as Prime Minister Netanyahu had asked, but when it comes to promoting the US industries, he is a devoted supporter. For this reason, since his appointment, not even one new comma has been added to the US Aid agreement for the coming decade. Moreover, the US is currently employing any possible political leverage to promote the sales of its industries worldwide, at the expense of the competitors, including the Israeli ones. In some countries, like Poland – which is totally dependent on the US umbrella in the face of the Russian threat – the US leverage is irresistible.

For this reason, the Poles canceled their plans to acquire the Israeli-made state-of-the-art air-defense system a few years ago. Switzerland is not as close to Russia as Poland is, but the Swiss government decided last January not to acquire the Israeli David's Sling system, despite the fact that all of the professional authorities in the Swiss armed forces preferred the Israeli system. Over the last few weeks, Rafael has been using its own tactics in an attempt to reverse the evil decree and get the major David's Sling deal back on the table. Swiss sources have stated, however, that the people of Rafael are wasting their time: the US will have none of it.

What about Raytheon, Rafael's US partner? They are not disappointed about the derailing of Rafael's deal. Instead of the David's Sling system, the Swiss will acquire Raytheon's Patriot system. The profit for Raytheon will probably be even more substantial – and will go exclusively into its own accounts, no partners. Incidentally, owing to their partnership in the development of the defense systems, the US derailed any attempt by Israel to sell the Arrow system to other countries. Conversely, several countries acquired the Iron Dome system (those countries remain unnamed, with the exception of the US, which recently acquired two Iron Dome systems for the US Army). If the Iron Dome proves its effectiveness with the US Army, this will establish a market for it in all of the US armed forces.

Back to the implications of the US Aid. According to Brig. Gen. (res.) Avraham Bar-David, Head of the Defense Industries Forum at the Manufacturers' Association of Israel, the derailing of major Israeli export deals by the US, as an implication of the US Aid, is just one negative aspect. In a recently published article, Bar-David stated that "The decision regarding the inability to use US Aid funds for local procurement will lead to a deficit of more than 4 billion ILS in the budget of the Israel Ministry of Defense. IMOD will not be able to obtain the extra budget required in order to prevent damage to those industries. Unless the ILS defense budget undergoes a significant revision, there will be no other option but to have some of the industries relocate their manufacturing operations to the US. Some industries will be closed down and cease to exist, and the knowledge they had acquired over decades of developing and manufacturing subassemblies will be lost.

"In fact, the process has already started to materialize. In my estimate, within just a few years, more than 40 such industries, mostly located in development areas, will disappear from the local scenery. The major industries, some of which have plants in the US, will not be harmed at this stage. A few years after the process had started, we will realize that all of the knowledge transferred to the US industries, be they Israeli-owned or American-owned, would become available to the major industries of the US. At this point, the major defense industries in Israel will start to sustain the damaging effects of international competition, while trying to sell their products around the world.

"The difficulties encountered by the major industries will lead to layoffs, as well as to the loss of accumulated knowledge and the technological capabilities required in order to meet the needs of the IDF in the context of the war scenarios expected in the future. Subsequently, the IDF will be harmed significantly as the availability of arms and weapon systems to them will be dependent on the willingness of other countries to sell to Israel. To this day, the State of Israel has not been granted the right to acquire cutting-edge systems from the superpowers, except in cases where it had managed to prove that it possesses the ability to develop a similar or even better system."

The above harsh criticism notwithstanding, it is important to note that most of the major acquisition plans of IAF, including but not limited to the F-35 fighter, are based on the US defense aid. In this regard, no one disputes the positive contribution of the US aid.

The Talpiot Program marks its 40th Anniversary

This happened last week, too: quite modestly, the graduates of the prestigious Talpiot program of the Israeli defense establishment got together to celebrate the program's 40th anniversary. Attending the event were the members of the various generations (classes) of the Talpiot program, whom the general public acknowledges as "geniuses." Very few know how profound and unique their contribution to the technological strength of the Israeli defense establishment, and subsequently to the Israeli economy, really is, so here is a summary of the program's history.

The Talpiot program was established in 1979 at the initiative of Hebrew University professors following the Yom-Kippur War. What those scholars had in mind was the need to establish military technological superiority methodically, and they believed it would only be possible through dedicated enrichment and education. They offered to recruit the cream of the crop of the technologically-scientifically inclined youngsters and provide them with dedicated training and education so as to "develop new weapons." According to the program they had devised, the Talpiot recruits undergo a combat training course in the various combat units of the IDF, and after having been introduced to the diversified defense needs at first hand, they enter the stage during which they have to wrack their brains.

The person who "bought" that thesis and actually implemented the program was Chief of Staff Rafael (Raful) Eitan. So, since 1979 to this day, 37 classes have graduated, producing a little over 1,000 graduates. Their training program consists of a high-quality academic tier – a comprehensive degree in physics, mathematics, and computer science at the Natural Sciences Faculty of the Hebrew University, combined with dedicated, specialized military training courses throughout the IDF. The objective is for the trainees to become familiar with the operational aspects of all IDF arms, with their needs and with all research and development trends. Initially, the trainees go through the basic training course of the paratroopers, followed by the officers' course. The graduates are assigned to all of the R&D elements of the IDF and the Israeli defense establishment for a period of six years. They man the core positions in the most important R&D projects.

The Talpiot graduates are "problem solvers" and "challengers." For example, the ability of the IDF to technologically overcome the subterranean tunnel problem is based on the efforts of a group of stubborn Talpiot graduates who never gave up and developed the concept of the "Laboratory" at the IDF Gaza Division. That activity employs cutting-edge systems, some of which are still under development, and integrates information obtained through various technologies. The core of the IDF electronic warfare systems is also developed by Talpiot graduates who are members of dedicated teams in the IAF and the IDF Navy. Talpiot graduates are at the system engineering core of such significant systems like the Iron Dome and Ofek satellites, and some of them invented and developed cyber systems for Unit 8200. They are the prime mover of the technological unit of the IDF Intelligence Directorate with regard to the development of unique, specialized systems. They are the core of the Cryptology & Security Center of the IDF C4I Directorate with regard to cybersecurity and cryptography.

Wherever different, revolutionary, daring, but knowledge-based thinking is required – the Talpiot graduates are in demand. IDF units practically squabble over them. Their contribution does not end with their discharge from military service. The Talpiot program is a national program and its graduates currently constitute the core of Israel's R&D efforts in academia and in the high-tech industry, starting with Marius Nacht, one of the founders of the Check Point Company, and building up to an overflow of graduates employed by the leading high-tech companies, both large and small, and the leading R&D centers.

Companies like Takadu, that specializes in detecting leaks in water piping systems by utilizing sophisticated algorithms; Passiva – specializing in the transmission of massive amounts of data; XIV – established by graduates from Talpiot Class 14 (hence the title) – offering storage solutions for massive amounts of data; Adallom in the field of cybersecurity (sold to Microsoft), numerous companies in the fields of cutting-edge medical equipment, cybersecurity and artificial intelligence, and many others.

Israeli academia also abounds with Talpiot graduates, especially in the fields of mathematics, physics, biophysics, etc. Names such as those of Professor Eli Waxman of the Weizmann Institute of Science (who had also served as the Chief Scientist of the Israel Atomic Energy Commission); Professor Elon Lindenstrauss, winner of the 2010 Fields Medal in mathematics; or Professor Uri Alon from the Weizmann Institute may not be household names, but their reputation precedes them worldwide.

Along with the aforementioned luminaries, we may list some other prominent figures such as the former head of IMOD's Directorate for Defense Research & Development (DDR&D), Brig. Gen. Ophir Shoham, who, as a Talpiot graduate, combined an operational career in the IDF Navy with an R&D career, reaching the top positions of Israel's defense R&D community; and Professor Eviatar Matania, who established Israel's national cyber directorate, subordinated directly to the Prime Minister (Matania's is the most senior public sector appointment of any Talpiot graduate). Matania currently leads, on behalf of the Israeli Government, the Intelligent Systems project, intended to consolidate a national artificial intelligence program.

In the more distant past, Matania had headed the Talpiot program as part of the Weapon System & Technological Infrastructure Development Administration (MAFAT, currently DDR&D) of the Israel Ministry of Defense. According to him, "What the Talpiot program delivers to the State of Israel and the IDF in particular, is the rare combination of academic skepticism integrated with military purposefulness. The program is not alone in the scientific-technological campaign of the State of Israel in general and the IDF in particular, but is, without a doubt, the flagship of the fleet."

The Other War

At the very forefront of the battle over the legitimacy of the State of Israel, Brig. Gen. (res.) Sima Vaknin-Gil has recently completed her term as Director-General of the Ministry of Strategic Affairs. Vaknin-Gil entered office as DG in January 2016, having just been discharged from military service, where her last position was that of Chief IDF Censor. As Director-General of the Ministry of Strategic Affairs, empowered by the government to head the campaign against the de-legitimization and boycotting of Israel, Vaknin-Gil developed and led the Israeli counter-offensive over a period of three and a half years.

Very few people understood what Vaknin-Gil was actually doing there. Now it may be explained that the "task force" established at the ministry operates subject to a strategic rationale that had set forth three objectives: to inflict damage on the money trail supporting the hostile organizations; to uncover the true nature of the leaders of the anti-Israel campaign (terrorism, anti-Semitism, and Iran); and to introduce the complex Israeli reality to larger audiences in an up-to-date, modern manner. For this purpose, diversified technologies from the worlds of Internet and intelligence were employed.

After three and a half years of "fighting," the intelligence status picture of the opponent is currently more detailed than ever – which enabled the ministry to shift from a defensive strategy to an offensive one. A pro-Israeli network established on the Internet is up and running in a coordinated and synergistic manner. The opponent's advance has been halted. He has shifted to a defensive effort. He currently finds it difficult to present a real success, while fighting for his sources of revenue and for maintaining his allegedly "clean" image, over which he had labored extensively. What next? Sima Vaknin-Gil is on the way to her first-ever appointment in the private sector. It is not yet clear who will replace her and resume the offensive in the context of Israel's fight for legitimacy.

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