Arms Exports and Israeli Government Policy,

Israel's Arms Industry,

Israel and Latin America,

South American Case: Ecuador and Argentina

excerpted from the book

Israel and Latin America: The Military Connection

by Bishara Bahbah

St. Martin's Press, 1986, paper

Arms Exports and Israeli Government Policy

Israel's absolute imperative to export arms. Dependence on arms sales is such that: a defense minister pledges upon assuming office to step up arms production and exports in order to improve the country's sagging balance of payments; the governor of the Bank of Israel publicly states that arms exports kept the country from going under economically; and a prime minister, introducing a strategic dimension, comments that as long as Israel's security situation remains the same, there is no alternative but to push arms.

The story of Israel's arms industry since it was seriously launched in 1967, besides being a record of successive achievements and technological advances, is the story of its growing centrality to the Israeli economy. Over the years industrial development has been channeled into the arms sector. As former Defense Minister Moshe Arens pointed out: "every country should be dealing in those products in which it has a comparative advantage . . . . Israel's largest comparative advantage is in military products, because these demand advanced technology on one hand and military experience on the other. Today, it can be said that no country in the world is as dependent on arms sales as Israel. The Jaffa orange is fast being edged out of the public consciousness by the Uzi submachine gun as Israel's major export. Israel is the largest per capita arms exporter in the world. Arms exports constitute about 16 percent of its total exports'° compared with 4.5 percent for the United States," to 5 percent for France, and 2.5 percent for Great Britain, which gives Israel the world's highest ratio of military to total exports as well. Conventional wisdom has it that dependence on arms exports reaches a danger point when these exports exceed 25 percent of industrial exports, and Israel has exceeded this limit, with one-fourth to one-third of its industrial exports being arms.

Regardless of how many wars Israel may fight, its domestic market, unlike those of the United States and the USSR, is not large enough to provide the economies of scale required for the development of main weapons systems such as tanks, missiles, boats, and aircraft. It is not merely a question of lowering unit costs; development costs of major weapons are such that the projected export volume determines whether or not a project can be undertaken in the first place.

... with as much as 60 percent of its output exported (compared with about 25 percent for the United States* and the United Kingdom and up to 41 percent for France),t the arms industry is able to run at or close to full capacity. Consequently, in an emergency, Israel can commandeer production earmarked for export, as was the case during the prolonged fighting following the invasion of Lebanon in the summer of 1982. Furthermore, with the high rate of turnover between generations of sophisticated weaponry, foreign orders allow Israel to sell models that are being replaced by new generations and thus move ahead to new levels of sophistication. Finally, arms export earnings help to support the research and development that enables Israel to maintain a leading edge in weapons technology.

Although Israeli arms reportedly have found their way to sixty-two countries in Asia, Africa, Europe, and the Americas, serious obstacles impede export capabilities. The Soviet bloc is off-limits as are, a fortiori, the Arab states (the largest purchasers of arms) and most Muslim countries. Most of the industrialized countries either produce their own weapons or purchase them from NATO allies. Many potential third world buyers, Israel's natural clientele, prefer to avoid the political risks of visible arms purchases from Israel, especially if other sources are available. Thus, Israel is forced to pursue a particularly aggressive arms sales drive in the markets that remain, using every competitive advantage it can summon. For Israel the chief competitive advantage, aside from the weapons themselves, is expertise in counterinsurgency techniques and the control of popular resistance.

No other region of the third world has had as continuous a relationship with Israel, both diplomatically and militarily. Apart from Nicaragua, Guyana, and Cuba, all the Latin American countries have diplomatic ties with Israel. This provides a regional context lacking for other major Israeli arms buyers (such as South Africa) which are scattered geographically. Furthermore, arms sales are most concentrated in this region. Not only has Latin America been Israel's primary market, but at least eighteen of the Latin American states have purchased Israeli arms.


Israel's Arms Industry

... in 1967 can't be said to mark the beginning of the militarization of the Israeli economy. According to Aaron Klieman, after the June 1967 war under the impetus of defense industrialization, Israeli society was transformed from a rural economy based on citrus exports to a highly industrialized one, producing electronics and high-technology items.

Prior to 1967 less than 10 percent of the Israeli work force was involved in the military sector. By 1980 approximately one-fourth of the total labor force, or 300,000 people, * and one-half the industrial labor force worked in the military sector, including the armed forces.

It was especially after 1973 that the industry acquired a high degree of sophistication, enabling it to produce advanced military equipment ranging from tanks and jet aircraft to precision-guided "smart weapons," microelectronics, and rocket-propelled engines for sea-to-sea and air-to-air missiles. This success, particularly in view of the size of the country, its lack of natural resources, and the short time in which the industry was developed, has been a source of considerable national pride. The arms industry has given Israelis not only a sense of security, but provided foreign currency and, in many cases, a vehicle for reaching and influencing the third world.

Israel's best resource is its human resource. It has the highest per capita concentration of scientists and engineers in the world...

... Because of Israeli government policy, the nation's research and development efforts are concentrated in the military sector. By the early 1960s, Israel was spending $5 to $10 million on military research and development at a time when total military expenditures amounted to only $200 million. This figure increased from $20 to $30 million in 1966-67 and almost doubled in 1969-70 to reach $50 million. Of all government expenditures for research and development, 46 percent goes to the military sector, as compared to 2 percent in Japan, 3 percent in Holland, and 8 percent in Canada.

Israel has also mobilized a highly skilled labor force whose salary levels, low relative to Western standards, make possible less costly products. Government subsidies of research also lower costs to between one-third and one-quarter of those in the United States or Europe. Less tangible but equally important is the motivation of workers, nearly all of whom are members of Israel's military reserves. In the words of an IAI official, "everyone who works here is emotionally involved." Workers are urged in the name of patriotism to manufacture equipment "good enough for your sons" to use.


Israel and Latin America

During the last decade Latin America was undisputedly Israel's largest market for arms, accounting for approximately 50 to 60 percent of its total military exports.' According to the Stockholm International Peace Research Institute (SIPRI), one-third of Israel's total arms sales of $1.2 billion in 1980 went to Argentina and El Salvador alone. Recently, Israeli arms to Asia and Africa have increased, partly as a by-product of Israel's success in regaining some of its old friends, particularly in Africa. Nevertheless, Latin America continues to be a primary market, * accounting for one-third to one-half of Israel's total arms sales. It is no coincidence that Israeli military sales literature continues to come out in two languages, English and Spanish.

No region outside of Western Europe and North America has been, as a bloc, as supportive of Israel as Latin America, even predating the establishment of the state. Largely Western in orientation, in the 1940s the Latin American countries tended to identify more with the essentially European Zionists than with the non-European indigenous population of Palestine that opposed the growing Jewish political power. Latin American sympathy for Zionist aspirations found expression in the role played by the heads of Latin American delegations during the diplomatic maneuvering at the United Nations that led to the creation of Israel in May 1948. Guatemala and Uruguay, especially, made significant contributions to advancing the Zionist cause at the United Nations Session on Palestine and as members of the UN Special Committee on Palestine (UNSCOP) which was set up in the spring of 1947. Latin America was instrumental in the passage of the partition plan, without which Israel would not have been created, because at that time Jews were only 35. 1 percent of the population of Palestine and owned only 7 percent of the land. In addition to mobilizing other countries to vote for the resolution, the Latin American delegates provided thirteen of the thirty-three votes in favor of partition. Cuba was the only Latin American country to vote against the resolution. The Latin American bloc of eighteen countries also voted unanimously in favor of Israel's admission to the United Nations as its fifty-ninth member.* Within a year twenty Latin American countries had extended diplomatic recognition. By the end of 1956, in contrast, Israel had succeeded in gaining the recognition of only ten of the more numerous Asian countries. The Latin American countries were also the only states, aside from the Netherlands, that agreed to set up their primary diplomatic missions in the disputed city of Jerusalem. A study of bloc voting patterns on Israel at the UN General Assembly reveals that in the 1950s the Western bloc was the most supportive, followed by Latin America and sub-Saharan Africa. In the 1960s the Latin American bloc became the most supportive, followed by the Western and Black African blocs. Even with the erosion of support in the 1970s, Latin America remained Israel's largest supporter among third world groups, and, except for Cuba and Nicaragua, disagreements have always stopped short of rupture.

It was not until the 1960s, when relations with Argentina soured following the kidnapping of Adolph Eichmann and fear of radicalization swept the area in the wake of Castro's victory in Cuba, that Israel began to turn its attention to Latin America. An Israeli-sponsored conference in Montevideo, Uruguay, in February 1961 broached the need to improve relations, and officials from the Israeli ministries of foreign affairs and agriculture were subsequently dispatched to study possibilities for providing technical assistance. Technical cooperation agreements, the first signed with Bolivia in 1961, followed, and by 1973 there were agreements with eighteen Latin American countries.

As a result of wars with its Arab neighbors and the latter's economic influence, Israel has access to only about 10 percent of the international oil market. While Egypt is a major supplier, Israel has been unsuccessful in obtaining a long-term, binding Egyptian guarantee of oil shipments. Latin America, therefore, has become the largest source of oil, with Mexico supplying 42 percent in 1982. Moreover, while Mexico is the only Latin American country that publicly acknowledges selling oil to Israel, Venezuela and Ecuador are doing so as well.

... the most important aspect of Latin American-Israeli relations is arms sales. By the end of 1984, at least eighteen Latin American countries had purchased military equipment-all, indeed, but Guyana, Suriname, French Guyana, and Uruguay.

Many factors led to Latin America's emergence as a primary market for Israeli arms. This region is beyond question the largest potential market. Israel's friends in Western Europe either manufacture their own weapons or utilize interlocking, complementary weapons systems as part of NATO policy. The Soviet bloc is off-limits. Many third world countries are dependent on Middle Eastern oil and hence are sensitive to pressures from the Organization of Petroleum Exporting Countries (OPEC); others lean toward the Arab states for historical or cultural reasons. Furthermore, although arms production in Latin America is growing, the region continues to meet most of its weapons needs through foreign markets.

While territorial disputes have unquestionably fueled the arms buildup in the region ... most of the weapons procured in Latin America have been used in suppressing internal dissent. Uruguay, Peru, Paraguay, Colombia, Chile, Argentina, Brazil, Bolivia, Honduras, Guatemala, and El Salvador have all had to deal with guerrilla movements, and the instability and economic duress of other countries make the threat of insurgency real. Reflecting the increased use of the military in an internal security role, the strength of the army in South America overall has increased by 50 percent over the past two decades ...

Governments dominated by the military are inevitably more attentive to the needs of their defense establishments and inclined to acquire arms that are perceived to add to the military's institutional dignity. The only countries with strong civilian traditions are Mexico, Costa Rica, and to a lesser extent Venezuela. All the others either are or have been controlled by the military, either directly or through the exercise of a kind of veto power. Argentina, Brazil, Uruguay, Bolivia, and Peru recently emerged from long years of direct military rule, but political and economic uncertainties and the history of the military coup d'etat as a tool for change make it impossible to take the new civilian rule for granted.

In any event, the critical role of the military in the region has worked in favor of the intensification of Israel's relations with Latin American governments. Aside from professional admiration for Israel's military exploits and an affinity of world view, or at least common understanding shared by professional military men, the Latin American military is fervently anticommunist and tends to perceive Israel as the guardian of Western civilization in the face of leftist terrorists and Soviet-backed Arab regimes. Some Israeli authors have called attention to the Latin American military establishment's tendency to see an analogy between Latin American revolutionaries on the one hand, and the leftist elements of the Middle East that Israel is dedicated to eradicate on the other.

Beyond this natural affinity, Israel has been nurturing relations with the military establishments of Latin America since the early 1960s. At that time the Kennedy administration, alarmed at Castro's victory in Cuba and the boost it gave to leftist movements in the region, asked Israel to implement its "civic action" programs-primarily military-agricultural projects of the Nahal type and paramilitary youth organizations - to counterbalance this influence. Using funds from the U.S. Agency for International Development (AID), Israel offered specialized instruction in how to organize paramilitary youth groups and Nahal programs for high-ranking officers and other officials of twelve Latin American countries.

Intangible Advantages of "Buying Israeli." For U.S. arms clients seeking alternate suppliers, either to diversify or because of U. S. restrictions on their arms purchases, Israeli weapons are a good substitute. Sales literature emphasizes that Israeli products are "oriented to the latest Western technology" and "compatible with U.S. systems." In a special advertising section of Aviation Week and Space Technology, care was taken to emphasize the "vast amount of U. S. made parts and material in the Kfir, from its engines, made here under license, to the aluminum in the body." Elsewhere it mentions that because "a high percentage of the finished product is actually U. S. or European manufactured the purchasing country is committing itself to Western systems which will need the necessary infrastructure to support them - meaning more future sales." While the last statement is obviously a bid for Western tolerance of Israeli competition, there is a message for the third world buyer as well: While diversifying arms sources, it can remain firmly in the Western camp as far as weapons compatibility is concerned and can rest assured of the technological superiority of the product. From a political standpoint, too, Israeli arms are a good substitute. The fact that most third world regimes are fervently anticommunist makes acquisition of Soviet bloc arms out of the question. Consequently, Israel's reputation as a bulwark against revolutionary leftist governments also stands it in good stead. In some cases Israel's special relationship with the United States is an advantage because buyers hope to use cooperation with Israel to gain respectability with Israel's friends in Congress or to help advance their case with a U.S. administration.*

*** According to Aaron Kijeman, "Israeli diplomats are not above suggesting the purchase of its military goods as an acceptable and fair quid pro quo for using the near legendary strength of the pro-Israeli lobby in the Congress and its influence with the American Jewish community on behalf of the arms client" [Israel's Global Reach: Arms Sales as Diplomacy McLean, Va. PergamonBrassey's, 1985, p 411. There have been a number of examples of the expectation, if not the suggestion. According to the Washington Post (13 August 1983) El Salvador hoped its close ties with Israel would induce the pro-Israel lobby in the United States to lend a "discreet hand" in congressional debates to push for higher U.S. military aid levels. Similarly, according to Israel Shahak (Israel's') Global Role: Weapons for Repression [Belmont, Mass.: Arab-American University Graduates Inc., 19821, p. 20), the Chilean regime hoped that published photos of General Pinochet with high-ranking Israelis such as former Chief of Staff Mordechai Gur, along with Cur's statements that press reports of Pinochet's excesses were "not commensurate with reality," would help its standing with the United States. For Costa Rica see Shahak, Israel's Global Role, p 199.

Israel's Latin American customers, who are military-dominated, avowedly anticommunist, and far removed from the Arab-Israeli conflict, are less subject to the political considerations that affect certain customers elsewhere (such as Iran under Khomeini, the Phalangists of Lebanon, Colonel Mengistu's Ethiopia, and other sub-Saharan African states). This freedom from political constraints is particularly evident in the right-wing military dictatorships and the "pariah states." Romeo Lucas Garcia of Guatemala, Pinochet of Chile, and the military junta of Argentina did not seek international or domestic approbation.


South American Case: Ecuador and Argentina


... arms sales to Argentina were principally the result of the vicissitudes of international politics. Indeed, it was largely because of U. S. arms policies and the boycott of weapons transfers by the Western powers following the Falklands/Malvinas War that Israel was able to penetrate the Argentine market. By 1981 Israel was supplying 14 to 17 percent of Argentina's total arms imports. Products were chiefly heavy and sophisticated military items such as aircraft and missiles, because Argentina has its own arms industry (ranking seventh among third world arms producers) that manufactures equipment ranging from warships, armored vehicles, and rockets to a wide selection of small arms.

Argentina established diplomatic ties with Israel almost immediately following the creation of the state and was the first Latin American country to open a legation there. Moreover, it has long been Israel's largest trading partner in Latin America, being Israel's "foremost and steadiest supplier of meat since 1948," with the trade deficit reaching $67 million in Argentina's favor in 1979 compared to $32 million in 1978. But relations were never warm. In fact, they were minimal until Argentina's emergence in the late 1970s as Israel's most important arms client, accounting for 25 percent of its total sales. Indeed, more so than with any other country, these relations could be reduced almost exclusively to the military dimension.

Like many countries in the region, Argentina until recently had an inordinate need for weapons. Dominated by the military even during most periods of nominally civilian rule since the 1930s, the country was also embroiled in taxing territorial disputes and plagued by internal unrest and armed opposition. The 1970s marked an upsurge of activity on both domestic and external fronts, reflected in the growth of Argentine military expenditures by over 50 percent from 1970 to 1980.

Runaway inflation, declining production, and overall economic deterioration (resulting from rapid industrialization at the expense of agricultural development and exacerbated by the demagogic policies of Juan Peron) had given rise to social unrest and political turbulence. After the military relinquished its grip in 1973 and the Peronists returned to power, factionalism and violence reached new heights. Extremists of both the right and left engaged in terrorism, with the government of Juan Peron, and then of his widow Isabel, powerless to stop the violence despite emergency decrees and the declaration of a state of siege. On March 24, 1976, the military intervened for the sixth time in less than a half century in an effort to end the chaos.* A "campaign against terrorism" of unprecedented violence was unleashed. Thousands of "leftist terrorists" were rounded up by Argentine security forces and never heard from again. By 1980 the opposition had been largely silenced, but the number of the desaparecidos (the disappeared ones) had reached some 15,000 to 20,000.t76 Reflecting this massive government effort was the fact that from 1970 to 1980 the number of police and paramilitary forces in Argentina doubled, while the armed forces as a whole increased by only 35 percent.

The atrocities attributed to the military junta were such that the newly installed Carter, administration with its emphasis on human rights could not but react. In 1978, despite Buenos Aires' anger over what it considered U.S. attempts to influence its internal affairs, President Carter decided to restrict military assistance and sales to Argentina.

For Israel, President Carter's ban on military credits to Argentina and the country's need for weapons for the Beagle Channel dispute could not have come at a better time.

General Mordechai Cur, former chief of staff of the Israeli Defense Forces, traveled to both Argentina and Chile in July 1978 with the aim of selling arms. His first stop was Chile, where he announced to President Augusto Pinochet that he "knew the Chilean army is accustomed to victories and hungry for more. "88 The statement, reported in the Buenos Aires press, created a considerable furor in Argentina. It did not, however, affect the welcome accorded to General Cur, who met with General Viola, supreme commander of the Argentine army, and was treated as if he were still chief of staff In a newspaper interview General Cur confirmed his interest in promoting arms sales: "This is no secret; everybody knows that Israel has emerged as a successful competitor to the suppliers of arms for the Argentinian army."

Argentina's territorial dispute with Great Britain erupted into open warfare. The conflict was over a group of islands, known as the Malvinas to Argentina and the Falklands to Britain, about 480 miles northeast of Cape Horn. Although the islands had been under British control, first as a Crown Colony and then as a self-governing dependency, for a century and a halt Argentina never renounced its claim of sovereignty. As successor to Spanish interests in the region, it administered the islands until Britain seized them in 1833, invoking a former sovereignty claim.

Argentina's attempt to reassert its sovereignty by invading and occupying the islands on 2 April 1982, was a failure. Britain dispatched its fleet, and by the time Argentina surrendered ten weeks later, 800 to 1000 Argentine and 250 British lives had been lost.

British suspicion after the war resulted in persistent sure on the U.S. and European nations to stem weapons sales to Argentina. Being less vulnerable to British pressure, Israel was eyed by the Argentine government as a key resource in its large and expensive arms-buying campaign.

... Argentina's defeat in the 1982 Falklands/Malvinas War then discredited the military junta and hastened its decision in mid-1982 to embark upon a gradual transition back to democracy. In anticipation of the transfer of power to civilian leaders whom the military feared would question and curtail new arms purchases, the junta was anxious to rearm before the transition was completed. It was thus that Israel's Foreign Minister Yitzhak Shamir in December 1982 was reported to have intended to sign a new arms deal with Argentina.

Israel's arms sales to Argentina, in addition to illustrating how Israel has benefited from international politics to advance its interests, are noteworthy for another reason. Nowhere else in Latin America-perhaps nowhere else in the world-is there a clearer example of Israeli realpolitik in arms sales, of the primacy of commercial interests over principles. After all, Argentina was the only country in Latin America that failed to declare war on the side of the Allies during World War II, and it was reportedly only under pressure from the United States that it refrained from overtly joining the Axis. Its German-trained armed forces were penetrated by the Nazis, and there was a strong pro-Axis faction within Grupo de Oficiales Unidos (GOU) which seized power in 1943. Moreover, the U.S. State Department's "Blue Book" on Argentina issued just prior to the elections in February 1946, apparently in the mistaken hope of hurting Juan Peron's chances of victory, contained documentary proof of Peron's Axis ties.

Despite its Jewish community, following the Second World War Argentina hosted a large colony of Nazis. Many known Nazi criminals were given de facto asylum, including Edward Roschmann, "Butcher of Riga," who was responsible for the killing of 40,000 Jews in Riga. Argentina refused West Germany's request for the extradition of a number of war criminals, such as Karl Klingenfuss and Dr. Josef Mengele. Argentina also gave refuge to Adolf Eichmann, albeit under an assumed name, in 1950. His kidnapping by Israeli secret service agents in May 1960 considerably strained Israeli-Argentine relations even though Eichmann was stateless and therefore not legally entitled to Argentine protection.

Nor was this legacy of anti-Semitism confined to the war or the immediate postwar era. Indeed, it may have reached its apogee at the time Israel was stepping up its arms export drive to Argentina in the late 1970s. Thus, in 1978 while Jewish prisoners held without charge in Argentine jails were being forced to kneel before pictures of Hitler and tortured to accompanying chants of "Jew! Jew!", Argentina was receiving a series of high-ranking Israeli military officers on "friendly visits" to sell arms.

Considering that the Argentine junta's anti-Semitic activities were well-known, having been documented by the U. S. Congress, the Catholic Church, and especially the local branch of the American Jewish Committee, 118 it is impossible that Israel was not aware of the situation. Later, in fact, it claimed that its military relations with Argentina had saved hundreds of Jews from military jails. Nonetheless, at the time the Begin government consistently refused, at least publicly, to comment. Reportedly the government even tried to restrain Jacobo Timmerman the Argentine newspaper publisher whose 1980 Prisoner Without a Name, Cell Without a Number recounts the five months of torture and anti-Semitic outrages he endured-in his virulent criticism of the Argentine junta. The perception expressed in the Latin America Weekly Report is widespread: "The Jewish State's concern for the disappeared was subordinated to political and commercial considerations." In a more general sense, Edy Kaufman, associated with the Hebrew University, was obliged to dismiss Israel's claims that arms sales were often undertaken as an insurance to protect local Jews. He added: "so far, commercial considerations seem to have prevailed. Arms are being supplied regardless of the possible consequences concerning the wellbeing of the recipient country's Jewish community."

The presence of anti-Semitism sets Argentina apart from other examples of Israeli cooperation with repressive regimes. Israel's reported involvement in training Savak, the shah of Iran's notorious secret police, can easily be justified on strategic grounds given Iran's proximity to Iraq. Its support of the Somoza government, though certainly not strategic, can be defended, as indeed Israel has done, on the grounds of repaying the old debt of Somoza's help to the Zionists before the creation of the state. * Likewise, South African ties with Israel go back to the friendship between Chaim Weizman and Jan Smuts, the assistance extended by South Africa to the early alliance between Britain and Zionism, and South Africa's support of militant Zionism in Palestine since the 1930s. Thus, while Israel's arms sales to South Africa are commercial, they are buttressed by close cooperation in the political, cultural, and scientific (not to mention nuclear and military) domains, frequent exchanges of visits and consultations at the highest level, and even in the pairing of Haifa and Cape Town as "sister cities" in 1975. With Argentina, there are no past debts to justify traffic with a regime large segments of which were known for anti-Semitism. But realpolitik in arms sales is not new, one recalls Moshe Dayan's rejoinder in the face of the storm of outrage that followed the discovery in 1959 of the government-sanctioned munitions sales to West Germany: "Germany would become strong with or without Israeli weapons-but would Israel?"

Nonetheless, there was a definite convergence of interests between the two countries in the military domain, with many examples of cooperation. Argentine planes were caught transporting Israeli arms to Guatemala and to Khomeini's Iran. Israeli and Argentine advisors together train security forces in Guatemala and help the anti-Sandinista forces operating out of Honduras. A CIA report seized at the U. S. embassy in Tehran in March 1979 indicates that the Israeli intelligence and security force Mossad carried out training missions in Argentina and shared information with the Argentine army. Finally, Israel also agreed to receive a "planeload of documents" which Argentine air force officers "spirited out of the country" when power was transferred to the civilian president, Raul AlfonsIn, in December 1983.

Israel and Latin America: The Military Connection

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