Israel’s now one of top arms exporters
UPI, Sep 18, 2012

Israel has become one of the world’s leading arms exporters with deals worth $12.9b from 2004-11, mostly with developing countries, the US Congressional Research Service says. That put Israel in eighth place among major arms suppliers, behind the US, Russia, France, Britain, Germany, China and Italy. The CRS report said actual Israeli arms transfers total $10.6b in 2004-11 but that’s because deliveries are often made some time after contracts are signed. Defense exports are reported to be the backbone of Israel’s high-tech economy. There are some 150 companies in the defense sector with combined revenues estimated at more than $3.5b/yr. The main companies are state-owned Israel Aerospace Industries and Rafael Advanced Defense Systems. Along with private firms they produce a wide range of conventional systems, ranging from ballistic missiles and anti-missile weapons, main battle tanks, radar and communications systems and warships. In 2010, Israel’s defense industry sales totaled $9.6b, but Oxford Analytica observes:

Israel’s defense companies are now facing a problem similar to the one they faced in the late 1970s and early 1980s, when they reacted quickly to the lessons learned during the 1973 war and the spate of airline hijackings. Systems invented at that time included unmanned aerial vehicles and sophisticated airport security networks but for a while it was hard to sell these products. Both systems have since been adopted by the security forces of many countries and form the core of Israeli defense exports.

These days, the defense industry’s trying to implement lessons learned from the wars in Afghanistan and Iraq, Israel’s 34-day war with Lebanon’s Hezbollah in 2006. However, Oxford Analytica notes:

Rrelated products are arriving on the market when the wars in Iraq and Afghanistan are winding down and defense budgets in most countries are being cut. Foreign buyer interest in these systems has thus been minimal.

The US provides Israel with $3.1b/yr in military aid, although much of that’s spent on US weapons such as Lockheed Martin’s F-35 Joint Strike Fighter and other military hardware. But the US also heavily fund Israeli defense projects. In July, Congress approved an aid package of nearly $1b on top of the annual aid for developing IAI’s Arrow-3 ballistic missile interceptor with Boeing, as well as lower-level systems like Iron Dome and David’s Sling being developed by Rafael. These systems and their associated radars, which will eventually be part of a multitiered Israeli missile defense shield, are likely to become crucial exports for Israel’s defense sector export. It’s not clear whether the US will buy any of the systems but South Korea, India and other important buyers of Israeli defense products have expressed interest. Among the major contracts Israeli companies have signed in 2012 is a $1.6b deal between IAI and Azerbaijan, a key Israeli defense customer, in January for aircraft, missiles, unmanned aerial vehicles and intelligence systems. Israel has become a strategic ally of the former Soviet Asian republic. This has heightened speculation that Israel uses Azerbaijan for intelligence surveillance of the Islamic Republic. In July, IAI signed two deals worth nearly $1b with Italy. One involves building a $182m high-resolution optical military satellite system, known as OPTSAT-3000, for Telespazio, prime contractor for a $200m satellite, launch services and logistics services and in-orbit testing. IAI will also supply two Gulfstream G-550 executive jets converted to early warning aircraft equipped with NATO-standard communications, tactical links and other subsystems developed by its Elta Systems division, each worth $750m.