January 8, 2023

Capitalism came early to Israel’s strategic defense and weapons industry.  In the 1930s, entrepreneurs were delegated responsibility by national leaders for keeping arms and weapons flowing into the hands of Jewish freedom fighters.  Their companies designed, manufactured, and supplied the nascent citizen army with small arms, ammunition, and explosives.

‘); googletag.cmd.push(function () { googletag.display(‘div-gpt-ad-1609268089992-0’); }); }

This month, Israel allowed the sale of a publicly owned defense and weapons company to foreign nationals.  It comes on the heels of a rising trend of foreign nationals acquiring Israeli companies.  This sale is fraught with potentially ominous implications for the national economy and security.

The defense and weapons industry evolved into an intimately intertwined tenacious web of private, public, and state-owned companies in partnership with domestic security agencies, Knesset committees, and the foreign service.  Our military-industrial complex dominates the economy and influences public policy and budget choices.  It prospers from annual sales worth tens of billions of dollars in defense products and weapons systems for commercial, military, and homeland security to Israel and other nations.  The partnership has spurred innovation, keeping Israel ahead of the defense technology curve.  Weapon superiority clearly deters enemies from war and promotes peace, evidenced by the Abraham Accords.  But the industry has had more than its share of corruption scandals in a Gilded Age of greed, amorality, and corruption in Israel’s politics and business.

On October 19, 2022, RADA Electronic Industries, headquartered in Netanya, approved an Agreement and Plan of Merger with privately held, American-based Leonardo DRS.  The latter was a subsidiary of Italy-headquartered Leonardo S.p.a.  The merger created an opportunity for DRS to become a public company assuming RADA’s place on the NASDAQ exchange.  There is a dearth of information about control and business plans foretelling management’s intentions for the Israeli employees and operations.  This is consequential if not an earth-shattering event for the business trajectory of Israel’s security business.

‘); googletag.cmd.push(function () { googletag.display(‘div-gpt-ad-1609270365559-0’); }); }

None of the three governments publicly objected to the merger.  This is probably because Israel, Italy, and the U. S. are strategic allies.

Strategic Defense

The strategic principle of war and football is that the best offense is a good defense.  It seared into Israel’s memory keepers from past lessons taught to the Jews.

Defending the Warsaw ghetto was heroic but futile.  The Polish Home Army sent two heavy machine guns, four light machine guns, 21 submachine guns, 30 rifles, 50 pistols, and 400 grenades to the 460,000 Warsaw Ghetto Jews.  The Allies boycotted the uprising.

The anti-Israel cabal in Britain refused to arm the Jews of Palestine.  President Truman’s administration and the U.N. embargoed weapons shipments to the fledgling state.  Sanctions lasted in some form into the 1960s.  France put a weapons embargo on Israel in 1967, blaming Israel’s pre-emptive attack.  President Johnson changed the relationship with Israel.  By 1968, the government signed deals with Israel to send Skyhawks, Hawk missiles, and Phantom jets and made loan guarantees to purchase them.

The turning point came in 1973.  The Yom Kippur War was the signature event that sparked the explosive growth of Israel’s domestic defense and weapons industry.  Henry Kissinger and James Schlesinger were disseisors in the Nixon administration.  They self-enforced an arms embargo on Israel while the Soviets supplied and re-supplied Arab forces.  Never again, Israeli leaders swore, will the State be held hostage and without its own arms and weapons.  By 1988, JStor, an academic journal, reported Israel as “home to an impressive military-industrial sector which ranks in the top ten in total exports.”