Israel Aerospace Industries is carrying out a contract with Russia for Russian-based production of UAVs, based on the firm's Searcher system. Israel is not terminating previously scheduled deals with Russia, but is severely limiting its export approvals amid turbulence in Ukraine. (Israel Aerospace Industries)
TEL AVIV — Israel has forfeited some US $1 billion in defense trade and dual-use development projects with Russia due to a delicately balanced foreign and export licensing policy aimed at preserving security ties with Moscow without harming vital interests of the US and its NATO allies.
In interviews here, officials underscored Israel’s sovereign right and need to advance its diplomatic and security agenda through strengthened ties with Moscow, an increasingly pivotal player in the region and the world.
But given ongoing US-Russian geopolitical posturing and recent tensions over Ukraine, Israel must remain sensitive to the interests of its key ally in Washington, officials here say.
The result, a senior MoD official said, is a delicate and continuously calibrated “policy of balance” that has already cost Israel more than $1 billion in lost sales and opportunities for strategic cooperation with Russia.
“We could gain from Russia billions of dollars,” the official said in a recent interview. In a typical year, Israel signs about $7 billion in export deals worldwide. But even more than lost sales, the official noted Moscow’s unique capacity to influence Israel’s strategic standing in the region through its ties to enemy states such as Iran and Syria.
“We obviously gained greatly from Russia’s decision to cancel a huge S300PMU contract with Iran,” he said of the $800 million contract signed in 2007, but terminated in 2011 after years of active Israeli-Russian engagement and the September 2010 UN Security Council arms embargo on Tehran.
But, the official added, “We need to be concerned about US concerns.”
Israeli government sources insisted Israel has not suspended defense trade with Russia, nor has it forced local firms to terminate previously signed deals. Rather, it is restricting exports to less advanced technologies and systems, primarily for purposes of counterterrorism and homeland security.
The senior MoD official said Israel Aerospace Industries (IAI) is in the final stages of implementing a $400 million contract with state-owned Oboronprom for Russian-based production of unmanned aerial vehicles based on the firm’s Searcher system.
That October 2010 deal, government and industry sources here said, was expected to segue into a follow-on multiyear co-production package worth more than $1 billion based on the front-line IAI-built Heron-1 UAV. In parallel, Russia expected to procure previously denied synthetic aperture radar and other sophisticated multimission payloads for domestically built UAVs.
But unless tensions subside over Russia’s annexation of Crimea, continued intervention in western Ukraine and other hot button issues, Israel will continue to shy away from high-profile sales and strategic cooperation with Moscow.
Sources here note indefinite delays in implementation of a March 2011 Russian-Israeli framework agreement for space cooperation. Candidate projects included dual-use technology development based on Israel’s small, very high-resolution imaging satellites and an Israeli-based ground station for improving the accuracy of Russia’s Global Navigation Satellite System.
“Nothing is happening on the Russian framework agreement,” said Zvi Kaplan, former director of the Israel Space Agency who signed the 2011 agreement with Anatoly Perminov, head of the Russian Federal Space Agency.
“There were some here who thought we should push ahead on some projects,” Kaplan said. “But as much as we wanted to expand cooperation and trade ties, and as much as they wanted access to technologies and projects pertaining to our small, high-performance satellites, we couldn’t risk upsetting our American friends.”
Israel also denied a Russian destroyer, the Vitse Admiral Kulakov, docking privileges at its Haifa port in April.
First reported by Israel’s Ha’aretz daily newspaper, Israeli National Security Adviser Yossi Cohen denied Moscow’s docking request after consulting with Defense Minister Moshe Ya’alon, the Israel Defense Forces, the Foreign Ministry and Israel’s Shin Bet security service.
“All opinions were negative,” wrote Ha’aretz’s Barak Ravid.
Foreign Ministry spokesman Yigal Palmor declined to comment on Israel’s so-called balancing policy, which he described as “a particularly sensitive subject.” Foreign Minister Avigdor Lieberman, a native Russian speaker, personally manages Israel’s relations with the Russian Federation and former Soviet states.
Israel has struggled to remain neutral on the continuously evolving crisis in Ukraine so it won’t upset Russia, Ukraine, the US or its NATO allies.
In a rare departure from its tradition of voting with Washington in the UN, Israel abstained from a late March vote on a nonbinding, but highly symbolic US-led General Assembly draft resolution declaring Moscow’s annexation of Crimea “invalid.”
“We have good and trusting relations with the Americans and the Russians … so I don’t understand the idea that Israel has to get mired in this,” Lieberman told Israel’s Channel 9 television.
Andin April, during a visit to Israel by then-candidate and now Ukrainian President Petro Poroshenko, Lieberman flagged his desire to help Kiev and Moscow repair their intensifying rift.
“I would be happy if I could help them … the sooner the better,” Lieberman said following the April 21 visit.
As for defense trade with Moscow, the senior MoD official insisted Israel has full discretion over export licenses to Russia. Unlike potential exports and technology transfers to China, which require prior consultation with Washington, Israel is under no bilateral obligation to the US to coordinate its defense dealings with Moscow. ■