In Israel, Furor Over Super Fast-Tracked Submarine Deal With Germany

TEL AVIV — It took more than seven years for Israel to reach its 2010 agreement with Washington on its first squadron of F-35s, the debut pair of which is scheduled to arrive here next month.

The process involved intensive staff work within the Israel Air Force (IAF) under three commanders; continuous coordination with American government and industry representatives; and the support of three Israel Defense Forces (IDF) chiefs and the same number of successive defense ministers and prime ministers.

But according to explosive headlines here over the past few days, it took less than a year to conclude an Israeli-German agreement for three new submarines; just six months if one counts back to the removal in May of former Defense Minister Moshe Ya'alon, who opposed the deal.

While a former Ministry of Defense (MoD) director-general last February conditionally endorsed the need to start procuring submarines in the out years well beyond the recently approved five-year plan, the deal was essentially negotiated by one office and spearheaded by one man: Prime Minister Benjamin Netanyahu.

According to Netanyahu's office, the Israeli Cabinet unanimously approved the German deal on Oct. 26.

Even now, details of the estimated €1.2 billion (US $1.3 billion) deal with the government of German Chancellor Angela Merkel remain a mystery to the Israeli Navy and the IDF General Staff.

"The Navy is in initial study phases for a next-generation submarine," a general officer here told Defense News on Thursday.

"It’s going to take years of work since we’re talking about an entirely different submarine from the Dolphin or the Dolphin AIP," he said, referring to the first three Israeli-designed Dolphins and the follow-on, three air-independent propulsion submarines contracted with ThyssenKrupp Marine Systems (TKMS).

When asked about Navy involvement in the recently approved deal, the officer said: "Whatever went on did not happen at the professional level. It’s all political, and we’re not dealing with these stories."

A top-tier industry executive whose firm has worked hand-in-hand with the Israeli Navy to design a good portion of the combat weapons suites supporting Israel’s undersea force said he had no idea what the deal involved. "We were never approached by anyone to prepare anything associated with this package. It’s all so highly unusual," the executive told Defense News.

Israel’s daily Ma’ariv first reported last month that Netanyahu’s office was secretly negotiating with counterparts in Berlin a package of three nuclear-capable submarines and two anti-submarine surface (ASW) ships in order to prepare for an eventual confrontation with Iran later in the next decade, after the nuclear deal with Tehran expires.

According to Ma’ariv senior security analyst Ben Caspit, Netanyahu secured assurances that Berlin would underwrite some 30 percent of the costs of the package.

But it wasn’t until a Nov. 15 report on Israel’s Channel 10 that the story gained traction, when the network flagged a potential conflict of interest between Netanyahu and the Kiel, Germany-based TKMS shipyards where the new submarines are to be built.

According to the network, Netanyahu and the Israeli agent for TKMS share the same attorney, and that attorney’s law partner is the same man who Netanyahu entrusts to negotiate the most sensitive affairs of state.

Since then, Israeli news outlets and outraged lawmakers who were left out of the loop have raised serious questions about the connection between Netanyahu and his personal attorney, David Shimron, who is also representing Micky Ganor, a retired Navy officer and authorized TKMS agent who happens to live near the prime minister in the plush seaside golf community of Caesaria.

To add to the intrigue, Shimron shares a law firm with Yitzhak Molcho, Netanyahu’s confidante and attorney on official matters, including negotiations with foreign governments.

"David Shimron and Yitzhak Molcho work for Netanyahu for one shekel a year: never has the currency rate of the shekel been higher," wrote Nahum Barnea, a veteran columnist for Israeli daily Yediot Ahronot.

Since the Channel 10 report, Netanyahu’s office put out several statements, all insisting that the process "was done in an orderly and professional [manner] with no outside influence and with the recommendation of professions in the security establishment, the National Security Council and the Foreign Ministry."

On Nov. 17, as prospects mounted for a special prosecutor to probe the so-called submarine affair, Netanyahu’s office’s sought to clarify "once and for all" the following points:

Shortly after Netanyahu’s notice, former Defense Minister Ya’alon went public with his version of events, insisting that he had "vigorously opposed" the project since new submarines at this time were not needed.

"I don’t know what was done and what was signed after I left the Defense Ministry," Ya’alon wrote. He added that "the very disturbing reports" should trigger a "comprehensive investigation by the relevant parties."

In an interview, former Defense Minister Amir Peretz, one of Ya’alon’s predecessors at the MoD, told Defense News he didn’t know of a single case where a major procurement project was advanced without the backing of the minister of defense.

Israeli Prime Minister Benjamin Netanyahu attends a ceremony for Israel's new submarine on Sept. 23, 2014, in the northern Israeli port city of Haifa. The INS Tanin was the fourth Dolphin-class submarine made in Germany for the Israeli Navy.

Photo Credit: Kobi Gideon/Israeli Government Press Office via Getty Images

"It’s just not done," said Peretz, an opposition lawmaker and longtime member of the Foreign Affairs and Defense Committee.

Peretz acknowledged that, at times, defense ministers did not require support from the IDF General Staff to promote a project deemed vital to Israeli security. Peretz did just that following the 2006 Lebanon war, when he directed the MoD to award its first procurement contract to Rafael for the Iron Dome defense system.

"The defense minister is not always beholden to the General Staff, but in matters of major military investments, the defense minister and the prime minister should see eye to eye," he said.

In a show of support for Netanyahu, Defense Minister Avigdor Lieberman, Ya’alon’s successor, told reporters he was in favor of the German submarine deal.

"I think it’s very correct, in light of the arms race in the region," Lieberman said. "There were discussions on the submarines and I think it’s a necessary acquisition. The defense establishment had an integral role in the decision-making and in negotiations. All the data was provided by the defense establishment."

However, in a subsequent timeline released by Netanyahu’s office, it appears that only after the prime minister’s first meeting with Merkel, in October 2015, and prior to his second meeting with the German Chancellor, in February 2016, was the defense minister and the MoD director asked to get involved in the process.

Once Lieberman replaced Ya’alon in May of this year, it took only six months for Netanyahu’s government to unanimously approve the deal. Now supporters of the deal hope to conclude negotiations and secure a final agreement with Merkel prior to Germany’s federal elections scheduled in less than a year from now.

Netanyahu spokesman David Keyes did not respond to repeated requests for clarification on whether the Cabinet-approved deal with Germany would also include two ASW surface ships.

However, it appears that the ASW ships have been dropped from the agenda, due to Lieberman’s unwillingness to challenge fierce resistance within the IDF to what is widely considered a superfluous and unnecessary investment.

Two teams of Israeli Navy specialists are working full time with TKMS and German Naval Yards Kiel to build Israel’s sixth strategic submarine — the Dolphin AIP INS Dakar — and four new 2,000-ton Sa’ar-6 corvettes.

The first Sa’ar-6 is scheduled to arrive here by early 2020, about a year before the Dakar is planned to reach its home base in Haifa, Israel. In a May 31 interview, Rear Adm. Yosef Ashkenazi, head of Navy Materiel Command, referred to the undersea vessel now taking shape in Kiel, Germany, as the service’s "sixth and final" Dolphin-class submarine.

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