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Israel
DEFENSE PRODUCTION AND SALES
The manufacture of small weapons and explosives for the forerunners
of the IDF had begun in secret arms factories during the 1930s.
The War of Independence was fought with Sten guns, grenades, light
mortars, antitank guns, flamethrowers, and light ammunition, much
of it produced in Israel with surplus United States machinery
acquired as scrap after World War II. After independence and the
departure of the British, massive imports of wartime surplus aircraft,
tanks, and artillery were possible. The Israeli arms industry
made a specialty of upgrading and overhauling such equipment.
The Israeli-designed Uzi submachine gun, adopted by the security
forces of many nations, was a major export success, providing
needed revenue for the arms industry. The Czechoslovak arms agreement
with Egypt in 1955 and the 1956 War gave further impetus to weapons
production. The decision to become a major producer of armaments
was inspired by the arms embargo imposed by France--then Israel's
main supplier of arms--just before the outbreak of the June 1967
War. By the mid to late 1970s, indigenous suppliers were delivering
an increasing share of the IDF's major weapons systems. These
systems included the Reshef missile boat, the Kfir fighter plane,
the Gabriel missile, and the Merkava tank. The Kfir, based on
plans of the French Mirage III acquired clandestinely through
a Swiss source, was powered with a United States General Electric
J79 engine, but embodied Israeli-designed and Israeli-produced
components for the flight control and weapons delivery systems.
Domestic production reduced foreign exchange costs for imports,
provided a degree of self-sufficiency against the risk of arms
embargoes, and facilitated the adaptation of foreign equipment
designs to meet Israeli requirements. A high concentration of
well-qualified scientists, engineers, and technicians, a growing
industrial base, and a flow of government resources toward military
research and development facilitated the rapid expansion of locally
produced military equipment. Officials asserted that spinoffs
from the arms industry, especially in electronics, had stimulated
the civilian high technology sector, thus contributing indirectly
to export earnings. This claim has been disputed by Israeli economists
who concluded that the US$700 million spent annually on military
research and development would have produced five times the value
in export earnings had it been spent directly on civilian research
and development. Even among government leaders, there was growing
realization that the defense industry had become too large and
that the government should not be obliged to come to the rescue
of large defense firms in financial difficulty.
Data as of December 1988
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