The News Behind The News
July 26, 2000
Israel in Search of Aid
Israeli journalists, pundits and Moshe Arens are complaining bitterly about US torpedoing of Israel's Phalcon deal with China. Accusing the US of hypocrisy, these commentators say it's not for any US security reasons that the US has forced Israel out of its arms deal. Instead, America is protecting its own weapons industry from competition. In other words, Israel is pursuing free markets and the proponent of free markets par excellence is complaining. Leading this assault on the US's purported anti-market policy against Israel is Amnon Barzilai.
In fact, Mr. Barzilai writes as if he were a public relations writer (paid by Israel’s high-brow leftist “free market” newspaper Ha’aretz) for government owned Israel Aircraft Industries (IAI), Israel’s largest arms manufacturer. Barzilai has written several very strident op-eds “exposing” the myth that the Phalcon deal was about U.S. security vis-à-vis secret U.S. technology being transferred to China via the Israeli manufactured Phalcon.
In his latest word on the subject Barzilai came close to the truth but let it slip away. He wrote:“Since the cancellation of the deal to sell Phalcon spy planes to China, it has become apparent that the security of the United States was never at issue - as U.S. Secretary of Defense William Cohen admitted during his visit to Beijing, when he said the United States was operating out of business considerations. . . .”
Is this true? Of course it is. But is it false that this excludes a prime US security consideration that it control the China arms market where it can? In fact this is true, too. Barzilai has the US roped in here. The only thing wrong with his analysis, and we can't doubt he knows it, is that the same mixture of economics and security that drives US China arms policy also drives US arms policy to Israel -- with one exception. Israel gets billions of dollars of US aid. Although US State Department bureaucrats see this as a "foreign policy" instrument, US politicians know it is a foreign policy disaster, but one worth the price in votes and at least not an "anti-Israel" label from AIPAC. Called the pro-Israel lobby, AIPAC is in reality the anti-reform, pro-socialist lobby.
In sum, US policy to China is useful strategically because it keeps Beijing leveraged by the US, at the same time that an economic/arms policy with Israel is a hopelessly bad policy for the reason that it promotes Israeli socialism and prompts Israel to sell its arms in competition with American security and business interests so that Israel can run a money losing socialist albatross called Israel Aircraft Industries.
Barzilai shows us he knows this well enough. Consider his use of the famous Lavi experiment as the turning point when the U.S. begin to rein in Israel’s threatening industrial power.
“In the 1980s, the first technological crisis surfaced. The United States saw the Lavi fighter plane as a threat to the American plane manufacturers. It halted funding for the Lavi and brought about the project's cancellation.”
What kind of a defense of Israeli markets and arms manufacturing rests upon US "funding?" For all of our readers who might have forgotten, the Lavi financial boondoggle, which had been substantially underwritten by U.S. largesse was killed because it turned out to be a bottomless pit just the way every unilateral transfer has been since 1974 (and as the present Israeli government hopes to continue via the peace process for what Mr. Barak has called "a very long time." The money sustains socialism; nothing more, nothing less.)
Barzilai suggests that the money it gave Israel "for the withdrawal from the Sinai peninsula ...[continuing] since the mid-1980s [to give]...Israel an annual $1.8 billion in defense aid...[forced] the Israeli defense industry...[to] indenture...itself to the Americans.” But what does Israel do with this money that originates in misguided US policy? It is this money that keeps the system working. In particular, it permits IAI, a major budgetary drain on Israeli taxpayers with overpaid and under-worked “engineers” (even the janitors at IAI are engineers) with workers’ committees and unions and demands to prevent privatization and the like, all of which is so common in Israeli society.
But the real point here is how this all plays out on the Peace Process we are witnessing unfolding at Camp David. Before leaving, Mr. Barak told a hostile Knesset that “Peace” would bring economic prosperity. Everyone in Israel, clear about these code words, promptly went on strike. As for canceling the Phalcon sale, the US has already learned it will need to come up with an additional $1 billion.
Yes, there will be demonstrations by 200,000 strong (in a country of 4 million Jews) in Rabin Square, but if Barak can come back to Israel with a Peace Deal wrapped up in the blanket of billions of dollars in promised new aid, the opposition will wilt like butter on a hot frying pan. One by one, Barak will buy off enough of the opposition to allow Likud to pretend it opposes.
Israel is "indentured" just as Barzilai says. There is something at least ironic in selling land, including Jerusalem, to keep people on the payroll of a deadbeat government monopoly arms builder, and swiping at the US for being concerned about its own security at the expense of free market principles. There's plenty wrong with US capitalism and with its China policies. Sadly Israel is as much out of touch with the principles of markets and of security for its own people as with the facts of these things. Identifying the survival of its deathbed socialist state and peace process money, it has nothing to teach the US what it needs to know about security or about markets. Maybe there's an exception for propaganda and constant comment about our "second silicon valley." Mr. Barzilai might want to offer his services to Joe Klein, Jane Reno and Mr. Clinton too, the Microsoft slayers. There's a match there.
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