Defense industry of Israel
[13] The Israeli-designed Uzi submachine gun, in service from 1954 and adopted by the security forces and the military of many nations, became a major export success, providing needed revenue for the Israeli arms industry.
[13] The Kfir, based on plans of the French Mirage 5 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.
[13] Officials asserted that spinoffs from the arms industry, especially in electronics, had stimulated the civilian high technology sector, thus contributing indirectly to export earnings.
[14] The largest of the defense firms was the government-owned conglomerate, Israel Aerospace Industries (IAI) that manufactured the Kfir and Arava aircraft, the RBY MK 1 light armored car, Gabriel antiship missiles, and high-speed patrol boats.
[14] IAI began in 1933 as a small machine shop, later catering to the maintenance and upgrading of the motley collection of aircraft acquired during the 1948 Arab–Israeli War.
[14] Purchase agreements for foreign military equipment frequently specified that production data and design information, together with coproduction rights, be accorded to Israel.
[15] By the late 1980s, Israel had become one of the world's leading suppliers of arms and security services, producing foreign exchange earnings estimated at US$1.5 billion annually, which represented one-third of the country's industrial exports.
[17] Because the defense industry was not subsidized by the government, it was indispensable for major arms manufacturers to develop export markets, which accounted in some cases for as much as 65 percent of total output.
Foreign military sales at first consisted primarily of the transfer of surplus and rehabilitated equipment stocks and the administration of training and advisory missions.
[17] Particularly after the October 1973 War, however, foreign sales of surplus IDF stocks and weapons systems from newly developed production lines increased dramatically.
[17] In addition to its economic and trade value, the expansion of the arms industry assured Israel of the availability of a higher production capacity to supply the IDF at wartime levels.
[17] It also provided Israel with opportunities to develop common interests with countries with which it did not maintain diplomatic relations and to cultivate politically useful contacts with foreign military leaders.
[17] In part through joint ventures and coproduction, Israel succeeded in breaking into the more lucrative American and West European markets.
[18] The primary concerns were that arms supplied by Israel not fall into the hands of its enemies and that secret design innovations not be compromised.
[18] The Israeli minister of defense in 1982 acknowledged the negotiation of an arrangement worth US$28 million, including spare parts for United States-manufactured airplanes and tanks in the early 1980s.
[19] Israel dispatched teams there to train elite units and to help reorganize and rearm a division deployed in Shaba Province.
[19] The US and Israel generally are considered allies and thus have many strong ties through defense industry, but there have been notable controversies over the years and at present.
These have included the 'Dotan Scandal' of diverted funds and violations of the US ITAR restrictions by selling sensitive equipment and data to China (in particular the Phalcon incident in the 1990s[20]).
[24] Israel Military Industries Ltd. (IMI), also referred to as Taas (Hebrew: תעש, התעשייה הצבאית), is an Israeli weapons manufacturer.
IWI is part of a group of companies that develops and manufactures a wide array of guns and rifles used by armies and law enforcement agencies around the world.
