Sources inform ''Globes'' that the Ministry of Defense is clamping down on defense exports. It is tightening supervision of companies and arms traders, especially in cases of dual-use components: civilian items which can be easily converted to military uses.
The first example of the clampdown came in late 2013, when a top Ministry of Defense official announced that the ministry would demand all defense businesses to file an annual report on its marketing and export activity. The ministry also intends to expand its enforcement of trade in goods and services with citizens of countries classified as hostile, even if those citizens do note reside or operate in those countries. In such cases, even if carried out in good faith, defense companies and arms dealers will be liable to legal risk, including administrative and criminal proceedings.
The Ministry of Defense said in response, "To promote the objectives of the Defense Exports Supervision Law (5766-2007) and to increase defense exports from Israel, the Export Supervision Department will improve enforcement and the fulfilling of the provisions of the law. As part of this effort, various steps are being examined, including annual reports of certain marketing activity and methods to streamline the process and improve the service given to exporters."
The State Comptroller Report of July 2013 revealed flaws in the application of supervisory authority by some Ministry of Defense units responsible for defense exports. The sources say that the new plans, especially the clampdown, are the ministry's response to the report.
The Ministry of Defense International Defense Cooperation Agency (SIBAT) takes pride in the scale of Israeli defense exports and by its actions to increase them. Defense exports totaled $7.5 billion in 2012. The ministry recognizes the defense companies' need to expand their foreign business, in order to keep jobs, secure financing for R&D of innovative systems, and to stay profitable in response to defense cuts in Israel and target export markets.
Sources said that in view of this policy, the Ministry of Defense recognizes that it must apply tighter regulation in a way that does not sabotage the Israeli companies' foreign operations.
Series of embarrassments
Six weeks ago, Dubi Lavi succeeded Meir Shalit as director of the Export Supervision Department, after three and half years in the job. In late 2013, Shalit made a working visit to the US, during which he showed US officials the findings of an investigation into the leak of advanced dual-use Israeli technology to China. The case involved cryocoolers made by Ricor Ltd., which can be adapted for military systems. The company exported the items to France, after obtaining a permit from the Export Supervision Department. But, because of an oversight, the department did not ban the items from going to a third party, and they ended up in China. The case angered the US, which has greatly restricted trading in military systems between Israel and China for many years.
In the past few weeks, the embarrassing case of two Israeli arms traders, who attempted to send spare parts for F4 Phantom jets to Iran, has been in the news. The Israel Police is investigating the affair, and the Ministry of Defense is keeping silent. However, the sources believe that the ministry's clampdown is unrelated to that case.
Published by Globes [online], Israel business news - www.globes-online.com - on March 13, 2014
© Copyright of Globes Publisher Itonut (1983) Ltd. 2014