IAI to sell UAVs to Russia

The deal is of major significance strategically as well as commercially.

Foreign media sources report that Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1) will sell unmanned aerial vehicles (UAV) to Russia for $50 million, after the Russian Parliament approved the deal.

The deal is important on two levels. First, it tightens Israel's security relations with Russia, and lessens the chance that Russia will sell its S-300 surface-to-air missiles (SAM) to Iran or Syria. Iran wants these missiles very much. Both Iran and Syria also want to collaborate with Russia on arms systems. Second, the deal opens a new and potentially lucrative market for Israel's defense industry.

The UAV deal is a very sensitive one to the Israeli defense establishment. Its main concern was to be careful with which technologies were offered, since it did not want to divulge all technologies.

An Israeli defense official said, "After reviewing systems of IAI and Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT), the Russians decided to procure IAI systems. The deal is for tactical UAVs with ranges of up to 100 kilometers, not for IAI's large and sophisticated UAVs. The tactical UAVs are intended for border missions."

The official added, "The Russians concluded that they needed UAVs after their war with Georgia in 2006, in which the Georgians operated Elbit Systems' Hermes UAV. They visited two years ago as guests of the Israeli defense establishment."

The Ministry of Defense said in response, "The ministry does not comment on these matters in the media."

Published by Globes [online], Israel business news - www.globes-online.com - on April 12, 2009

© Copyright of Globes Publisher Itonut (1983) Ltd. 2009

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