Procurement: December 27, 2003


Despite, or perhaps because of, three years of fighting with Palestinian militants, Israel's weapons exports are skyrocketing. Sales in 2001 were $2.6 billion, which grew to $4.1 billion in 2002 and are expected to top that figure for 2003. In 2002, the only two nations with larger weapons exports were the United States ($13.2 billion) and Russia ($4.4 billion.) Israel's total exports in 2002 were $30 billion. Some analysts contend that Israel is using overly optimistic standards for calculating weapons sales and that their 2002 sales were actually only about one billion dollars. Nevertheless, there are some 200 companies in Israel that manufacture military equipment, and five of them (Israel Aircraft Industries, Israel Military Industries, Rafael and Elbit) account for over 90 percent of the export sales. Of those five firms, only Elbit is a private company, the others are owned by the government of Israel. Although most of these companies began with contracts to supply the Israel armed forces, they have grown through exports. For example, Israel Aircraft Industries had sales of $2.1 billion in 2002, and 75 percent of that was exports. Israel does so well at arms exports because it has fought, and won, five wars in the last 55 years and has a reputation for overall military excellence. Moreover, Israel will sell to just about anyone if they have the money. This sometimes causes problems, as when Israel tried to sell some AWACs type aircraft to China. The United States is a partner in several Israeli weapons development projects, and gives Israel several billion dollars in military aid each year. Thus the United States can exercise a veto over some Israeli sales, and did so when it came to selling high tech stuff to China. That aside, Israel has lots of proven weapons and military equipment available for sale and sees this as a growth area for their economy. Moreover, Israel sees a strong arms industry as necessary for national survival, as many nations have, in the past, canceled deliveries of weapons to Israel because of political disagreements. 


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