Congress Warns Bush, Israel On Arrow Exports
Defense Week, June 3, 2003
John M. Donnelly

Two congressional committees recently told the Bush administration and Israel to think twice before allowing sales of a U.S.-Israeli antimissile system to third countries, according to previously unpublicized language in
congressional reports.

It is unusual for Congress to publicly admonish a close ally. Yet, in two separate reports, which accompany the House and Senate defense-authorization bills for the coming fiscal year, legislators threw down the gauntlet over the possibility that Israel would sell the Arrow missile system to other nations. Israel reportedly would like to sell Arrow within the next few years to
India and Turkey, for starters.

Such sales could increase proliferation if the defensive technology were turned into an offensive system or if the deployment of defensive systems triggered an offensive arms race in the regions where the weapons were sold, some observers say. Israel has a record of transferring or attempting to transfer some military technologies to countries of concern to the
United States-especially, but not exclusively, China.

Congress appears concerned about not only the proliferation implications of Arrow sales, but also about who would profit from the sale of a product for which the United States paid most of the development costs.

Moreover, U.S. lawmakers may have gone public with their concerns about possible exports of Arrow in response to lobbying by U.S. defense contractors, some sources suggested. Arrow is viewed by some U.S. aerospace firms as
a competitor with U.S. systems-particularly Raytheon's Patriot.

Yet not all U.S. companies would lose if Arrow begins to sell in world antimissile markets. New Arrow missiles will be produced jointly by Israel Aircraft Industries (IAI)and Boeing.

After listing all that the U.S. government has done for the Arrow program, the House Armed Services Committee's new report said: "The committee has reservations about recent interest shown by Israel in the sale of Arrow to third parties. In the more general context of international cooperative missile defense programs, the committee has concerns regarding how such sales comport with the obligations of the United States under international treaties and agreements, the possibility of technology transfers that might assist foreign offensive missile programs and the rights of the United States to share in revenue generated through third-party sales."

The House report-which, like the Senate's was published last month-concluded: " The committee urges the administration to give serious consideration to policy development in this area prior to approving third-party sales of
missile-defense technologies co-developed by the United States."

The Senate Armed Services Committee struck a similar note. It, too, pointed out Congress's support for Arrow in particular and Israel in general. That support includes the majority of over $2 billion in development money
for the Arrow program itself, plus the provision of $9 billion in loan guarantees, and $1 billion in foreign military financing in the most recent " supplemental" spending bill for fiscal 2003.

Now, the senators said, in effect, they would like some consideration.

"The committee notes that the Department of Defense provided two-thirds of the funding for the development of the Arrow system and continues to provide funding for Arrow production, and that the Arrow system embodies U.S.-developed technologies," the Senate report said. "The committee notes that any sale of the Arrow ballistic missile defense system to third parties should take place only after approval by the U.S. government, pursuant to the requirements of
existing law."

Israel broached with the United States the topic of selling Arrow to India and Turkey some time ago, but neither deal appears to be moving ahead, said a source who pays close attention to these matters. Israeli officials said they would need U.S. approval for any such sales anyway. They also said that Israel must meet its own Arrow inventory requirements before it would sell to other countries. So any sales might be three or more years away.

Moreover, while acknowledging Israel might like to sell to Turkey, experts knowledgeable about Israel's views say that Turkey, in the midst of an economic crisis, does not have the money to buy Arrow.

The questions about selling Arrow to third parties come in the context of a larger debate about selling U.S. antimissile technology abroad. The administration would like to include U.S. allies under the American missile-defense umbrella and to develop and build the global antimissile shield as an international cooperative effort, similar to the way the Joint
Strike Fighter program is being run.

But the Missile Technology Control Regime, a voluntary pact, proscribes exports of missiles that can deliver a 500 kilogram payload 300 kilometers. Arrow is a defensive system, but it may be covered by that prohibition.

Boeing and IAI will get around the MTCR restrictions by building components in the United States and shipping them to Israel for final assembly. That same formula might apply to other future exports of Arrow-which may in fact be U.S.-Israeli joint exports of Arrow, not Israel-only exports.

President Bush, in National Security Presidential Directive 23, says it is time to reinterpret the MTCR so it doesn't block international missile-defense sales.

Congress is poised to continue its financial support for Arrow, despite the legislators' concerns. The House-passed defense authorization bill for fiscal 2004 provides the president's request of $64.8 million, while the Senate-passed bill authorizes $74.8 million-plus an amendment to allow the Missile Defense Agency to spend an additional $115 million on Arrow, if it finds the
money to do so.