ISAIAH hoped it would be different.

The day would come, he prophesied, when Israel could beat its swords into plowshares and its spears into pruning hooks. True, Israel today produces more than its share of plows and pruning hooks - but it produces even more swords and spears in the form of tanks, fighter jets, rockets, machine guns and military advisers.

By Thomas L. Friedman

• Dec. 7, 1986

No one here likes to talk about it, but Israel, with only 4 million people, has become one of the top ten arms exporters in the world and Israeli businessmen are among the world's leading arms merchants. Israel competes head-to-head with such major industrial powers as Britain, France, Brazil and West Germany.

Although the continuing furor over the Iranian guns-for-hostages affair has brought Israel's role as global arms supplier into rare public view, it revealed only a tiny slice of Israel's overall weapons trade. Defense Ministry sources estimate that Israel exports $1.2 billion in arms and security services each year -more than a quarter of its total industrial exports. Roughly $500 million worth is shipped to the United States.

A quick glance across the globe finds Israeli advisers training and arming elite troops in Cameroon and Zaire, Israeli Kfir fighter jets being flown by the Ecuadoran air force, Israeli-made patrol boats guarding the shores of Sri Lanka, and Israeli cannon fitted to upgraded Chinese tanks, The rebel forces in Nicaragua have Israeli-made weapons, as do the regular armies of Honduras, Argentina, South Africa, Chile, Belgium, Holland, Kenya, Singapore, Malaysia, Taiwan and Thailand - to name but a few. Israeli-made security systems guard oil reserves in Australia, army bases in Taiwan and industrial plants in Korea. Even England's Buckingham Palace is protected by an Israeli-made security fence.

Much of the Israeli arms industry is Government-owned, and exact financial data are secret. But according to widely-used estimates, as many as 140,000 Israelis - 10 percent of the work force - are involved in manufacturing or selling military hardware.

''Israeli arms manufacturers have reached such a level of production and importance within the Israeli economy that exporting weapons has become an economic imperative,'' observed Aaron S. Klieman, a Tel Aviv University political scientist who is Israel's leading expert on arms sales.

That is especially true, Professor Klieman added, now that cuts in the Ministry of Defense's budget have sharply reduced its orders to domestic arms manufacturers. ''This has left Israeli arms producers with no choice but to look abroad if they hope to maintain anything close to full production or full employment,'' he said.

But economic necessities can make for diplomatic virtues. The Israeli arms sales to Iran are only the latest example of how Israel can use military exports to establish contacts with regimes that would otherwise shun the Jewish state. Like it or not, say Israeli military experts, arms sales are now an integral tool of Israeli foreign policy.

'Were Israeli defense marketing strategies to fail, it would have a profound impact on Israeli security, economic viability and diplomacy,'' noted Professor Klieman. ''Arms sales in the 1980's are a strategic national commitment for Israel.'' SUCH statements embarrass many Israelis. The idea that the Jewish state should be so dependent on weapons sales for its economic or diplomatic survival is profoundly troubling to some people here, clashing with both their self-image and their vision of the Zionist utopia.

But many others, the so-called ''realists,'' counter that arms sales are a fact of life for all nation-states, but especially for an Israeli society that has always lived close to the edge. If Israel did not sell arms, others would, and Jerusalem would be deprived of the economic and strategic benefits such sales bring, without having changed the world a whit. Anyway, the realists argue, survival is as much a moral imperative as nonviolence: better a tarnished utopia than a dead dream.

During a recent Knesset debate about arms sales to Iran, these two schools clashed head on. Rabbi Menachem Hacohen of the Labor Party put the moral argument succinctly when he declared on the parliament floor: ''Israel should revert to its normal size and avoid involvement in the sale of arms to corrupt regimes. Can the Jewish state afford to supply weapons for dark and deadly purposes?'' Pessah Gruper, a Likud Party member, shot back: ''Let's get off the subject of arms to Iran. There are more important things to talk about than ethics and ideology. When a country lives in a state of war, you can't tell the Government to be choosy about its arms transactions.''

For the foreseeable future, Mr. Gruper's arguments will carry the day. A quick look at the circumstances that gave birth to the Israeli arms industry makes that clear. Israelis actually went into the arms business in the mid-1940's, during the pre-Independence period, when a weapons embargo was in effect and the incipient Jewish army was badly in need of light arms and explosives. It was a shortage of arms, not of fighters, that almost cost the Jews their state - something that has never been forgotten here.

After the War of Independence, then-Prime Minister David Ben-Gurion vowed never again to be so vulnerable, and he consolidated the nation's scattered and unsophisticated weapons factories into a single industry, which was soon manufacturing small arms - most notably the Uzi submachine gun - producing mortars and ammunition, overhauling and upgrading tanks and aircraft and developing some electronic systems.

One of the first and most controversial foreign sales was Mr. Ben-Gurion's secret 1959 decision to sell 250,000 Israeli-made mortar shells to - of all places - West Germany. Mr. Ben-Gurion later justified the sale to the cabinet, saying that Israel will ''sell arms to foreign countries in all cases in which the Ministry of Foreign Affairs has no objection.''

Even then, noted Professor Klieman, the sale followed a pattern that has continued right up through the recent Iran affair: Decisions were reached at a secret sub-cabinet level; the Defense Ministry, as opposed to the Foreign Ministry, dominated decision-making; and there was no comprehensive policy, only a case-by-case approach based upon a predisposition to sell.

By the late 1950's the three major elements of Israel's Government-owned arms industry were in place: Israel Military Industries (I.M.I.), specializing in small arms, artillery and ammunition; Israel Aircraft Industries (I.A.I.), specializing in aircraft, missiles and naval vessels, and the Rafael Armament Development Authority, specializing in research and development and in missile systems.

Later, these giants spawned a network of smaller, privately owned high-tech military and electronics firms, such as Tadiran, El-Op, Elbit, Elisra and scores of others - some of them publicly traded - listed in a Government-published, 314-page Israel Defense Sales Directory. Exactly how much of their business is from arms sales can not be determined, since most of these companies manufacture a wide range of electronic products.

Many of these companies owe their real expansion to the years after the 1967 war. No one did more, while trying to do less, for Israel's arms industry than Charles de Gaulle, the former president of France, which had been Israel's main arms supplier. In the wake of the 1967 war, Mr. de Gaulle abruptly cut military ties with Israel and imposed an immediate embargo - even for products already bought and paid for.

The net effect was that Israel's military industries quadrupled their output during the three years immediately after 1967, as the Government vowed to make at least one of each major weapons system. The result was the Kfir fighter jet - built, ironically, with plans of the French Mirage III stolen by Israeli secret service agents - the Merkava tank and the Saar III navy patrol boat.

During the 1970's and 1980's, the Israeli weapons and security industry continued to expand in size and sophistication into one of the biggest employers in Israel. The foreign buyers became crucial in the 1970's, a defense industry official explained, ''because as we started to produce more sophisticated weapons systems, the development costs became more and more expensive. It might cost IAI, for example, $50 million to develop a missile, but we, with our limited demand, could only buy $20 million worth. This made for very high average costs per unit. Exports enabled us to achieve the economies of scale so that we could buy the same product at a lower average price.''

David Ivri, the director general of the Israeli Ministry of Defense, said there are several factors explaining Israel's ability to compete with much larger nations in arms sales.

First, whether it is a simple mortar made by Soltam Ltd. or a sophisticated electronic warfare jamming system sold by Tadiran, Israeli salesmen can offer state-of-the art technology stamped with the military equivalent of Babe Ruth's signature on a Louisville Slugger: ''Tested in battle by the Israeli army.'' At times, Israeli arms manufacturers will sell a product at a loss to the Israeli army or air force, simply to gain the endorsement for overseas markets.

''We have a lot of advantages reputation-wise,'' said Mr. Ivri, ''but you still have to offer competitive prices.''

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https://www.nytimes.com/1986/12/07/business/how-israel-s-economy-got-hooked-on-selling-arms-abroad.html

NOTE THE DATE OF PUBLICATION: 36 YEARS AGO....

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