NEWS ANALYSIS : U.S. Criticism on Arms Sales Alarms Israel

JERUSALEM â€”  Alarm is spreading among top Israeli officials and expert observers that ill feelings between the Bush Administration and the government of Prime Minister Yitzhak Shamir are spreading into the sensitive realm of defense.

The controversy over alleged Israeli diversion of American military technology to third countries--notably South Africa and China--could undermine Israel’s claim to be a Western bulwark in the Middle East, a position that serves to justify a steady inflow from the United States of technically superior weapons for Israeli defense, observers say.

And the controversy coincides with the emergence of a pair of Israeli initiatives that the Shamir government had hoped to press in Washington. Israel wants to win more U.S. foreign aid to develop its own arms industry and is also launching a campaign to try to head off new U.S. sales of sophisticated warplanes to Saudi Arabia.

In official views here, Israeli concerns are being drowned out by the noise created by allegations, based on intelligence reports, that Israel resold some U.S. weapons and used American-supplied technology to develop some Israeli-made weapons that Jerusalem has sold overseas. The issue also deepens an already profound well of suspicion between the two governments.

“These charges will have to be refuted,� government spokesman Yossi Olmert said. “We have a real interest in making sure that the charges don’t hang over our relationship with the U.S.�

If, as expected, the United States sends a team of investigators to Israel to look into the reported transfers, Israel will cooperate, a senior official said. But, the official added, Israel is not in a position of having to prove its innocence. “The burden of proof will be on those who are making the charges,� the senior official said.

If cleared, Israel will ask for official refutation of the charges by the Bush Administration, the official added.

After years of keeping a strict silence, Israel has taken the step of admitting that it sold weaponry to China, even before diplomatic relations were opened with Beijing earlier this year. Officials also confirmed that some of the weaponry under scrutiny has been sold by Israel, but they stressed that none of it contained U.S. components.

Observers note that the arms controversy comes in a period of bitter dispute between Bush and Shamir over Jerusalem’s policy of building settlements for Israelis in the occupied territories of the West Bank and Gaza Strip. Bush is delaying American action on U.S. guarantees for international loans that would make it easier for this country to borrow money to create jobs and provide other assistance for new immigrants.

Taken together, the Israelis say, the conflicts highlight a concerted effort by Bush to get Israel into line with American foreign policy in areas where the two countries part ways. “Since Bush came to office, there has been an effort to modify Israel’s political behavior,� said Dore Gold, a defense expert at Tel Aviv University’s Jaffee Center for Strategic Studies.

“We have seen a decline in the political relationship. We have not (yet) seen a deterioration in the security relationship,� declared Joseph Alpher, deputy director at the Jaffee Center. “There is concern over linking the two spheres.�

Washington has frequently expressed displeasure with the sale of arms by Israel to nations in international disfavor--countries ranging from Guatemala to South Africa and to China right after Beijing’s 1989 crackdown on the pro-democracy movement in that country.

Gold said that many of the assertions of arms diversions reportedly contained in a report--not yet made public--by the State Department’s inspector general’s office go back several years. Such issues had usually been handled quietly between the two governments, he added. “I think what we are seeing now is unique in its intensity, and many people here interpret it as simple pressure on Israel,� Gold said.

Israeli officials suspect that Bush is responding to complaints from hard-pressed U.S. arms manufacturers about real and potential Israeli competition for international arms sales. Even during the Israel-friendly Reagan Administration, Pentagon officials charged that Israel pirated American technology and sold it as its own. “The U.S. was always trying to attribute every nut and bolt in our equipment as an American advance,� a senior official said.

That official predicted that Bush, by putting Israel on the defensive, would be able to sidetrack opposition to the warplane sales to Saudi Arabia. “Bush has set the stage for taking the higher ground in the congressional debate,� the official said.

The Bush Administration has proposed selling Saudi Arabia 48 F-15E fighter bombers along with 24 less sophisticated F-15H jets. F-15Hs have advanced navigation systems that Israel wants to keep out of Arab hands. Despite the minor role played by the Saudi air force in the Persian Gulf War, Israeli officials were disturbed that they took part at all and even succeeded in shooting down some Iraqi warplanes.

“The F-15E is not for defense. It is an offensive weapon,� the official asserted.

To hold its edge over Arab rivals, Israel has asked for more U.S. military aid. It now receives about $1.8 billion a year. Out of that sum, $475 million can be invested in Israel’s own arms industry, an arrangement with Washington that is unique.

Last year, Defense Minister Moshe Arens requested another $700 million in military aid, for a total of $2.5 billion. The request would include an added $300 million for Israeli arms development.

Charges that Israel has funneled American technology to China and South Africa aggravate the already formidable task of persuading a penny-conscious Congress of the need for more military aid to Israel. “These charges against Israel are damaging to the relationship, no doubt,� government spokesman Olmert said. “They are causing real trouble.�