Israeli defense and technology firms have been lobbying the
government to ease restrictions on their exports to China, TheMarker has
learned from industry sources.
According to the source, the manufacturers have the support
of the Prime Minister’s Office as well as the economy and foreign ministries,
which want to expand exports to and joint ventures with China.
Their officials
are open to discussing changes to the restrictions, including ones on so called
dual-use technologies that have both civilian and military applications. But
they face opposition from the Defense Ministry, the sources said .
One source in the defense industry, who asked not be identified,
said manufacturers are pushing for a more liberal policy in light of “the
increasing difficulty of selling to Israel’s Defense Ministry and the exchange
rate, which is eroding the profitability of exports.”
One of the changes proposed by the industry and its
supporters would be to allow the sale of older technologies to China, for
example, last-generation UAVs, since Beijing could just as easily acquire them
from other countries.
Israeli military exports were $7.5 billion in 2012; the
Asia-Pacific region was the biggest market. But at the behest of the U.S.
government there are tight restrictions on the sale of defense and dual-use
technology to China and other countries. Companies must first receive approval
from the Defense Ministry’s Defense Export Controls Agency, whose staff
includes representatives from the foreign and economy ministries.
In response to U.S. demands, Israel has in recent years
widened the list of sensitive countries to include India, Russia and many
Eastern European countries. In 2009, Washington cleared Israel to jointly
produce unmanned aerial vehicles with Russia, but a year later blocked
state-owned Israel Aerospace Industries from bidding on a contract to upgrade
Indian jet fighter aircraft even though American companies were bidding.
The U.S. restrictions have a chilling effect on all Israeli
high-tech companies, even those not dealing in defense or dual-use technology,
that want to sell to China, say industry sources.
Companies fear harming their
reputation in the key American market, or finding that their products were, in
fact, used by the Chinese military even when they were sold to civilian
customers.
Defense industry sources believe the Defense Ministry has
been trying to win Washington’s quiet consent to specific export deals to
countries considered sensitive. But the ministry isn’t giving eased exports the
highest priority, as it is now holding talks on strategic cooperation with
Washington on developing and financing new weapons systems.
The Economy Ministry confirmed in a response that it was
examining the guidelines for dual-use exports and was in communication with
other government agencies on ways to ease export restrictions while still
complying with Israel’s international treaty obligations.
The Foreign Ministry said it does not speak to the media
about defense exports.
In its response, the Defense Ministry said its exports
policy complies with Israeli law and with international agreements and
understandings to which the state is a signatory.
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