When the Carter administration cut off military aid to the rightist regime of Guatemala because it refused to accept human rights requirements, Israel was one of several countries that filled the gap. Today Guatemalan troops wear Israeli uniforms, tote Israeli automatic rifles and conduct counterinsurgency operations learned from Israeli instructors.
When the contra rebels in Nicaragua faced a congressionally mandated cutoff of U.S. aid, Israel was one of the countries the CIA turned to. Private Israeli arms merchants -- one of whom was later involved in the secret White House arms sales to Iran -- sold the contras light arms funneled through Honduras. At around the same time, U.S. and Israeli sources have said, Israel's government supplied several million dollars in aid to the contras at the behest of CIA Director William J. Casey.
When the United Nations ratified a mandatory arms embargo against South Africa in 1977, Israel was one of the states that quietly defied the ban by maintaining its own pipeline of military equipment to the white-minority government there, according to informed sources here and in South Africa. Last July, South Africa unveiled a new jet fighter bearing an uncanny resemblance to the Israeli Kfir, and an Israeli Cabinet minister privately has confirmed that key parts of the plane are indeed the same.
While Israel publicly has denied involvement in each of the above cases, senior officials privately concede that such deals take place.
The justifications they offer include the need to support friendly regimes in an international climate hostile to Israel; the need to honor requests and aid the interests of the United States, Israel's chief ally, and the role arms sales can play in providing a form of life insurance for small, vulnerable Jewish communities in Third World states.
But another factor invariably has come to dominate Israel's decisions about where and to whom it should sell arms: the economic imperative.
Israel's drive to develop one of the world's most sophisticated and competitive arms industries compelled it to become a weapons exporter in order to help foot the bill.
And its drive to maintain and constantly improve that industry at a time of economic hardship has pressed the Jewish state to search for new customers and, at times, seek opportunities and take risks that larger and wealthier arms exporters might avoid. "We're not doing anything different than a dozen other countries I could name," said a senior Israeli official, who asked not to be identified.
"We just get a lot more scrutiny than the others. The fact is that there's a highly competitive arms market and either you sell what you can and not ask too many questions about where it's all going or you lose out."
Such sales have helped give Israel "global reach" far beyond what a postage stamp-sized nation of 4 million could otherwise expect to wield, says Prof. Aaron Klieman, a Tel Aviv University political scientist and expert on arms sales. "Conventional arms have been converted by Israel into unconventional diplomacy," he wrote in a recent study.
But critics contend Israel's reliance on its defense industry has given arms dealers too much power over government policy and tarnished the country's image.
"The needs of the arms manufacturing establishment dictate much of Israel's foreign policy," said Yossi Sarid, a left-wing Knesset deputy who sits on the parliament's key foreign affairs and defense committee. He called this phenomenon "unfortunate and very dangerous."
The controversy over Israel's role in brokering the arms-for-hostages exchange between the United States and Iran -- and the disclosures, still denied by officials here, that Israel sold millions of dollars in weapons and spare parts to the Khomeini regime long before the exchange began in 1985 -- has focused unusual public attention on a vast part of Israeli society that generally has remained hidden from view. It has exposed a shadowy world of middlemen that the government can use to obscure its role in arms dealings it prefers to conceal.
It has also exposed the cold pragmatism that is at the core of Israel's arms sales policy.
"If an Iranian regime is friendly, we let them have arms to celebrate the friendship," said senior statesman Abba Eban, chairman of the Knesset foreign affairs and defense committee and a subdued but persistent critic of Israel's role in the Iran affair. "But if it is hostile, we let them have arms to mitigate the hostility. We end up in a situation where the selling of arms is the only constant."
Officials here like to emphasize that, compared with the world's arms giants, Israel is a small fish. It is ranked by experts between ninth and 15th worldwide, depending on the source.
"When it comes to arms sales, you won't find Israel near the top of any list," said former defense minister Moshe Arens in an interview before the Iran affair became public.
But a more revealing figure to some analysts is that Israel's estimated $ 1.2 billion in annual arms sales and security services now amounts to nearly one-fourth of its total industrial exports. The country's defense industry employs between 140,000 and 200,000 people to make and sell arms -- roughly 10 percent of the country's work force.
In its early days, Israel's defense industry manufactured light arms and refitted other nations' aircraft and tanks. But these days Israel is identified more with such "big ticket" items as high-performance aircraft and tanks, missile systems, radar and small naval craft -- all of it battle-tested in Arab-Israeli wars.
Lately it has also moved into the business of terrorism control. An estimated 30 private military consulting agencies have sprung up in recent years, manned by former career military officers. The officers retain their commissions while on reserve status and offer services ranging from setting up security systems for hotel chains and supplying bodyguards to VIPs to training police or antiterror units in Third World nations.
Recent incidents have caused embarrassment to the government, including charges in New York that a retired Israeli general was involved in an illegal scheme to peddle $ 2.5 billion worth of warplanes and other military hardware to Iran. Such incidents led Defense Minister Yitzhak Rabin earlier this year to issue a new set of regulations tightening restrictions on foreign arms deals.
Nonetheless, industry sources say the pressure to sell abroad has actually increased due to extensive cuts in Israel's defense budget at a time when the nation is seeking to cure its chronic economic ills through fiscal austerity. One smaller producer of jet engines, Bet Shemesh, is already in receivership and several other defense companies are said to be tottering on the brink.
To make those foreign sales, companies rely upon extensive networks of contact men and go-betweens. Among those middlemen are estimated to be between 700 and 800 former career military officers whose training and work experience qualify them for little else. These are the kind of men the government itself turned to when seeking to forge the Iran connection, and they have been active for many years in Latin America and Africa.
The Israeli connection in Nicaragua dates back nearly 40 years, to the time when the late Nicaraguan president Anastasio Somoza Garcia provided diplomatic cover for arms smuggling to the Jewish underground in Palestine and a U.N. vote in favor of the creation of the Jewish state.
Israel maintained arms shipments to the regime of Somoza's beleaguered son and heir, Anastasio Somoza Debayle, long after the United States and many other western nations had ceased. Indeed, a strong warning from the Carter administration compelled Jerusalem to order back to port two shiploads of arms on their way to Somoza in 1979, an event that the deposed dictator later cited as one of the reasons he finally fled the country.
Israel has repeatedly denied any involvement with the contra rebels, although Prime Minister Yitzhak Shamir has frequently criticized Nicaragua's Sandinista regime for its support of the Palestine Liberation Organization. Defense Minister Rabin told the Israeli Knesset last week in a carefully worded statement that Israel "does not maintain contacts or ties with the rebels in Nicaragua. Nor does it supply arms from here to them. Israel did not grant permission to any Israeli to assist, supply know-how or sell weapons from Israel to the rebels in Nicaragua."
But informed sources here contend Israeli shipments to the contras may date back as far as 1982, when the rebels began using large quantities of Soviet-made AK47 automatic rifles said to have been captured by the Israelis in Lebanon. Later shipments reportedly took place in 1984, after a congressional cutoff of aid to the rebels.
The weapons -- Soviet-made rocket-propelled grenade launchers and grenades, assault rifles and ammunition -- were shipped to the Honduran Army, according to end-user certificates signed by Honduran military officials, copies of which were obtained and published last year by the Hebrew-language newspaper Maariv. The newspaper cited interviews with unnamed arms dealers as saying the weapons ultimately ended up with the contras. One tip-off was that the Honduran Army is not known to use the RPG7 grenade launcher, but the contras are.
The newspaper account, some of which has been confirmed by knowledgeable sources here, names three Israeli middlemen as involved in the contra dealings: Yaacov Nimrodi, Pesah Ben Or and David Marcos Katz.
Nimrodi, a London-based arms dealer who was former military attache at the Israeli Embassy in Iran in the days of the shah, also played a key role in setting up the secret exchange between Washington and Tehran. According to the sources quoted in The Washington Post late last month, shipments of arms to the contras followed the Israeli funding of the rebels at CIA director Casey's behest in 1984. Nimrodi has refused to comment on his role.
Ben Or, a former Israeli paratrooper who divides his time between Guatemala and Miami, arranged the three shipments that were delivered to the contras via the Honduran Army, according to Maariv. He could not be reached for comment.
Katz, who lives in Mexico City and reportedly specializes in sales of jet fighters, artillery and radar, helped broker another deal with the contras in 1985, according to an unnamed business associate interviewed recently by the Miami Herald. He could not be reached either.
Official sources here have denied that either Ben Or or Katz operate with Israeli government sanction. But both men appear to have acted in semiofficial capacities in previous arms dealings.
Ben Or was a key figure in supplying Israeli arms and military communications equipment to Guatemala after the Carter administration's cutoff in the late 1970s. Among the equipment he reportedly helped supply were spare parts for Guatemala's U.S.-made helicopter fleet, a key part of the regime's war against leftist guerrillas.
Israel contends its arms sales to Guatemala were insignificant. But they were important enough for two senior members of the ruling junta to thank Israel publicly for its support in the early 1980s.
"We went on rather too long selling to Guatemala at a time when other western countries had stopped," said Abba Eban. "There has to be a point when you decide it's time to turn off the tap."
As for Katz, the Hebrew press reported that he accompanied the then-defense minister, Ariel Sharon, on a much-publicized tour of Central America in 1982. Sharon at the time denied making any arms deals during the tour, but soon afterward Katz was reported to have signed several deals with the Hondurans.
In the case of South Africa, Israeli policymakers such as Foreign Minister Shimon Peres publicly have condemned the apartheid system and insisted that Israel has no military links with Pretoria. At the same time, however, informed analysts contend that military sales to South Africa in defiance of the U.N. arms embargo consistently top $ 50 million per year -- roughly 5 percent of Israel's total arms exports. Even that figure may be an underestimate, according to one informed source.
"The strategic relationship between the two countries is very extensive and very important to both sides," said Michael Wade, an associate professor of African studies at Hebrew University who emigrated here from South Africa 20 years ago. "While the foreign ministry has tried to distance Israel from South Africa, the fact is that the nature and degree of relations have been determined by the Defense Ministry and the defense establishment for a very long time."
The resemblance of South Africa's new reconnaissance jet, known as the Cheetah, to Israel's Kfir jet is a case in point, sources say. Both planes are remakes of the Mirage III, the French-built jet that was the mainstay of each country's air fleet until Paris cut off sales to each.
But while the Kfir is built from scratch by Israel Aircraft Industries, the Cheetah is an overhauled Mirage, produced in collaboration with the Israeli company and using avionics and communications equipment supplied by the Israelis, according to Jane's Defense Weekly and other sources.
"You don't have to be a genius to see our fingerprints all over it," said an Israeli Cabinet minister in a private discussion after the South African plane was unveiled earlier this year.
South Africa is fiercely proud of the domestic defense industry it has developed since the U.N. arms embargo became mandatory in 1977, and officials there insist the country produces 85 percent of its military equipment. But analysts contend that key parts and sophisticated equipment are often supplied by third parties, including Israel.
In the case of the Reshef speedboat, which Israel contracted to sell to Pretoria before the embargo, informed sources say that in recent years Israeli firms have supplied new weapons and radar systems to refit the aging boats and that some of that equipment is of American origin. Those same sources contend the United States has given tacit approval to such supplies because Washington, like Jerusalem, believes that South Africa's Navy plays an important role in patrolling sea routes around the strategic Cape of Good Hope.
Most Israelis know little about Israel's role in supplying military equipment to unpopular regimes because that role is kept secret by the government in most instances. But the country's leaders -- and especially the triumvirate of Shamir, Peres and Rabin that has the final word on arms exports -- contend that most Israelis understand and approve of the sales.
"In general we know that countries that manufacture arms must also export arms," Shamir said in a recent television interview. "Otherwise they are incapable of maintaining an arms industry. These countries publish virtually nothing about their arms exports. This is accepted procedure everywhere because there is competition . . . . Israel, which also has to take part in this race, cannot be the exception. Therefore we do not talk very much about this subject."