What Does China Have to Do With Israeli Weapons Industry Scandal?

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Recent reports inform that Shin Beth, Israel’s internal intelligence agency, has arrested at least 20 persons in what appears to be one of Israel’s biggest weapons-industry scandal – the illegal development, manufacture and sale of loitering munitions to an “unnamed country somewhere in Asia”. While a gag-order by the Rishon Lezion Magistrate’s Court restrains local media from naming the country, separate reports suggest it is China. Another pointer that this scandal involves China is that Israel had legally sold loitering munitions in February 2021 to two-three Asian countries, and China isn’t one of them.

The Israeli government was forced to act because it realised that the diplomatic and political fallout of this mess with respect to Washington would be very severe.

What are ‘Loitering Munitions’?

LMs are cutting-edge weapons platforms and were used extensively in the recent Azerbaijan-Armenia conflict with devastating effect. A hybrid between an unmanned aerial vehicle and a missile, LMs are equipped with an explosive warhead, as well as high-resolution electro-optical cameras which allow the operator to constantly survey the battlefield. LMs can, after launch, ‘loiter’ for an extended period over the battle space till the operator directs it to dive onto a selected target and self-destruct on impact. Also known as ‘suicide drones’, most LMs are portable, yet able to engage beyond line-of-sight targets.

LMs like the ‘Harpy’, developed to suppress surface-to-air missile (SAM) batteries, home onto the radar emissions of the SAM system and destroy it. The battlefield deployment of LMs like the Harpy forces a tough choice on an adversary — operate the radar and risk its destruction, or keep it switched off.

LMs have many advantages over traditional rockets, mortars and small missiles:

• they provide forward ground units with precision capability
• improve their ability to discriminate between combatants and non-combatants, and thus reduce collateral damage
• they are steerable, meaning that they can be switched from one target to a more important one mid-flight, or simply ‘wave-off’, that is, cancel the attack

Earlier Sales of Munitions to China

This is not the first time that Israel has sold — or tried to sell — advanced munitions to China. In 1998, it sold the ‘Harpy’ suicide drones to China, but the deal came to light in 2004-2005, when China returned them to Israel for an upgrade. In 2000, it progressed the sale of the PHALCON Airborne Warning & Control System (AWACS) to China.

The US, wary that the PHALCON could give the Chinese military an edge in any conflict over Taiwan, ruthlessly pushed Israel to nix the deal.

It also forced Israel to cease its long-standing, somewhat clandestine defence relationship with China.

How the Israel-China Relationship Blossomed

After World War II, the Communist Party of China defeated the Kuomintang (KMT), gained control of mainland China, and established the People's Republic of China (PRC) in 1949. The KMT/Nationalist leadership fled to Taiwan, where, backed by the US, it formed the Republic of China. Israel was the first country in the Middle-East to recognise the PRC as the legitimate ‘China’.

Their defence relationship started in the late 1970s after the US-China détente, with Israeli military-technology and arms sales to China enjoying tacit US support.

This suited Israel – as the sales compensated for the loss of other markets, for example, Iran (which cut-off relations with Israel in 1979 after the Islamic Revolution), West European members (after the erstwhile USSR got increasingly bogged down in the Afghan quagmire). As per some reports, Israel, inter alia, also assisted China in:

• developing its PL-8H surface-to-air/ship-to-air missile and the PL-9 air-to-air missile from the Israeli Python missile
• improving its main battle tanks by supplying 9,000 kits for their 105 mm guns, along with fire-control systems, night-vision equipment and reactive armour
• redesigning its DF-3 intermediate-range ballistic missile and the DF-15 short-range ballistic missile
• developing the J-10 fighter aircraft – reportedly based on Israel’s Lavi design
• improving its diesel-electric submarines

How Israel is Able to Sell Weapons, Surveillance Tech to Almost Any Regime

From the early 1990s, Israeli military transfers to China slowed down. In 2005, the US and Israel signed a bilateral agreement (‘Declaration of Understanding on Technology Exports’), in which both pledged defence export transparency.

Israel also created its own arms export control agency, the Defence Export Control Agency (DECA). Nevertheless, Israel’s defence industry, with about 1,600 licensed arms exporters employing between 1.5 lakh to 2 lakh, along with a huge supply chain of subcontractors, remains poorly regulated — gaps in the oversight apparatus, for example, exporting arms to a middleman country — which allow exporters to bypass DECA.

The Israeli government and its private companies are thus able to sell weapons, surveillance equipment and hi-tech to almost any regime in the world.

Israel was ranked the world’s eighth largest arms exporter in the world in the 2015-2019 period, with over USD 4.3 billion in sales.

After the US forced Israel to officially end its defence ties with China, the latter began expanding its economic relationship with Israel, and now, it is Israel’s second largest single-state trading partner (after the US).

Given the scale of Chinese investment and the wide swath of trade, there is a clear possibility of Israeli civilian-use/commercial technology, particularly dual-use, in the fields of metallurgy, aeronautics, avionics, armour-defeat, cybersecurity, artificial intelligence, robotics, autonomous platforms, etc finding their way into China, and the latter using its Civil-Military Integration model to optimally leverage those technologies for military use.

China’s Civil-Military Integration (CMI) Model

The CMI strategy dates back to the 1980s, when Chinese military industries owned more advanced technologies than their civil counterparts in most fields. It was then decided to commercialise some military technologies for civilian use. As the US and the European Union become increasingly reluctant to export weapons to, or share military technologies with China, the latter adopted a strategy of encouraging Western commercial ventures in China, from which technology was hived off for China’s military-industrial complex.

Technology is vital for building an ‘informationised’ force — and the CMI model is allowing China to do just that.

For instance, by end-2018, Israel, which has developed and manufactures the world’s most advanced ‘chips’, had exported semiconductors worth USD 2.6 billion to China, accounting for 56 percent of Israel’s exports to it.

Semiconductors are used in a wide array of civilian applications as well as in military systems/platforms. If a nation has the technology to manufacture ‘chips’, hardening them to Military Specifications is the next logical step.

US Efforts to Thwart Israel-China Ties

As the Israel-China economic relationship grew, so did US concerns and pressure on Israel to curtail its economic relationship with China, particularly in the domain of advanced technologies.

The US labelled China as a ‘strategic competitor’ in its 2017 National Security Strategy.

In 2019, it forced Israel to set-up an advisory panel on foreign investment in sensitive sectors — but surprisingly, this panel does not have the mandate to review investments in high-tech sectors that account for most of Chinese investments. The US’ National Defence Authorization Act 2020, which also includes monetary and equipment authorisations for Israel, asked the latter “to consider the security implications of foreign investment in Israel.” The same year, US Secretary of State Mike Pompeo warned Israel’s engagement with China in sensitive sectors threatens US interests.

Geopolitically, China and Israel are not natural partners. In fact, Israel is a strategic ally of China’s main competitor, the US.

Yet, the Israel-China relationship has endured, albeit in different forms.

China is drawn to Israel’s cutting-edge technologies, many of which have US origins, even as Israel embraces Chinese funding, and as a research collaborator (China's investments also include high technology, agriculture, food, water, and biotechnology). With a pandemic-affected economy and its apex leader facing corruption charges, this scandal was perhaps waiting to happen. It now remains to be seen how the Biden administration reacts to this imbroglio.

(The author is a retired Brigadier of the Indian Army. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)