The story of future of the Merkava tank has been doing the rounds among manufacturers and parties close to the defense industries for a good many months. But as the battle between Minister of Finance Yuval Steinitz and Minister of Defense Ehud Barak over the cutting the defense budget escalated, the list of critical strategic programs in jeopardy lengthened.
The Merkava tank was the first to win a place of honor on the list, but the Ministry of Defense in Tel Aviv has been trying enhance that list it and make it more severe, and has invited company for the Merkava in the shape of the Magic Wand antitank missile interceptor and the Iron Dome short range missile interceptor. When disputes rage, it's best to treat such threats as idle threats, populism that provides the press with its daily pound of flesh, and as an attempt to improve the position of one of the parties in the eternal spat between government ministries.
Manufacturers are prepared to swear that really, truly, scores of enterprises across the country have not received a single shekel in orders from the Ministry of Defense as part of the annual NIS 1.1 billion investment in Merkava tank production. They have tried to say that whether it is a matter cheap spin on the backs of thousands of employees in the periphery or not, in any event, they have not seen any money for too long, and the distress is hard felt in the field.
Defense sources have frequently made it clear in recent weeks that current policy involves "halting expenditure" until it is decided what to invest in, and how much to invest in it, against the backdrop of threats to cut the defense budget base beginning next year, and the absence of a multiyear plan for this year: the multiyear plan on the basis of which the defense establishment operated expired in 2011, and IDF Chief of Staff Lt.-Gen. Benny Ganz decided that 2012 will be a year of reorganization, and that the next multiyear plan, which will include the IDF's responses to regional changes and the Arab Spring, will begin in 2013.
The Ministry of Defense understands the complications and uncertainty, but meanwhile it is silent to a degree that raises serious suspicion that its conduct is a means to leverage anxiety about the cancellation of national projects in order to inflate the defense budget. A senior defense source has already said that the IDF needs a few billion shekels more a year in order to better deal with what happened last year in Egypt, and to provide a proper response to the Saudi hacker and his ilk, who threaten to disrupt the online shopping routine of the Israeli consumer.
So on the matter of the Merkava, the ministry has been spreading a smokescreen for weeks, fostering the uncertainty with the phrase "deliberations and discussions". Ministry of Defense director general Udi Shani knows that there are quite a few people in industry who understand the details of the map he screens at his presentations about the importance of defense procurements in the periphery, while stressing the Merkava tank program.
If further production of the tank is not financed, what will happen to the employees of Simat Industries Ltd. in Kiryat Shmona, Imco Industries Ltd. (TASE: IMCO) in Nahariya, and Shalon Chemical Industries Ltd. in Kiryat Gat? He also knows that elections are on the way. There are few politicians who would like to see pictures of burning tires in Ramle, Mitzpeh Ramon, Maalot-Tarshiha, and Carmiel.
Published by Globes [online], Israel business news - www.globes-online.com - on February 1, 2012
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