Last week, the Strategic Forces Subcommittee of the US House of Representatives Armed Services Committee decided to allocate a further $680 million for the purchase by the IDF of additional batteries of the Iron Dome short-range rocket interceptor system in 2013. The system is produced by Rafael. (In 2011, the US Congress approved $203 million for this purpose, on an initiative by the Obama administration.)
"Globes" has now learned that the subcommittee is making the new grant for Iron Dome conditional on the US receiving rights in the system's technology, and on part of its production being transferred to the US. The main implication is a loss of jobs in Israel.
The subcommittee members found that Iron Dome had proved itself highly effective, and said that the proposed funding would "ensure long-term cooperation" between the US and Israel on its development. However, the legislators want the head of the US Missile Defense Agency (MDA), Lt. Gen. Patrick O'Reilly, to "ensure the United States has appropriate rights to this technology", before the money is transferred to Israel.
Together with the proposed grant, the US will have invested some $900 million, yet the US has no rights in the relevant technology, the bill drafted by the subcommittee states.
In addition, the bill states that O'Reilly "should explore any opportunity to enter into co-production of the Iron Dome system with Israel, in light of the significant US investment in this system."
In response, Rafael USA president Oron Oriol told "Globes", "We know that the Ministry of Defense is working with the US Defense Department on the question of US funding for Iron Dome. We are not involved in these talks, and rely entirely on the Ministry of Defense."
Defense industry sources point out that the wording of the House of Representatives subcommittee's bill is fairly vague, and not by chance. What does "appropriate rights" mean: access to the technology, or intellectual property rights? The call for examining joint production is also unclear: does it mean 50% of production, or perhaps 25%? Certain components of Iron Dome are already produced in the US, because Rafael came to the conclusion that this would be cheaper and more efficient.
The assessment is that the US legislators deliberately left broad room for maneuver for the Defense Department in its negotiations with the Israeli Ministry of Defense. "There is no need to take alarm at the draft bill that emerged from the Strategic Forces Subcommittee," the sources said. "It will go through a lot of sifting."
The US does have intellectual property rights in the Arrow anti-missile system, the technologies of which were entirely developed in Israel. However, this was stipulated in advance in the agreement between the two countries under which the US and Israel divide the development costs equally between them, but Israel develops the technology by itself. Parts of the Arrow system are made in the US by Boeing, and assembled in Israel.
Published by Globes [online], Israel business news - www.globes-online.com - on April 30, 2012
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