Israel to buy German submarines despite cost doubling

Benny Gantz  credit: Marc Israel Sellem, Jerusalem Post

The order for three new submarines is due to be signed Wednesday, even as Defense Minister Benny Gantz pushes for an official graft inquiry into the deal.

The ministerial procurement committee has approved the deal whereby Israel is to buy three submarines from Germany, despite the fact that they will cost €1.2 billion more than originally envisaged, almost doubling the cost. The German government, which agreed to subsidize the deal to the tune of €600 million out of the original price of €1.8 billion, will not raise its subsidy in line with the price increase. The net cost to Israel will thus be twice as high, at €2.4 billion

The three Dakar-class diesel-electric submarines will be built by ThyssenKrupp Marine Systems unit Howaldtswerke-Deutsche Werft AG (HDW) in Kiel, and will start to be delivered in 2027. They will replace three Israel Navy Dolphin 1-class submarines dating from the 1990s.

The committee convened on Sunday evening to approve the price hike in advance of a formal signing ceremony due to take place tomorrow attended by Minister of Defense Benny Gantz and representatives of German company ThyssenKrupp, which will build the submarines. In a rather odd coincidence, earlier this week Gantz, together with Minister of Foreign Affairs Yair Lapid, tried to have the government set up a committee to investigate the submarines deal with Germany, concerning which there are serious allegations of corruption, but a decision on the move was deferred for at least a week because of political constraints. In Israel, the deal became the focus of Case 3000, known as the submarines affair. At the end of its investigation, Israel Police recommended indicting several people involved in the affair.

Sources in the government told "Globes" that the Germans were aware of the ministers' intention of setting up an official inquiry into the deal, and raised no objections. Israel also notified Germany that, despite the wish to investigate the deal, it would not withdraw from it. The Germans for their part agreed to examine the submarines purchase and to assist in the enquiry when it is formed.

Last October, Prime Minister Naftali Bennett gave an undertaking to then Chancellor of Germany Angela Merkel that the deal would be completed despite the examination of its propriety in Israel.

An MOU for the current deal, including the submarines and patrol vessels, was signed in 2017. Under a previous deal ThyssenKrupp has delivered two Dolphin 2-class submarines to Israel, INS Tanin and INS Rahav,  with a third, INS Drakon, due to be commissioned.

Published by Globes, Israel business news - en.globes.co.il - on January 18, 2022.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.

Benny Gantz  credit: Marc Israel Sellem, Jerusalem Post
Benny Gantz credit: Marc Israel Sellem, Jerusalem Post
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