BUSINESS/ECONOMY

Declawing a military lion

MARK NICHOLS August 18 1986
BUSINESS/ECONOMY

Declawing a military lion

MARK NICHOLS August 18 1986

Declawing a military lion

Lavi, the name of a sleek, sweptwing fighter-bomber, means young lion in Hebrew. With a prototype already built, the Lavi is intended as a fast and potent weapon for the Israeli air force in the 1990s. But recently the menacing fighter’s leonine appetite for funding, which is about $1.65 billion, mainly from U.S. defence aid, has already been spent. As a result, it has provoked a fierce controversy that threatens the Lavi’s future. Powerful critics in the United States and Israel say they are concerned that the cost of producing 300 Lavis will soar well beyond Israel’s original estimate of $20.2 billion, monopolizing the country’s defence spending until the turn of the century. The influential U.S.

aerospace industry, which views the Lavi as a potential international competitor, has also succeeded in lobbying the Pentagon to force the Israelis into reconsidering the program. As a result of those combined pressures, sources within President Ronald Reagan’s administration confirmed last week that the Pentagon has launched a study of the Lavi’s skyrocketing costs in an effort to persuade the Israelis to alter—or even abandon—the costly project.

The dispute over the Lavi may lead to a confrontation between Congress, where there is wide support for the Israeli venture, and the Pentagon, as champion of the multibillion-dollar U.S. aviation industry. In Israel itself, the future of the Lavi has become a critical political issue for Prime Minister Shimon Peres’s shaky coalition government, involving both national pride and the country’s continuing efforts to strengthen its high-tech industrial base.

At the heart of the issue is a dispute over the real costs of the Lavi. Originally conceived in the late 1970s as a low-cost, workhorse replacement for Israel’s own Kfir fighters and its fleet of aging American A-4 Skyhawks, the Lavi changed in design five years ago when air force commanders demanded a more sophisticated aircraft.

The redesigned Lavi that rolled out of the Ben-Gurion airport hangar of the state-owned Israel Aircraft Industries near Tel Aviv last month is a far more expensive and technically advanced fighter-bomber. Scheduled to have its first test flight in October, the Lavi is equipped with state-of-the-art electronic sensory devices designed to guide it past batteries of Soviet-

built surface-to-air missiles. Said Ezer Weizman, an Israeli politician who commanded the Israeli air force in the early 1960s: “We set out to build an Austin Mini, and we have ended up with a Cadillac.”

Over the past decade, cost projections have doubled. While Israeli officials originally envisaged a fleet of fighters costing only $9.6 million each, they now estimate that the advanced fighter-bomber will carry a $21.3-million price tag. With the cost of spare parts, maintenance and development included, Israeli officials estimate that each plane in its planned 300-strong fleet will cost $67.6 million, for a total of $20.2 billion.

But U.S. military analysts say that the final bill will be even higher. According to a study by Dov Zackheim, an undersecretary in the U.S. defence department, the basic cost of the Lavi will reach $30.3 million per plane, with

the total cost of the program rising to at least $28.4 billion, or $94 million per plane. Zackheim claims that the Israelis have seriously underestimated labor and inflation costs.

Israeli planning for the Lavi also assumes that U.S. economic aid will remain at its current level of about $4 billion annually through the next decade. But U.S. treasury sources predict that total American aid could shrink to $2.7 billion a year by 1990 because of efforts to reduce the U.S. federal deficit, which the Congressional Budget Office last week predicted would reach $239 billion in 1987. According to Lavi critics, that would leave Israel only $897 million a year for defence procurement at a time when the 10year Lavi production program—to begin in 1988—will be costing $759 mil-

lion annually. Said a high-ranking Israeli army officer: “If the Lavi flies, the army will be grounded.”

In June Secretary of State George Shultz and Defence Secretary Caspar Weinberger both wrote to the Israeli government to complain that Washington was being “stonewalled” in its attempts to discuss alternatives with the Israeli government. Pentagon officials claim that an Israeli plan to export the fighter to Third World countries in order to recover costs is not realistic because many potential customers are Islamic and Arab nations, and their allies which refuse to buy Jewish goods. There is also concern that countries such as Argentina may choose to purchase the Lavi instead of American-made planes.

But the Lavi has the support of in-

fluential congressmen, among them California Democratic Congressman Meldon Levine and New York Republican Jack Kemp, a likely 1988 presidential candidate who is seeking Jewish votes in his home state. The Lavi, Kemp declared last week, “is of major importance to Israel and the decision to produce it should be made by Israel alone, without pressure from U.S. business interests.” Moshe Arens, a former Israeli defence minister who is now a minister without portfolio in Peres’s government, added that it is politically impossible for Israel to scrap the Lavi. Declared Arens: “It is just too deeply embedded in the Israeli economy, in Israeli society.”

When the Pentagon study is completed by early November, Israel will be offered several alternatives to the

Lavi, an administration source said last week. One main option now under discussion involves the purchase of an existing and less expensive American warplane modified to include Israeli weapons systems. General Dynamics Corp.’s F-16, Northrop Corp.’s F-20 and the McDonnell Douglas CF-18— currently being used by the Canadian Armed Forces—are expected to be put forward by the Pentagon as aircraft that could be modified for Israeli use.

A second option is a coproduction agreement with a U.S. manufacturer to share the actual building of the Lavi. Sources close to the Israeli Embassy in Washington said last week that Israel had abandoned its original refusal to consider scrapping the Lavi and would give serious consideration to the Pentagon’s proposals.

Arens predicted that the Lavi will eventually be produced. “I don’t know of a single case,” Arens said, “where an aircraft has been developed that is one of the best in the world and wasn’t put into production.” He may not be aware of Canada’s highly regarded Avro Arrow fighter, which the Conservative government of Prime Minister John Diefenbaker cancelled in 1959 because of mounting costs and—according to some experts—pressure from the United States to buy American weapons. If political and economic forces prove to be more important than Israeli pride, a similar destiny could await the Lavi.

MARK NICHOLS

WILLIAM LOWTHER

DAVID BERNSTEIN