Factory and Lab: Israel's War Business
By Markus Becker in Tel Aviv, Israel
August 27, 2014 – 10:26 AM Spiegel Online
http://www.spiegel.de/international/world/defense-industry-the-business-of-war-in-israel-a-988245.html#ref=plista

Israel invests more money in research than most other countries -- and in no
other place are research institutes, the defense industry, the army and
politics as interwoven. The result is a high-tech weapons factory that
successfully exports its goods globally.

There's not much left of the high-tech car. In a warehouse about the size of
an aircraft hangar, its remains look tiny. There are no wheels, no chassis,
just the angular body of the car. And it's not in good shape at all. There's
a gaping hole in its side with edges of lacerated metal. "Rocket-propelled
grenade," says Yoav Hirsh, smiling. Had a person been inside, he or she
would likely not have survived the blast. But there was no one behind the
wheel: The Guardium is a fully automated vehicle.

Pride radiates from Hirsh -- who has a mix of gray and white hair, an
athletic frame and a determined look on his face -- when he talks about his
cars. He's the CEO of G-Nius, one of first companies in the world able to
produce an army of robot fighters. The Guardium has been used since 2007 in
patrols along the border of the Gaza Strip. It can be guided by remote
control or can steer itself through a pre-selected route as its cameras and
sensors capture data about the surroundings.

"Guardium already has 60,000 hours of operations behind it," Hirsh says.
"And it has saved many lives." He says the aim is to complete "missions
without any risk to the soldiers." But in addition to saving lives, G-Nius
vehicles can also destroy them, using remote-control weapons systems mounted
on top of the unmanned vehicles. Hirsh notes that, although the
weapons-equipped vehicles haven't yet been used, they are deployable. In
another warehouse, a standard Ford F350 pick-up truck is parked, one
equipped with its own weapons station. The cameras and sensors are real but
the machine gun is a dummy. "We're a civilian firm, after all," Hirsh says.

G-Nius is a textbook example of the way technology is created in Israel. The
company's headquarters are located in the High-Tech Park development in the
city of Yokneam in northeastern Israel, surrounded by numerous other
technology firms. It's a joint venture of the space and electronics firm
Elbit Systems and the state-owed aviation and defense company Israel
Aerospace Industries (IAI). It also has excellent ties with the military.

'Combat Proven'

Israel has been in a perpetual state of conflict with its neighbors since
the country's founding. It feels threatened from all sides; it is small and
doesn't possess a massive army. "Innovative military technologies, rather
than a massive army, have been viewed as strategically crucial for Israel
given its relatively small size," says Dan Peled, a business professor at
the University of Haifa. Over the decades, this has led to a close
interlinking of the army with the civilian science, industrial and political
sectors. And to a lucrative business with war -- the most recent of which
claimed the lives of over 2,100 Palestinians and 70 Israelis before what is
hoped to be a lasting cease-fire went into effect on Tuesday.

British military trade publication Jane's ranks Israel as the world's sixth
largest exporter of weapons. In 2012, it exported $2.4 billion in military
equipment. But with a per capita value of around $300 in exports for each
resident, Israel is at the top of the list. Even the United States, by far
the world's largest arms exporter, only has per capita weapons sales of $90.
Israel's exports are growing rapidly, too. Data from the Stockholm peace
research institute SIPRI shows that Israeli weapons exports more than
doubled between 2001 and 2012.

The decades-long conflict between Israel and its neighbors has certainly
contributed to the defense sector's success, a fact that people in the
industry and the military are surprisingly open about. "'Proven combat
performance' is still one of Israel's strongest military technology sales
promotions," says business professor Peled. The label "combat proven"
translates directly into healthy global sales of firearms, drones and
rockets "Made in Israel."

Gil Wainman doesn't have to look far for a weapon. The marketing director
for Israel Weapon Industries, Wainman is standing in the company's
conference room, but it looks more like an arms depot. The conference table
and video screen are flanked by shelves filled with pistols, assault rifles,
machine guns and grenade launchers. "I'd be happy to," is Wainmann's
surprising response when asked if he would be willing to pose for a photo
holding a rifle.

IWI supplies the Israeli army with Uzi machine guns, Tavor assault rifles
and Negev machine guns. Its portfolio also includes the Desert Eagle pistol,
which is so big that it is more often seen in action films than it is in the
hands of military or security personnel.

IWI has had enormous success with its products. When the company was
privatized in 2005, it had 70 employees. "Now we are more than 500," says
Wainman. "We are growing exponentially." Today, he says, every square foot
of the company's office in Ramat Hasharon north of Tel Aviv is full. Wainman
declines to say how many assault rifles, pistols, machine guns and mortars
IWI sells. "We are talking about tens of thousands every year," he says with
a smile. Indeed, IWI is among the world's top five firearms manufacturers.

The Israeli army is one of its biggest customers. When a new weapon is
developed, Wainman explains, it is given to the military just as soon as the
internal testing phase is complete so that it can be tried out on the
battlefield. Soldiers then report back to IWI's technicians in order to help
them improve the weapons. "We have vast experience," says Wainman. "Real
combat experience. And we are using it in our development effort."

His pride in the company's achievements becomes palpable during a tour of
IWI's assembly plant. "I love the smell of oil and the sound of the
machinery," he says. At first sight, the plant resembles a car parts
manufacturer. There are lathes and CNC cutting tables, bulletin boards
covered in design drawings and large cases filled with metal parts.

Shiny steel rods are lined up in rows at the center of the plant. Later,
they will be bored through and rifled so that their projectiles spin,
allowing them to fly straighter as they speed towards their target. In the
vast majority of cases, that target is a human being, whose bones and organs
are shattered by the bullet.

When asked if that knowledge has any influence on daily work at the plant,
Wainman understands it to be a purely technical question. "Our workers are
screened by the authorities," he says. "Besides, for our workers, working
with IWI is first of all a passion, and secondly work."

90 Percent of IWI's Firearms Are Exported

Such casual attitudes towards everything related to the military are in no
way seen as being problematic in Israel. Some have been critical of the
tight ties between military and industry, like Israeli journalist and film
maker Yotam Feldman. His film "The Lab" generated some controversy last year
with its provocative theories that Gaza and the West Bank serve as Israel's
weapons laboratory, that the Palestinians are guinea pigs and that war has
mutated from a burden into a highly profitable business.

Still, the vast majority of Israelis view the development of new weapons as
a simple necessity in order to ensure their safety and their country's very
existence. Defense industry officials even go so far as to present their
superior technologies as promoting peace. They argue that precise weaponry
can prevent collateral damage, that the Iron Dome rocket defense system
makes milder responses to missile attacks from the Gaza Strip possible.
Viewed in the context of the current conflict, though, the term "mild" seems
highly inappropriate. The majority of the over 2,100 Palestinians who have
perished in Israeli attacks since the beginning of July have been civilians.
The United Nations has spoken of war crimes and even the US has distanced
itself from Israel.

"We send our sons and daughters to the Israeli Defense Forces," says IWI
spokesman Wainmann. "We want to make sure they get the best of the best."
However, it's not just Israel's sons and daughters who are getting the best
of the best. Exports have grown to the point that supplying Israel's army
only makes up a small part of the country's defense industry. Wainman says
that IWI exports about 90 percent of the products it produces. The situation
is similar for other Israeli defense companies, with an export ratio of 75
percent or more being standard.

In addition to firearms, complex weapons systems like drones are also being
exported. Although the US may have the reputation of being the world leader
in these flying reconnaissance and killing machines, Jane's reported that
Israel sold more unmanned flying systems than the US in 2013. It is
estimated that it will export twice as many as the US in 2014.

The assembly shop at defense concern IAI looks a little bit like the
building site for oversized model airplanes. Harop drones can be seen all
over the place at different levels of completion. Some are opened and only
have some of their electronic components installed while others are ready
for shipment in their launch cannisters. In a side room, the still empty
airframes of Harop drones hang like bats from the ceiling.

The remote controlled Harop can carry 23 kilograms (50 pounds) of explosives
in its tip. Once the pilot has identified a target, the drone dives toward
it at a speed of up to "400 kilometers per hour," says an IAI employee. The
Israeli army has deployed the Harop for years now, India is considering
buying some and Germany's military also expressed temporary interest -- to
the extent that the Bundeswehr even had the German defense firm Rheinmetall
conduct tests in 2011. In February 2013, however, the German Defense
Ministry cancelled its plans. Officials at IAI do not comment on other
potential purchasers of the Harop.

The majority of Israeli drone exports go to Asia, with India viewed as the
largest growth market for Israel's defense goods. The Israeli defense sector
also would also like to increase sales to China, but the US government has
often stood in the way of deals that include technologies that could
potentially be used for military purposes. Sweden's SIPRI says that Israeli
defense firms are active in the African market.

It may soon get some large orders from Germany, too. IAI's Heron, alongside
the American Reaper, is considered to be a top candidate in the German
military's future plan to purchase combat drones. The company is also
seeking to sell Bombardier Global 5000 reconnaissance jets that have been
equipped with IAI sensors to Germany as a replacement for the failed Euro
Hawk reconnaissance drone program.

There are reasons behind Israel's advances and the quality of the military
technology it manufactures. "Surprisingly, given its modest resources,
Israel's defense R&D community succeeds in developing state-of-the-art
weapon systems, often the first of their kind in the world," a study
conducted by the University of South Wales in Australia concluded. Israel
doesn't shy away from investing in risky research projects and, by doing so,
develops "radically innovative defense capabilities," it added.

The enormous role played by the military in society also plays a role. "The
links between scientists, engineers and technology developers and the
security situation in Israel is even more intertwined," says business
professor Peled. And even those who haven't been a part of the system
themselves by serving in the army or the reserves are still familiar with it
through close friends and family members. "This almost first-hand
familiarity between what the defense needs are and what science and
technology can deliver are unparalleled in other countries."

And Isreal has a lot to offer when it comes to research and technology.
Israel has topped the list of the world's most innovative countries in the
World Competitiveness Yearbook produced by Swiss business school
International Institute for Management Development (IMD) for years now. The
country invests 4.4 percent of its gross domestic product in research and
development, the highest percentage anywhere in the world. IMD also ranks
Israel in first place in terms of total expenditures on education,
scientific research, the development and application of technology, cyber
security and information technology skills.

At the same time, the country is also in first place in a less praiseworthy
ranking: the Bonn International Center for Conversion's (BICC) Global
Militarization Index. That ranking is also reflected in Israel's research
priorities. Michael Brzoska, director of the Institute for Peace Research
and Security Policy at the University of Hamburg estimated in a paper
written in 2007 that 30 percent of all research and development in Israel
has a military focus. By comparison, only 2 percent of German R&D is of a
military nature.

'We Know How to Talk Military'

Avner Benzaken: "We know the military's needs."

Few have better knowledge of how the cooperation works in practice between
Israeli research institutions, industry and the military than Avner
Benzaken, head of the Technology and Logisitcs Branch of the IDF. He has a
small Zen sandbox, with snow-white sand, small stones and a miniature wooden
rake, on top of his desk at a barracks near Tel Aviv. There's a sign in
front of it that reads, "We can't solve problems by using the same kind of
thinking we used when we created them." The quote apparently comes from
Albert Einstein, but it's also the kind of thing a Mideast peace activist
might come up with.

Benzaken reaches for a small wooden pyramid made of pieces that have been
pushed into one another and takes it apart. "Try to put it together again,"
he asks his visitor with a gentle smile. The pyramid is one of those puzzles
that can drive a person mad. You know that there's a simple way to solve it,
but you get so caught up in conventional thinking that you cannot find it.
It's a wooden toy that feels like the epitome of the Mideast conflict.

But considering solutions for the unrelenting military conflict isn't the
kind of thing Benzaken has to think about at work. Among his
responsibilities are making combat troops more effective and, in Israel, he
is provided with unique conditions for doing so.

"If I develop a product and want to test it in the field, I only have to go
five or 10 kilometers from my base and I can look and see what is happening
with the equipment," Benzaken says. "I get feedback, so it makes the
development process faster and much more efficient." His unit is comprised
largely of academics who also happen to be officers. "We know how to talk
military, we know the needs. And we know how to translate these needs into
technology."