31 December 1998
ISRAEL'S DEFENSE INDUSTRY IN 1998
(Communicated by Defense Ministry Spokesman)
Defense Ministry Director-General Ilan Biran today (Wednesday)
30.12.98, appearing before the Managers' Club of the Kibbutz Industry
Union, said, "In order to exist, develop and compete in the global
economy, considering the decline in demand for defense related
products, and to provide answers to the defense establishment's
needs, Israeli defense industries must export at least $2 billion
annually. There has been a 50% decline in demand for defense related
products over the past decade, from $60 to $30 billion annually.
In 1998, due to the global crisis, especially in Asia, and the
decline in demand in Europe and the United States, Israeli defense
exports amounted to $1.7 billion. In truth, we were afraid that the
total would be far less, but coordinated action by industry and the
Defense Ministry managed to increase export sales. In 1997, Israeli
defense exports were $2.6 billion, due to a large deal with
Turkey.
Defense industries must export 80% of their production, according to
experts. Israel Aircraft Industries already reaches this target. In
order to meet the challenges in the world and by the defense
establishment, defense industries must continue carrying out
structural reforms, including mergers and joint production in order
to prevent redundancies. At least 80% of all products were joint
programs, including drones and equipment upgrading.
In future, essential mergers and privatization will have to be
carried out so as to compete with giant American and European
conglomerates each of which have tens of billions of dollars worth of
turnover. The world has already merged, and those who do not grow
very large, will not survive.
The committee examining defense industries and their future, headed
by Moshe Peled, has already reached its conclusions, and we are
implementing them. The conclusions, which support the trends of
structural reform and privatization, are still at the level of staff
work and will be published only after decisions are made by the
Israeli government."
Director-General Biran also said, "Israel faces three fundamental
threats -- terrorism, conventional arms and non-conventional weapons,
which includes the nuclear threat. The conventional threat has been
repressed, possibly because of the human factor. Our environment has
not seen a diminishing of armies. Syria has sharpened its ballistic
missiles and has been arming them with non-conventional warheads."
As for the IDF's armaments, which have doubled and tripled in various
fields since the Yom Kippur War -- such as tanks and aircraft --
Biran said, "Weapons have aged, including missiles and vehicles. They
have to be upgraded, because not everything can be replaced. Each of
these areas has to be budgeted, a regime of maintenance and upgrading
has to be implemented, components' life-spans have to be planned for
based on each model, otherwise urgent upgrading will have to be
carried out to restore the balance, and urgent action will be more
expensive and problematical than continual, moderate deployment."