Israel’s probe into submarine affair is a chance to look into its arms, spyware purchases

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The establishment of a state commission of inquiry into the purchase of submarines and missile ships is a necessary step that was taken very belatedly, more than five years after journalist Raviv Drucker broke the story on Channel 10 television.

This decision is a big success for the protesters who made this issue a major element of their campaign against former Prime Minister Benjamin Netanyahu. It’s also largely due to the intensive public activity of dozens of former senior defense officials recruited by the Movement for Quality Government in Israel and its energetic chairman, Eliad Shraga.

On the political level, it’s an important victory for Defense Minister Benny Gantz, who forced it on his coalition partners, especially Prime Minister Naftali Bennett. The latter ultimately abstained on the vote.

The long list of suspicions generated by this affair demanded an external inquiry from the start. New problems kept being revealed. There were numerous complaints of corruption at every stage of the decision-making process on the navy’s purchase of the vessels, as well as in the surprising additional purchases that were discussed, like ships designed for antisubmarine warfare.

Even if the inquiry doesn’t incriminate Netanyahu, as many of its supporters ardently believe it will, a lot of evidence has accumulated about the rot in the defense establishment’s procurement system.

What naturally sparked public outrage were the reports that some of Netanyahu’s close associates meddled in military procurement decisions and may even have reaped profits from them. There was also an astounding ancillary affair – Netanyahu’s decision to green-light Germany’s sale of advanced submarines to Egypt while excluding and apparently misleading most senior defense officials.

But beyond Netanyahu (including claims that he profited from stock sales indirectly connected to ThyssenKrupp, the German shipyard building the subs) lies a broader story.

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This story relates to the enormous efforts that the navy, numerous senior naval officers and some former officers made to leverage these giant deals, which don’t necessarily meet the needs of either the country or the Israel Defense Forces. They engaged in a systematic campaign whose goal was to divert huge budgets to the navy in an attempt to raise its status to that of the air force.

En route, quite a few red lines were crossed. That’s one reason why many former generals were outraged and it was that – and not only a general disgust with Netanyahu – that prompted them to join the protests.

Israeli sailors stand on a German-built “Rahav” submarine at the military port in Haifa, Israel.AP Photo/Ariel Schalit, File

The navy was able to cross these lines by exploiting weak supervision over military procurement by the politicians and the courts. This is a critical issue, and to investigate it properly, it’s important that some members of the inquiry commission be people with an in-depth knowledge of military procurement, but who aren’t connected in any way with the shady maneuvering over the purchase of the naval vessels.

Nor is this problem limited to the navy. This is an opportunity to try to bring order to the entire issue of military procurement.

Finally, amid all the suspicions, there’s one key issue that ought to keep Israelis awake at night. That’s the likelihood that due to the inflated deals and excessive commissions, the IDF’s procurement budget suffered – both because too much was paid for what was bought and because fewer critical systems were purchased for other corps (for instance, Trophy systems to protect tanks) since not enough money was left.

Now the subs cost more

The vote on the inquiry commission came three days after the deal to buy the subs from Germany was signed. Bennett insisted that the deal be signed before the commission was established.

Last week, Haaretz reported that the price Israel will pay for three subs has doubled, to 2.4 billion euros (Germany will cover the remaining 600 million euros). Bennett and his aides blamed the deal’s delay and the consequent price increase on the suspicions of corruption under Netanyahu and the political crisis that prevented a budget from being passed for years. Netanyahu countered by accusing his successor of negotiating amateurishly with the Germans.

Protest demanding inquiry into the submarine deal.Emil Salman

The defense establishment has a third version of what happened. According to senior defense officials, the price estimate prepared by Netanyahu’s National Security Council in 2016 was never realistic, being significantly lower than the actual cost of the new subs. Moreover, the navy hadn’t yet determined its operational requirements for the vessels. Norway recently purchased similar subs from Germany for 900 million euros apiece (compared to the billion euros apiece Israel’s will cost).

These officials also admitted that contrary to another explanation offered recently by the IDF, a global rise in metal prices can’t explain the increase.

Israel has been negotiating with the Germans over the final price for more than a year, but was unable to lower it significantly. The defense establishment admits that it’s a captive customer of ThyssenKrupp, from which it has bought its subs for years.

An inquiry into use of spyware

This seems to be a moment with potential for peeking into some of the defense establishment’s dark secrets. A series of recent reports by the daily Calcalist has sparked calls from both the media and the public for establishing another commission of inquiry into the police’s use of spyware made by the Israeli firm NSO.

Attorney General Avichai Mendelblit has set up a task force to look into this, but limited the probe to the last two years (which means it won’t cover the submarine affair, Netanyahu’s criminal cases and so forth). Public Security Minister Omer Bar-Lev, to his misfortune, has found himself in the position of defending the police even though it’s hard to trust their explanations. In an interview with public radio Sunday morning, he said the hacking of mayors’ cellphones occurred six years ago and he “has stopped dealing with this.”

Both men are wrong. The inquiry must go further back, to when the hacking first began. And it can’t be conducted by the attorney general or the prosecution, because they were part of the system. The prosecution knew police were using the Pegasus program but never informed the public, despite the poisonous image Pegasus and its ilk have acquired in recent years due to reports about the troubling usage around the world.

As part of the effort to defend – NSO? The police? It’s getting hard to keep track – claims have been made that the latest media reports will destroy Israel’s offensive cyber industry. But that horse left the stable long ago.

Pegasus and similar programs have enormous capabilities that were never meant to wind up in private hands. The fact that this technology has reached commercial companies (with the consent, or deliberate disregard, of the state and the defense establishment), and that these companies have put it at the service of dictators and dubious intelligence organizations, has already caused the state great damage. A significant portion of this industry is already lost, and several leading companies are in danger of closing.

In the background lurks another issue. Israel’s impression is that U.S. President Joe Biden’s administration has targeted the Israeli industry and is seeking to drive it out of the offensive cyber business. This is partly due to a desire to reserve these destructive capabilities for major powers, but the administration also seems to be exploiting the opportunity to get rid of Israeli companies that compete with American ones.

Israel identified this trend almost a year ago. But NSO’s serial entanglements, especially overseas, will likely intensify this by giving the administration an excuse to impose stiffer sanctions on Israeli companies and to step up its demands that Israel’s defense establishment amend its behavior.