Israeli Arms Sales to U.S. Adversaries

An American surveillance satellite passed over a Chinese air base used for testing prototypes and photographed several new fighter aircraft on the runway. When CIA imagery analysts looked at the pictures, they were looking at the Lavi.

The Lavi was an Israeli fighter, developed with roughly $1.5 billion of American money and modeled on the F-16, and Israel had cancelled the program in 1987. Its plans had gone to Beijing. What came off the Chinese production line eventually became the J-10.

What the CIA told the Senate

This was not an isolated transaction, and the American intelligence community said so on the record.

Reading from a declassified CIA report to the Senate Governmental Affairs Committee in the early 1990s, Director James Woolsey said that Israel had been selling military technology to China for more than a decade, and that the total might run to several billion dollars. “We believe the Chinese seek from Israel advanced military technologies that U.S. and Western firms are unwilling to provide,” he told the committee.

He was specific about what worried the Agency. China was drawing on Israeli contacts to develop engines for its next generation of combat vehicles, and expected to use Israeli expertise to build sophisticated airborne radar using technology the United States had entrusted to Israel for the Arrow missile defense program, which American taxpayers had largely paid for.

The structural problem underneath all of it is simple. Israel’s defense industry builds advanced systems with substantial American funding and American technology inside them, and then sells on the open market. Through the 1990s Israel was the second largest arms supplier to China after Russia, accounting for as much as a fifth of Chinese arms purchases.

Phalcon

In 1999 the arrangement produced a full diplomatic crisis. Israel had signed a contract worth about a billion dollars to sell China four Phalcon airborne early warning radar systems, the Israeli counterpart to American AWACS, to be fitted to Russian aircraft.

Washington had objected privately for a long time and went public when the first Russian plane arrived in Israel for fitting. American officials said plainly what the concern was: the Phalcon would shift the military balance in the Taiwan Strait in China’s favor, against American forces.

Prime Minister Ehud Barak refused to cancel, including in person to President Clinton and to Defense Secretary William Cohen. Israel eventually cancelled anyway in 2000, and pointed to two things as decisive: Cohen’s forceful visit that April, and the fact that long-standing supporters of Israel in Congress had turned against the sale.

Harpy

Five years later the same argument happened again, and this time the United States concluded it had been lied to.

China had bought Harpy loitering attack drones from Israel in 1994. In 2003 it contracted with Israel Aerospace Industries to upgrade them. Washington, again thinking about Taiwan and about American forces in a future conflict, demanded the systems not go back.

Israeli officials said they were merely refurbishing old drones that had been exported with American consent. American officials believed that was false, and that the drones were being upgraded with newer technology the United States had shared with Israel.

The response was the sharpest documented American sanction against Israel in this archive. The United States suspended cooperation on several long-range military development programs, including Israeli Air Force involvement in the Joint Strike Fighter, and the Pentagon threatened to remove Israel from the F-35 program entirely. Washington demanded a written apology. Defense Minister Shaul Mofaz cancelled his trip to the United States. Amos Yaron, a senior official in the Israeli defense ministry, resigned, and the Pentagon refused to deal with him for months.

The drones went back to China in 2005 without the upgrades. The cooperation was restored. Nothing structural changed.

South Africa

The China transfers moved American technology to a strategic competitor. The South African relationship was a different order of thing.

From 1977, the year the UN Security Council imposed its arms embargo, South Africa was Israel’s largest weapons customer. Sales had grown from $70 million in 1973 to a billion dollars by 1981. Israel publicly maintained that it was complying with the embargo. Internally, a telegram from the deputy director of its foreign ministry set out the actual policy alongside the public denial.

The nuclear dimension emerged only after apartheid ended, when South African archives opened and the American academic Sasha Polakow-Suransky worked through them. The declassified documents show Defense Minister Shimon Peres and Prime Minister P.W. Botha signing a broad military cooperation agreement containing a clause stating that the very existence of the agreement was to remain secret. In 1975 Israel offered to sell South Africa nuclear warheads. That particular deal did not proceed. What did proceed was an exchange: South Africa lifted safeguards on yellowcake uranium, and Israel supplied thirty grams of tritium, enough for several atomic weapons, which South Africa went on to build.

Washington had at least a partial picture at the time. A 1977 State Department memorandum from Secretary of State Cyrus Vance to President Carter recorded that “available information reveals nuclear cooperation between South Africa and Israel, possibly including plans to exchange nuclear-related materials,” and warned that if it involved weapons technology or materiel it “would hold gravest potential consequences for both governments.”

Why it matters

Across thirty years the same sequence repeats. Israel transfers technology the United States funded or supplied to a country Washington has identified as an adversary or placed under embargo. It is caught. It denies, or characterizes the transfer as something smaller than it is. Washington applies pressure, Israel gives way on that specific transaction, and the relationship resumes on the same terms.

Two details make the pattern hard to argue with. The first is that a sitting CIA director laid it out before a Senate committee in the early 1990s, so this was not a suspicion but an assessment on the record. The second is what finally produced the strongest American sanctions in this entire archive: not espionage, not the Pollard operation, not political interference, but a dispute over upgrading drones for China. The F-35 threat, the demand for a written apology, the resignation.

Those sanctions were lifted, cooperation was restored, and military aid never paused. American concern about Israeli defense technology reaching China through intermediaries has continued regardless, with Washington warning Israel about Chinese front companies operating inside the country as recently as 2022.

Sources

• CIA Director James Woolsey, testimony to the Senate Governmental Affairs Committee, early 1990s
• Arms Control Association: “Israel Halts Chinese Phalcon Deal,” September 2000; “Israel Cancels Radar Deal With China,” September 2001; “U.S., Israel Reach China Arms Deal,” September 2005
• Flight Global, “USA and Israel in Crisis Over China Harpy Deal,” January 4, 2005
• Council on Foreign Relations, “The U.S.-China-Israel Technology Triangle,” July 2019
• Sasha Polakow-Suransky, The Unspoken Alliance: Israel’s Secret Relationship with Apartheid South Africa (Pantheon Books, 2010)
• U.S. Department of State, Foreign Relations of the United States, 1977–80, Volume XVI, Document 291 — the Vance memorandum to President Carter on Israeli-South African nuclear cooperation
• The Guardian, “Revealed: How Israel Offered to Sell South Africa Nuclear Weapons,” May 23, 2010
• Daily Maverick / Open Secrets, “Declassified: Apartheid Profits, Ties to Tel Aviv,” December 2017 — drawing on roughly 40,000 archival documents