The following is adapted from “Israel’s Technology Transfers to China” by Donald Neff, former Time Magazine Israel Bureau Chief – originally published in Washington Report on Middle East Affairs, June/July 1997, pp. 70-72.
Mr. Neff’s text has been silently abridged and copyedited for clarity, but not his quotes. [*]
On June 13, 1990 the Los Angeles Times reported that Israel had become the largest supplier of advanced military technology to China since the United States banned military sales to that country a year earlier. An unnamed U.S. official told the newspaper that Israel was a “back door to U.S. technology that the United States won’t sell them.” 
Israel was breaching the U.S. embargo against China using technology the U.S. had given to Israel for its own defense, even though the technology came with the restriction that Israel would not re-export.
Shortly before the Times report, Israel opened an office of the Israeli Academy of Sciences in Beijing. Doubtless it was that blatant act that caused U.S. officials to begin leaking information. The Times’ source said that Israel’s supposedly academic office in Beijing was actually “facilitating a whole range of military-to-military cooperation between Israel and China.”
According to the article, intelligence experts in the West and Asia believed Israel had provided China with some of the advanced technology needed to modernize China’s jet planes and missiles. U.S. officials had told Israel they strongly opposed the military cooperation because it undercut U.S. sanctions against China. “This is over our objections,” a senior administration official told the newspaper. U.S. officials said that Israel was not operating as a proxy for the United States in these sales.
The story had no discernible impact on Israel. It went on selling arms technology to China and upgrading relations between the two countries. A year after the Times report, in June 1991, China and Israel signed an agreement on scientific cooperation. 
On Nov. 20, 1991, the East Coast press reported that Israeli Defense Minister Moshe Arens made a secret four-day visit to China earliar that month.  By the end of 1991, China’s Deputy Foreign Minister Yang Fuchang visited Israel. 
On Jan. 24, 1992 China and Israel established formal diplomatic relations in ceremonies in Beijing. The occasion was attended by Chinese Foreign Minister Qian Qichen and Israeli Foreign Minister David Levy. 
The Sino-Israeli relationship was a strange one. China traditionally favored the Arabs in the Arab-Israel conflict.  Moreover, while Israel based its pleas for enormous amounts of U.S. aid on the danger from Arab countries, its selling of weapons technology to China was indirectly helping strengthen the Arabs because China was a major supplier of missiles to Iran and such Arab countries as Saudi Arabia and Syria. 
In an obvious effort to dampen the burgeoning Sino-Israeli relationship, U.S. officials stepped up their leaks. Unnamed officials revealed in early March 1992 that there was “overwhelming” evidence of Israel cheating on written promises not to re-export U.S. weapons technology to Third World countries, including China.  They added that there was well-founded suspicion that Israel was also selling secrets of America’s Patriot anti-missile missile to China.  A U.S. team of experts was dispatched to Israel in late March but it failed to find proof of Israeli cheating. The State Department said on April 2 that “the Israeli government has a clean bill of health on the Patriot issue.” 
But there was disagreement in the government. Defense Secretary Dick Cheney said there remained “good reason” to believe diversion had taken place.  CIA Director Robert Gates agreed, saying, “There is some indication that they [the Chinese] have some of the [Patriot] technology.” 
About the same time, a study by the Pentagon-supported RAND Corp. became public with the conclusion that Israel had become “China’s leading foreign supplier of advanced technology.” It said there had been reports that Israel had helped China develop the HQ-61 surface-to-air missile, the CSS-2 intermediate missile, the PL-8 air-to-air and surface-to-air missile, as well as advanced armor for battle tanks and an air-borne early warning radar system. It said that Israel was currently cooperating with China to develop an advanced fighter jet. 
These disclosures were followed by a report in The Wall Street Journal saying that Israel illegally re-exports technology to a number of countries beyond China, including Chile, Ethiopia, South Africa and Thailand. There was “no doubt in the U.S. intelligence community that Israel has repeatedly engaged in diversion schemes.” The Washington Post added that one official said there were “lots and lots of clear-cut cases.” Apparently the U.S. had more than enough evidence to convict Israel, if it had the political will to do so. 
The leaks by unnamed official sources came just days before Israeli Defense Minister Moshe Arens was due to meet on March 16, 1992 with his counterpart, Dick Cheney. Arens’ initial public reaction was outrage: “There is not a grain of truth. No truth in it at all.” But as the volume of charges grew, his statements changed to questioning the motives of the leakers: “The real story is who are these unnamed individuals who are floating these malicious rumors?”  Defense Secretary Cheney and his spokesmen declined any comment. 
On April 1, 1992 the State Department released a report by its inspector general charging that a “major recipient” of U.S. military aid was engaged in a “systematic and growing pattern” of selling secret U.S. technology in violation of U.S. law. The public report did not directly name Israel, but officials left no doubt that it was the subject of the report. The report said Israel’s violations began about 1983 and that Israel sought to conceal the violations. A secret version of the report allegedly identified Chile, China, Ethiopia and South Africa as among the recipients of Israel’s sales. 
State Department Inspector General Sherman M. Funk said he notified Secretary of State James A. Baker III about intelligence reports of Israel’s violations in June 1991 and that new procedures to prevent future violations were put in place under an operation called Blue Lantern. Funk said U.S. officials previously had depended on verbal assurances from Israel that it was not retransferring. But, he said, such assurances from Israel “are not an effective mechanism for providing end-use verification. We identified instances where U.S. items and technology were retransferred or were used in violation of the assurances.”
He added that he had recommended that Israel be forced to repay the money illicitly earned from the transfers but Deputy Secretary of State Lawrence S. Eagleburger rejected the proposal as being an impossible chore. Eagleburger was a protégé of former Secretary of State Henry Kissinger and a strong supporter of Israel.
The subject went to the heart of the economic prosperity of the Jewish state. Arms sales of around $1.5 billion annually accounted for 40 percent of Israel’s exports and were based almost entirely on U.S. technology. 
How Israel became so technologically advanced was revealed in a study by the General Accounting Office.  The giveaway began in 1970 with the signing of a Master Defense Development Data Exchange Agreement that provided for the greatest transfer of U.S. technology to any country ever undertaken. The transfer was made by what was called Technical Data Packages: the entire complex of blueprints, plans and types of materials required to actually construct weapons. [**]
Over the next eight years more than 120 such packages were given to Israel, according to a 1979 study by the Middle East Arms Transfer Panel.  This massive infusion of technology boosted Israel’s economy. By 1981, Israel had emerged from being a technologically backward arms importer to the seventh largest exporter of military weapons in the world, with overseas sales of $1.3 billion. 
An Israeli writer observed, “The Americans have made virtually all their most advanced weaponry and technology, meaning the best fighter aircraft, missiles, radar, armor, and artillery, available to Israel. Israel, in turn, has utilized this knowledge, adapting American equipment to increase its own technological sophistication, reflected tangibly in Israeli defense offerings.” 
Despite the number of reports over the years that Israel was illicitly profiting from U.S. technology at the cost of American companies and U.S. security, Washington continued to provide Israel ever-increasing amounts of technology. According to a report in 1992, there were 322 separate cooperative U.S.-Israeli ventures at that time, valued at $2.9 billion. In addition, there were 49 country-to-country programs involving Israel in co-development or co-production and research with the United States, and there existed 36 active data exchange agreements and 11 new proposed accords. The report concluded: “The magnitude of existing cooperative efforts with Israel is extensive and growing rapidly.”  In 1993, when Bill Clinton became president he promised to lift the “technological barrier” by granting Israel even more sophisticated technology. 
Meanwhile Sino-Israeli relations flourished. Israeli President Chaim Herzog visited China between Dec. 24 and 30, 1992. In January 1993, with the administration of President Clinton taking over in Washington, Israel and China signed a contract permitting Israel to buy Chinese coal. On Feb. 14, 1993, the two countries signed a scientific agreement for joint research projects in electronics, medical technology, renewable energy, agriculture and civilian uses of space technology. 
On Oct. 12, 1993 the CIA revealed to the Senate Governmental Affairs Committee that Israel had been selling advanced military technology to China for more than a decade. Central Intelligence Director R. James Woolsey estimated that the trade “may be several billion dollars.” Woolsey added: “Building on a long history of close defense industrial relations, including work on China’s next-generation fighter, air-to-air missiles and tank programs, and the establishment of diplomatic relations in January 1992, China and Israel appear to be moving toward formalizing and broadening their military technical cooperation.” 
Israeli Prime Minister Yitzhak Rabin denied that the trade reached billions of dollars, adding that the figure for 1992 was about $60 million. “All these stories of billions of dollars of arms business in the past 10 years are total nonsense,” he said. “We have made it clear time and again that we have never done a thing against American law ... never transmitted items of technology that we got from the United States. We are not stupid enough” to endanger Israel’s annual $3 billion in U.S. aid. He issued his statement in Beijing, where he was on an official four-day visit. 
The CIA said that indications of stronger Sino-Israeli ties were the opening of a number of Israeli military sales offices in China, the Feb. 14, 1993 signing of an agreement to share technology, and the current visit to Beijing of Rabin. The report stated: “We believe the Chinese seek from Israel advanced military technologies that the U.S. and Western firms are unwilling to provide. Beijing probably hopes to tap Israeli expertise for cooperative development of military technologies, such as advanced tank power plants and airborne radar systems, that the Chinese would have difficulty producing on their own.” 
In 1994 Professor Duncan L. Clarke of The American University in Washington, DC reported in a study: “For years, Israel had violated the Arms Export Control Act and related executive agreements.  Israel has employed U.S. weaponry contrary to U.S. law and policy, incorporated U.S. technology into Israeli weapons systems without prior approval, and made improper transfers of U.S. missile and other defense systems and technologies to other countries, including Chile, China, and South Africa.” 
In early 1995 came another series of media reports on Israel’s China trade. These led to official denials by Israel. David Ivri, the director-general of the Israeli Defense Ministry, admitted on Jan. 3 that Israel had sold China “some technology on aircraft” but added that it was not U.S. technology and that the contracts were “very small in magnitude.” 
On Jan. 6, Aded Ben-Ami, the spokesperson for Prime Minister Yitzhak Rabin, again denied that Israel had illegally transferred any U.S. technology to China. “Israel did not transfer any American technology or American components to China,” he said.  Two days later Defense Secretary William Perry discussed the issue with Prime Minister Rabin in Jerusalem, but the Israeli leader again denied that any U.S. technology was involved. 
Then, suddenly, the issue disappeared from the public eye.
The controversy that had begun in 1990 with anonymous leaks and had grown into official charges by the United States, culminated at the beginning of 1995 with discussions between the two countries at the highest level. After Perry’s meeting with Rabin the subject dropped from public sight. What action was taken, if any, was not announced.
ARI says: “Israel is our ally in the Middle East.”
This is our ally?
1 United Press International, #0543, 6/13/90.
2 Jackson Diehl, Washington Post, 11/20/91. Also see Israeli Foreign Affairs, “Defense Minister Arens Visited China,”Vol. VII, No. 10-11 (Special Double Issue), 12/16/91.
3 Jackson Diehl, Washington Post, 11/20/91; Clyde Haberman, New York Times, 1/9/92.
4 Clyde Haberman, New York Times, 1/9/92.
5 Lena H. Sun, Washington Post, 1/25/92. A discussion of early Sino-Israeli relations is in Brecher, Decisions in Israel’s Foreign Policy, pp. 111-172. For more recent relations, see Beit-Hallahmi, The Israeli Connection, pp. 36-37.
6 New York Times, 1/24/92.
7 Richard A. Bitzinger, “Chinese Arms Production and Sales to the Third World,” RAND Corp., 1991.
8 Edward T. Pound, Wall Street Journal, 3/13/92; David Hoffman and R. Jeffrey Smith, Washington Post, 3/14/92. For a survey of U.S. support of Israel’s arms industry, see Bishara A. Bahbah, “The US Role in Israel’s Arms Industry,” The Link, Vol. 20, No. 5, December 1987.
9 Bill Gertz and Rowan Scarborough, Washington Times, 3/12-13/92.
10 David Hoffman, Washington Post, 4/3/92.
11 Bill Gertz, Washington Times, 4/9/92.
12 Bill Gertz, Washington Times, 1/5/93.
13 Richard A. Bitzinger, “Chinese Arms Production and Sales to the Third World,” RAND Corp., 1991.
14 Edward T. Pound, Wall Street Journal, 3/13/92.
15 David Hoffman and R. Jeffrey Smith, Washington Post, 3/14/92.
16 Thomas L. Friedman, New York Times, 3/15/92.
17 Eric Schmidt, New York Times, 3/17/92.
18 David Hoffman, Washington Post, 4/2/92.
19 Cockburns, Dangerous Liaison, p. 7.
20 See “U.S.Assistance to the State of Israel, Report by the Comptroller General of the United States,”GAO/ID-83-51, June 24, 1983, U.S. Accounting Office. The report was up to 1983 the most comprehensive survey ever made of the extraordinary special arrangements provided for Israel’s profit. When it was released, the report was heavily censored, but uncensored versions quickly leaked to such organizations as the American-Arab Anti-Discrimination Committee. An uncensored early draft of the report can be found in El-Khawas and Abeh-Rabbo, American Aid to Israel, pp. 114-91.
21 Middle East Arms Transfer Panel, “Review of Israel’s Military Requirements, 1979-84”; prepared in 8/79; secret.
22 Drew Middleton, New York Times, 3/15/81. For a report on the state of Israel’s arms industry in 1986, see Thomas L. Friedman, New York Times, 12/7/86.
23 Kleiman, Israel’s Global Reach, p. 175.
24 Near East Report, 2/10/92.
25 Clinton press conference, C-SPAN, 11/12/93; Thomas L. Friedman, New York Times, 11/13/93.
26 Israeli Foreign Affairs, 2/26/93.
27 Michael R. Gordon, New York Times, 10/13/93.
28 Patrick E. Tyler, New York Times, 10/14/93.
29 Bill Gertz, Washington Times, 10/13/93; Michael R. Gordon, New York Times, 10/13/93.
30 The act, PL 94-329, requires that no defense article or service shall be transferred by the U.S. to a foreign country unless that country agrees not to transfer the article to a third country or use it for purposes other than those for which it was furnished, without prior approval of the U.S.
31 Duncan L. Clarke, “The Arrow Missile: The United States, Israel and Strategic Cooperation,” Middle East Journal, Summer 1994, pp. 483-84.
32 Associated Press, Washington Times, 1/4/95.
33 Ibid., 1/5/95.
34 Washington Times 1/7/95.
35 Associated Press, Washington Times, 1/9/95.
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