ISRAEL PLANS SPY SATELLITE SALES TO TURKEY, SINGAPORE / MID-EAST NATION FEARS U.S. MAY SCUTTLE ONE OF THE DEALS
By BARBARA OPALL-ROME
posted: 12:00 am ET, 24 July 2000
TEL AVIV, Israel -- Israeli officials insist they have fully coordinated with Washington on the potential sales of spy satellites to Singapore, Turkey and other nations. Nevertheless, Israeli officials fear the United States might try to scuttle one of those deals just as it insisted that Israel cancel the sale of Phalcon early warning aircraft to China.
"These satellites have strategic applications, and as such, have been fully coordinated with Washington," a senior Israeli Ministry of Defense official told Space News.
U.S. Embassy officials here refused to comment on Israeli assertions, referring the issue to Eric Newsom, U.S. assistant secretary of state for political military affairs, who chairs a joint U.S.-Israel Technology Transfer Working Group.
A State Department official said July 14 that Newsom was on travel and could not be reached for comment, but added: "Israel is a close ally and we have discussions on a wide range of topics, including remote sensing. But such discussions are sensitive and we will not comment on them."
The Israeli Ministry of Defense official noted that Israel's coordination efforts with Washington began in 1998, during negotiations with South Korea over the sale of a camera and other technology developed for Israel's Ofeq series of spy satellites. The camera eventually sold to South Korea has a 1-meter spatial resolution for black and white imagery, which is sharp enough to detect ground objects of that size, and four-channel color pictures with 4-meter resolution.
Defense and industry sources here said ongoing contract negotiations with Turkey and Singapore may be more sensitive than the Korean deal, because potential contracts to those nations involve not only the camera and related equipment, but the entire reconnaissance spacecraft.
The South Korean program requires El-Op Electro-Optics Industries Ltd., now part of Elbit Systems Ltd. of Haifa, to provide the camera to the Korea Aerospace Research Institute for installation aboard Seoul's planned Multipurpose Satellite-2, or Kompsat-2.
"The South Korean deal was $50 million, tops. But here we're talking more than $1 billion worth of business between those two countries alone. . . . This could cause heartburn in Washington, not because of security concerns, but because of competitive business interests," an Israeli industry executive said.
He noted that El-Op competed with six contenders for the South Korean contract, including Bethesda, Md.-based Lockheed Martin Corp. "If U.S. business interests influence Washington, as we're sure they did with the Phalcon contract, we may be heading for trouble."
In a July 5 interview, Dan Meridor, chairman of the Israeli Parliament's Foreign Affairs and Defense Committee, said Israel's first priority was to respond favorably to U.S. national security concerns. Nevertheless, he noted that cancellation of the Phalcon deal would impact adversely on the credibility of the Israeli defense industry on the global market.
"The issue not only with Phalcon, but with future items that may arise in the context of our bilateral relationship, is how to distinguish between national security concerns and other factors," Meridor said.
Officially, Israel's Ministry of Defense refuses to confirm or deny reports of a potential $1 billion contract to jointly develop a series of spy satellites for Singapore. The program, first reported in the July 3-9 edition of London-based Jane's Defence Weekly, is expected to match or exceed the capabilities of the Israeli Ofeq satellite.
As for the Turkish program to build a remote-sensing satellite, first reported in July 6 issues of the Ankara, Turkey-based Millyet daily, officials here are less restricted, but nevertheless circumspect. During a visit to Ankara earlier this year, Israeli Prime Minister Ehud Barak spoke openly about Israeli-Turkish cooperation in the field of space, but declined to provide details.
Turkish Defense Minister Sabahattin Cakmakoglu was more forthcoming in addressing the issue, when he denied an essential element of the Millyet story, which asserted that Israel Aircraft Industries (IAI) of Lod, Israel had won the contract with its bid of $274 million.
In a July 6 statement, Cakmakoglu insisted, "Two companies meet our criteria and were authorized to provide offers, but nothing has been finalized." Cakmakoglu was referring to the French aerospace company Alcatel and an Israeli consortium led by Israel Aircraft Industries.
An Alcatel official confirmed that the company is competing with an Israeli consortium for the Turkish surveillance satellite project and that the Turkish government has not yet decided on a winner, but declined to comment further.
Meanwhile, Turkey's military procurement authorities say they soon will determine the winner in the National Satellite project, estimated to be worth several hundred million dollars. Authorities in Ankara said the Turkish Treasury already has issued loan guarantees for the program.
"We are close to a decision," said a senior military procurement official. "This is a priority program we wish to make operational rather quickly."
Turkish procurement officials said the IAI-led consortium, which consists of Elbit and Rafael Armament Development Authority of Haifa, recently made a radical move and cut its bid to $206 million to defeat its French rival. "With the move, the Israelis have come quite close to sealing the contract," noted one Turkish procurement official.
An aviation industry official said, "All eyes are now on Alcatel, which is expected to cling to the deal and cut its price." He added, "They must revise their price if they want the contract."
Space News correspondent Burak Ege Bekdil and staff writer Peter B. de Selding contributed to this report from Ankara and Paris, respectively.
