India invokes new code of business for deals with Israel

Moves comes in light of unresolved bribery allegations against two of Israel's leading defense industries.

By YAAKOV KATZ
arrow launch 224 88 iai (photo credit: IAI [file])
arrow launch 224 88 iai
(photo credit: IAI [file])
In light of unresolved bribery allegations against two of Israel's leading defense industries, the Indian defense ministry has instituted a new code of conduct for doing business with Israel. According to media reports in India, New Delhi decided to issue the new and comprehensive guidelines out of fear that the corruption allegations will spoil the country's upcoming general elections. According to the new guidelines, the Indian Navy will not be allowed to buy any more Barak anti-ship missiles for the time being and no new tenders will be issued to Israel Aerospace Industries (IAI) and Rafael Defense Systems in single vendor situations without a security cabinet decision backing the move. India is one of Israel's largest defense clients and in recent years has purchased weapons systems valuing over $1 billion annually. In August, the Indian MOD approved a $2.5 b. joint IAI-Rafael deal to develop a new and advanced version of the Spyder surface-to-air system. It was in 2006 that federal Indian investigators launched an investigation into former Indian defense minister George Fernandes and former navy chief Sushil Kumar, for alleged irregularities in the purchase of the IAI and Rafael-developed Barak anti-missile ship defense system six years ago. The issue remains unresolved. In response to the Indian media reports, the Israeli Defense Ministry said that the new guidelines were an internal Indian matter and that Israeli companies always operated according to the laws of each country. Defense officials said that Israel and India have enjoyed close relations since the early 1990s when India began buying advanced military platforms from Israel and not just Russia. As proof of the ongoing relations, the officials referred to the approval granted in August of the multi-billion dollar Spyder deal. "There is nothing wrong with the new guidelines since we have always worked by the book," one official said. In related news, a top Indian defense delegation visited Israel last month to try to speed up the delivery of three Phalcon Airborne Warning and Control Systems (AWACS), the first of which was supposed to have been delivered this month. Sources close to the deal said Wednesday that they would not be delivered for several more months. IAI is installing electronic and radar systems on Russian II-78 planes according to a $1.1 b. deal signed in 2004. Israel and India are in advanced talks for the purchase of an additional three Phalcons with delivery expected early in the next decade. India is acquiring the AWACS to bolster its air-surveillance capability, mainly against Pakistan.