US, Russia, Indian Muslims out to down IAI deal

Israeli Aerospace Industry to supply India with 2,000 air-aircraft missiles effective in 70-kilometer range.

By YAAKOV KATZ
arrow launch 224 88 iai (photo credit: IAI [file])
arrow launch 224 88 iai
(photo credit: IAI [file])
Muslim political parties in India as well as Russian and American defense corporations are suspected of working behind the scenes to torpedo a $1.4 billion deal signed recently between Israel Aerospace Industries and India for the development of a missile defense system, Israeli defense establishment officials said on Wednesday. The deal was signed in February for the reported development and production of a land-based version of the Barak 8 missile systems. The sea-based version is already in advanced development stages. IAI will reportedly supply India with 2,000 missiles capable of intercepting enemy aircraft and missiles within a 70-kilometer range. The deal was first reported in March after IAI officially announced the new contract to the Israel Securities Authority last week. Due to Defense Ministry regulations, IAI did not disclose the name of the foreign country involved or the product it was selling. Following the notification to the Israel Securities Authority, media reports originating in India claimed that IAI withheld notification of the deal until it received an advance payment. Some reports claimed that the deal included "business expenses" that were to be used to pay kickbacks to senior Indian government officials who approved the deal. In a highly-unusual move, IAI released an official press statement rejecting the claims that it purposely withheld notification of the deal to the Israel Securities Authority. "Lately, various articles have appeared in the media regarding a large transaction for the sale of weapon systems to the country of a foreign customer, which have included information that is incorrect and biased, and which have originated, apparently, from entities that are trying to harm IAI's business ties with this customer," the statement read. Israeli defense officials said it appeared that pro-Muslim political opponents of the New Delhi government as well as competing defense companies from around the world were spreading rumors of financial irregularities to damage Israeli-Indian defense ties. The Muslim opposition to the deal, the officials said, could be backed by Iran, which last year tried to thwart the launch of an Israeli spy satellite from India. The IDF's Operation Cast Lead in the Gaza Strip in January was also playing a role in stirring opposition to the deal. Officials said it was possible that Russian defense companies were also working behind the scenes to sabotage the deal. In 2008, Israel surpassed Russia as the main defense supplier to India after breaking the $1 billion mark in new contracts signed annually over the past two years. According to news reports, Russia had averaged sales of $875 million annually to India for the past 40 years. In August, the Indian Defense Ministry approved a $2.5b. joint IAI-Rafael Advanced Defense Systems deal to develop a new and advanced version of the Spyder surface-to-air system. In May, India is scheduled to receive the first of three new Phalcon Airborne Warning and Control Systems (AWACS) developed for the Indian Air Force by Israel Aerospace Industries. The sides are in talks for the possible purchase of another three AWACS.