In what may pose a significant setback for Prime Minister Benjamin Netanyahu, Israel and Germany have agreed to cancel the deal to purchase submarines if corruption charges relating to the deal with German company ThyssenKrupp are substantiated by the police investigation.
According to a report by Haaretz, the agreement was added at the insistence of the Germans as a new clause to a draft memorandum of understanding on the purchase, which is set to be signed within a few weeks.
Senior officials in both countries have agreed that the agreement is a condition for Germany’s agreement to sign the contract on the transaction.
In addition to the significant sum of money that the deal is worth, senior German officials stated that the deal is important for German Chancellor Angela Merkel to show her “explicit policy of strengthening Israeli security.”
MK Erel Margalit (Zionist Union) responded to the report saying that “the prime minister is trying to snatch an advantage while under investigation at a price of 1.5 billion euros and Germany’s demand of a corruption clause illustrates the gravity of the situation.
“I demand that the implementation of the agreement be delayed until the Knesset Foreign Affairs and Defense Committee has discussed the deal in the presence of the prime minister,” he added.
Questions over the 2014 submarine deal began to arise in November when Channel 10 reported that Netanyahu’s personal lawyer, David Shimron, worked for the Israeli representative of ThyssenKrupp.
ThyssenKrupp itself has been accused of being involved in bribing officials across the world to promote its submarines. According to the German financial newspaper Handelsblatt, Thyssen- Krupp launched an internal investigation into suspicions that the employees of a subsidiary, Marine Force International, had bribed officials in Greece, Turkey, South Korea, Pakistan and Indonesia.
Shimron had pushed for the multi-billion shekel deal over the objections of the defense establishment, including then-defense minister Moshe Ya’alon, who found out about the deal only after it was leaked to the media. Ya’alon had initially succeeded in stopping the planned purchase, but after he stepped down as defense minister, Netanyahu renewed the negotiations with Berlin.
Ya’alon is reported to have recently testified against Netanyahu in this affair, code named File 3000, offering the police details about the contacts Netanyahu held with German officials regarding the acquisition of three submarines and several other warships, all of which occurred without the knowledge of the security establishment.
An initial probe of the allegations was opened by Attorney- General Avichai Mandelblit in February. While the probe into the deal has turned into a criminal investigation, Netanyahu is not a suspect in the affair.
Israel currently has three Dolphin-class submarines and two Dolphin 2-class submarines (another one is expected to be delivered in 2018). The new Dolphin 2-class submarines, which are not due to be delivered for another decade, are expected to replace the older Dolphins at a combined price of NIS 5 billion ($1.3 billion).Gil Hoffman contributed to this report.