Analysis: Privatization of IMI keeps vital defense production in the country

Underlining the agreement is the defense establishment’s understanding that it cannot rely on any outside party to deliver such weapons at a time of extreme crisis.

By YAAKOV LAPPIN
Mobile IDF artillery unit fires a shell 311 (R) (photo credit: Jerry Lampen / Reuters)
Mobile IDF artillery unit fires a shell 311 (R)
(photo credit: Jerry Lampen / Reuters)
The agreement the Defense Ministry and Israel Military Industries signed on Wednesday by, marking the privatization of the defense corporation, is designed above all to ensure that vital arms production lines remain in Israel.
The accord, signed by Defense Ministry director-general, Maj.-Gen. (res.) Dan Harel, was already finalized several weeks ago, and has committed the ministry to purchasing NIS 550 million of arms from IMI every year, thereby ensuring that the ailing firm can survive and pay salaries to staff.
Some 900 employees will still end up losing their jobs.
Ten years of negotiations have led to this arrangement, which ensures that Israel will continue to produce its own strategic arms, particularly shells and mortars. Underlining the agreement is the defense establishment’s understanding that it cannot rely on any outside party to deliver such weapons at a time of extreme crisis.
Had the agreement not been signed, Israel would have lost the ability to produce these weapons. Hence, despite the agreement not being the most financially efficient of options, it reached the signature stage on Wednesday.
Additionally, IMI produces classified strategic defense products that are considered absolutely vital to state security.
The section of the company that manufactures these products will be split from the rest of the firm, and turned into a state company, operating under the Defense Ministry.
The privatization of IMI will see the company move from its current headquarters in Ramat Hasharon to Ramat Beka, south of Beersheba, clearing the way for the construction of 44,000 housing units. Defense sources have expressed hope that the newly available land will contribute to lowering housing prices in the area.