April 03, 2008

Bribes threaten Indo-Israel defense ties

Investigations into corruption and bribes surrounding the Barak missile deal threatens to upset growing Indo-Israeli ties, PR Kumaraswamy writes for ISN Security Watch.

Commentary by P R Kumaraswamy for ISN Security Watch (01/04/08)

Military ties, the most visible manifestation of Indo-Israeli relations, are being undermined from within by corruption and bribery. To ensure the smooth functioning of its growing military exports, leading Israeli companies have greased a few Indian palms – actions that are now threatening to blow up into a major controversy.

In October 2000, under the government of Prime Minister Atal Behari Vajpayee, India signed a US$250 million Barak missile deal with Israel. Within months, media began revealing large-scale corruption involving senior political figures and arms merchants.

Besides the usual defense agents and greedy politicians, the scandal has also involved members of the naval fraternity. Suresh Nanda - son of the former naval chief who headed the Indian navy during the 1971 Indo-Pakistan war - is the prime suspect. He is estimated to have earned about US$100 million in commissions for the Barak deal, while some smaller amounts went to the friends of George Fernandes, India's defense minister at the time the deal was signed. The investigative agencies have also questioned Admiral Sushil Kumar, the then-commander of the Indian Navy.

Furthermore, recommendations against the procurement of Barak by APJ Abdul Kalam, the-then scientific advisor and later on president, worked against the deal, especially when bribes appeared to have tilted the scales.

Defense deals have always been controversial, especially since New Delhi sought to lessen its dependency on Russia. Because its ties with Moscow were tightly controlled and managed, one never heard of money changing hands even when the USSR remained India's most favored arms supplier. Its desire to diversify defense procurements brought in arms merchants who understood and worked within the pulses of the Indian establishment.

In the 1980s, a bribery scandal involving the Swedish Bofors Company adversely affected the electoral prospects of then-prime minister Rajiv Gandhi and cost the Congress party dearly. The long-drawn controversy was largely responsible for the party losing its nation-wide appeal and popularity.

Since then, Indian leaders have been arguing against using middlemen and agents in defense contrast. However, given the complexity of the process, legendary Indian bureaucratic bottlenecks and cut throat completions, conducting major defense deals without agents is nearly impossible.

For its part, the Indian defense establishment is maintaining that the Barak deal was a good acquisition that was badly executed. Similar arguments were put forth by the army at the height of the Bofors scandal: good gun, bad procedure.

Partly with political calculations in mind, upon coming to power in May 2004, the government of Manmohan Singh instituted probes into 48 major defense contracts signed by the previous government. And the Barak deal is not the only one under scrutiny.

According to media reports, Israeli Attorney General Menachem Mazuz is investigating Moshe Keret - the CEO of Israel Aerospace Industries (IAI) for 20 year until 2005 for his role in the Phalcon spy plane deal. The judiciary in Israel has issued a gag order against disclosing the identity of another arms dealer involved in the probe.

As per the original deal signed with China, Israel was to supply four spy planes for US$1 billion. When the US scuttled that deal, Israel found a new buyer in India and agreed to sell three planes for US$1.1 billion. According to the Israeli daily Ha'aretz, though the Indian deal is still in the implementation phase, "the agent has received an advance of millions of dollars with many more millions promised."

The investigative agencies are closing in on the Indian beneficiaries of the Barak deal, but at the same time, the Indian government will not be able to remain silent on the role played by the Israeli companies.

Already the communist parties who are highly critical of India's defense ties with Israel have jumped at the opportunity and have demanded the blacklisting of Israeli companies involved in the scam. Should the Indian government accept their plea, leading firms such as the state-owned Rafael will be affected as it is involved in a number of defense deals with India.

Within a short span of 15 years, Israel has emerged as the second largest arms supplier to India and New Delhi the prime export destination for Israeli arms. In recent months, both countries are moving into joint defense research and other forms of security cooperation. Despite some disquiet in countries such as Iran and Egypt, both are keen to establish a long-term defense partnership.

Seen in this larger context, the Barak scandal is a major setback and will haunt both defense establishments for a long time to come.

P R Kumaraswamy teaches at Jawaharlal Nehru University, New Delhi.

The views and opinions expressed herein are those of the author only, not the International Relations and Security Network (ISN).

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