Arms and military goods have become Israel’s main export item, to the tune of well over $2 billion per year.  Israel has exported arms to more than 60 countries and an undetermined number of armed groups worldwide. A peculiar feature of Israel’s arms business is that up to one third of sales are conducted by a network of private dealers who net commissions of between 5 and 25 percent for their services.
Two Israeli arms dealers, Ya’acov Nimrodi and Al Schwimmer, figure prominently in the joint US-Israeli sale of weapons to Iran over the last two years. Nimrodi is reputed to be one of the richest men in Israel. He started his career as a military intelligence officer and served from 1960 to 1974 as Israel’s military attaché in Tehran. After leaving this post he continued to broker hundreds of millions of dollars worth of military deals with Iran in the last years of the Shah. His contacts with Iranian military and security forces (“I built Iranian intelligence,” he has boasted) made him a central figure in the sale of weapons to the new Islamic Republic, going back at least to a $135 million deal in 1981. Nimrodi claims to be good friends with Saudi arms broker Adnan Khashoggi.
Al Schwimmer made his name as the founder and long-time president of Israel Aircraft Industries (IAI), one of the largest companies in Israel. Schwimmer holds dual Israeli and American citizenship, and is a close friend of Foreign Minister (and recently Prime Minister) Shimon Peres.
The network of Israeli private arms dealers includes at least 1,000 Israeli businessmen, present and former government officials, and ex-military officers. These individuals apply for and are typically granted an Israeli Defense Ministry document bearing the signature of the defense minister and authorizing the holder to prospect abroad for arms sales opportunities. These permits allow arms dealers to negotiate the sale of Israeli military equipment. A further government permit is required for an actual sale.
The Defense Ministry’s sales office, SIBAT, theoretically supervises all arms negotiations. In practice, it approves final sales with few questions asked about how the deal was made. The initiative lies with the private dealers. Bribes and irregularities are said to be rife; commissions are reportedly quite high. The Defense Ministry at various times has tried to put an end to “unnecessary” intermediaries and arms agents and to conduct business in a “more centralized way.” Ariel Sharon, in particular, was concerned about the high commissions paid to middlemen, which he termed “blackmailing the state.”
David Marcus Katz, one of Israel’s top arms dealers who resides in Mexico City, was singled out by the Hebrew press. Katz’s high fees, according to these reports, have cost Israel large deals in Central America that otherwise would have gone through. When Ezer Weizmann was defense minister, there was an unsuccessful move to curb Katz’s activities. Katz had backing among influential political circles, including those close to Prime Minister Menachem Begin. Other private dealers are said to be similarly well connected. But the private agents have been given free rein because they succeed, not because of their friends in high places.
From Israel’s perspective, there are numerous advantages in using private arms dealers. First, Israel has a narrow field of formal, regularized diplomatic activity and government-to-government relations. Sales to countries with which it has no diplomatic relations have to be conducted through back channels. Second, many of Israel’s arms dealers have close ties to Israel’s leaders. Retired military officers are familiar with the Israeli military and its equipment.
Third, arms dealers rely on their vast network of personal contacts with the ruling elites of the countries in which they operate. When former Defense Minister Sharon negotiated with the Honduran government in December 1982, David Marcus Katz was there with him. The fact that private dealers are identified with the Israeli government facilitates their success. The dealers’ activities are usually secretive and unsupervised, although fairly effective in closing deals which are monetarily important for Israel.
Fourth, the status of private dealers as “cutouts” (they lack formal links to a government) enables the purchasing or selling government to deny official involvement. Finally, although the proliferation of private weapons salesmen aggravates the problem of coordinating arms sales, their operations disguise the trail of at least some Israeli arms, which are “laundered” and resold through a host of fictitious companies in various countries.
The largest group of Israeli arms dealers comprises ex-military officers. Many are ex-generals or reserve generals. According to Mordechai Abir, a Middle East specialist at the Hebrew University, their nice pensions do not fully compensate for “the rank, authority and perks they enjoyed in the military.” Private industry no longer freely provides retired senior officers with executive jobs. Many try to make a second career in the lucrative business of arms sales, hoping to use their expertise and connections. Some of the best known of this group include: Gen. Rehavam Ze’evi (retired), Maj. Gen. Herzl Shafir (retired), Brig. Gen. Efraim Poran (reserve), Maj. Gen. Avigdor Ben-Gal (reserve) and Brig. Gen. Abraham Bar-Am (retired).
The second group of Israeli private arms dealers include businessmen and entrepreneurs. The most prominent of this group include Shlomo Zevdelovitch, who over the past three decades has become one of the biggest private arms dealers in the world. He successfully sold Israeli arms to countries in Europe, Asia, Africa and elsewhere. David Marcus Katz is well connected in Latin America; Pessah Ben-Or has been very active in selling Israeli arms to Central America; Shaul Eisenberg is reportedly responsible for some 10 percent of Israel’s arms exports; Guri and Israel Eisenberg have been involved in trying to sell US arms to Iran.
The third group of Israeli private arms dealers includes both former and present government officials. A number of Knesset members act as representatives of Israeli military industries. Moshe Arens was associated with an arms company called Kibernetikes. Ezer Weizmann, also a member of the cabinet, was a partner in Elul Technologies, a major middleman for the export and import of arms. Other government figures have been directly involved in arms sales or have had close ties with individuals acting as arms merchants.
Israel uses its overseas diplomatic and military missions to explore the possibilities for bilateral military cooperation with the host countries. Israel’s major arms manufacturers are themselves active in seeking out potential customers. The IAI, Soltam, Rafael and Tadiran, for example, have export departments and special marketing employees. Some of these firms have regional offices around the world to promote their products.
Whether arms deals are concluded by private dealers, major arms manufacturers or military and diplomatic missions abroad, the Israeli government controls all arms exports at the highest level through the Ministerial Committee on Weapons Transfers, and at the operational level through the SIBAT. Arms sales are subject to close scrutiny by a ministerial committee which includes high-ranking civil servants and politicians as well as the military.
Israel’s success in becoming the leading arms exporter among developing countries rests with its aggressive sales policy and its encouragement of the vast network of private Israeli arms dealers. Thanks in large part to Nimrodi’s efforts, the Shah’s regime was buying as much as $500 million worth of Israeli arms annually by the late 1970s. The Shah’s fall was a blow to Israeli arms manufacturers; at least two firms, Tadiran and Soltam, had to lay off workers as a direct consequence of the Iranian revolution. Economic constraints and increased competition from other Third World producers have threatened market shares and growth; those with a stake in Israel’s arms exports would naturally look to Iran, with its wartime needs, as a very important market. According to Aaron Klieman of Tel Aviv University, Israel had probably sold about half a billion dollars worth of arms to the Khomeini regime by the end of 1983; according to the London Observer, Israel was once again “Iran’s most reliable arms supplier with a trade valued at between $500 million and $800 million a year.”  While these figures may be high, there is little reason to doubt that Israeli arms manufacturers and salesmen regard Iran as one of their most important markets.
Israel’s Major Private Arms Dealers
Alfred Akirov Owner of an arms exporting firm.
Abraham Bar-Am A retired Israeli army officer who was deputy chief of the Northern Command (the Syrian-Lebanese border). Now on trial in New York for trying to sell $2 billion worth of American-made weapons to Iran.
Avigdor Ben-Gal A reserve major general who worked with arms dealers Shlomo Eliyahu and Yechiel Fromer upon retiring from active military service.
Pessah Ben-Or A leading middleman for Israeli arms sales to Guatemala. Owns Eagle Military Gear Overseas. Also connected with the Sherwood International Export Company, which sells small arms to rebel groups.
Pinhas Dagan Representative of IAI for the territory between Mexico and Colombia. Also works for the Sherwood company.
Israel and Guri Eisenberg Branches, agents and business contacts in East Asia, Africa and Latin America. Arrested in Bermuda in 1986 with Bar-Am, accused of conspiring to smuggle US arms to Iran.
Shaul Eisenberg Headquarters in Tokyo and Tel Aviv; companies registered in Vaduz, Liberia and Panama; reputed to have excellent connections in China. May be responsible for 10 percent of Israel’s arms exports. In 1985, Belize appointed him as its honorary consul in Israel.
Sholomo Eliyahu A known arms dealer.
Yekutiel Federmann He negotiated an arms deal with the Swiss army in 1981. Also controls the El-Op company, with an arms sales inventory of its own.
Yechiel Fromer A known arms dealer.
David Marcus Katz Resides in Mexico City; an agent of at least 17 Israeli arms manufacturers.
David Kolitz Head of Elul Technologies; reputed to be a major middleman for arms exports and imports.
Hayim Laskov Former army chief of staff; sells arms in Latin America.
Arnon Milchan An arms manufacturer, exporter and importer, and now a movie producer.
Betzalel Mizrahi In 1977 offered ultra-modern equipment and the services of Israeli military advisers to a number of Latin American countries. A contractor from Tel Aviv with links to organized crime.
Ya’acov Nimrodi Ariel Sharon called him the “architect” of Israel’s relations with Iran. His company, International Desalination, has branches in a number of countries involved in the sale of Israeli arms. Nimrodi still has investments in Iran worth about $6 million.
Efraim Poran Former military attache in Singapore; reserve brigadier general. Former military secretary to premiers Rabin and Begin. He specializes in exports, including arms, to the Philippines.
Herzl Shafir A retired major general and former chief of Israeli police with an office in Nigeria; an agent of Israeli arms exporting firms.
Al Schwimmer Founder of IAI, an adviser and friend of Shimon Peres. The Jerusalem Post has identified Schwimmer, who also holds US citizenship, as one of Israel’s “top” arms dealers.
Hayim Topol An internationally known actor and former Mossad agent, very active in sales to Latin America.
Levi Tzur Former air force officer, once Israeli military attache in Venezuela and Ecuador; now one of Israel’s top arms dealers in South America.
Rehavam Ze’evi A former general, he collaborated with Hayim Topol to supply Ecuador with sophisticated military equipment and technicians.
Shlomo Zevdelovitch One of the founders of Soltam and a close friend of the late Golda Meir; now a top private arms dealer.
Sources: Bishara Bahbah, Israel and Latin America: The Military Connection (New York: St. Martin’s Press, 1986), pp. 93-94, 120; Aaron Klieman, Israel’s Global Reach: Arms Sales as Diplomacy (Washington, DC: Pergamon-Brassey’s, 1985), pp. 11, 117-121; Yoram Peri, “The Military-Industrial Complex,” Israel Economic and Business Review (Jerusalem, 1985), pp. 47-53; Israel Shahak, Israel’s Global Reach: Weapons for Repression (Belmont, MA: Association of Arab-American University Graduates, 1982), pp. 17-18, 36-37; Claudia Wright, Spy, Steal and Smuggle: Israel’s Special Relationship with the United States (Belmont, MA: AAUG Press, 1986), p. 19; Baltimore Sun, April 28, 1986; Chicago Tribune, April 24, 1986 and December 5, 1986; Davar, November 13 and 14, 1979; Haaretz, February 7, 1983, March 30, 1984 and August 16, 1985; Haolam Haze, August 3, 1983; International Herald Tribune, May 27, 1983; Israel Foreign Affairs, January, March, June and July 1986 and November 1985; Jerusalem Post, April 25, 1986, April 27, 1986, November 22, 1986 and December 6, 1986; Los Angeles Times, May 5, 1986; Ma’ariv, August 12, 1982; Monitin 59 (July 1983), pp. 86-96; National Catholic Reporter, December 25, 1981; New York Times, December 5, 1986 and February 7, 1982; USA Today, April 28, 1986; Wall Street Journal, December 3, 1986; Washington Post, May 16, April 28 and November 26, 1986; Washington Times, December 1, 1986.
 Estimates of Israeli arms sales are educated guesses, based on sources ranging from Israel’s trade statistics to scattered data published in the international press. Most recent estimates of Israeli arms sales range from $1.5 billion to well over $2 billion per year. The latter figure is used in this article to account for recent revelations involving huge Israeli arms sales to the People’s Republic of China and the Khomeini regime in Iran. The Stockholm International Peace Research Institute (SIPRI), one of the most respected sources on the international arms trade, gives the lower figures. This is because SIPRI includes in its calculations only major weapons such as aircraft, tanks and naval ships, and excludes small arms, ammunition and defense electronics, which constitute the bulk of Israel’s military exports.
 Observer (London), September 29, 1985.