Guns, Not Butter
US Corporation: AEL Industries, Inc.
Israeli Corporation: Elisra Electronic Systems (formerly AEL Israel)
Financial Relationship: AEL owns 58 percent of Elisra.
Military Products: Electronic warfare systems; telephone switching equipment. In 1984 approximately 50 percent of sales were for export. Awarded Israel Defense Prize in 1983 for collaboration with the Israeli navy on computerized battle systems. 
US Corporation: Astronautics Corporation of America
Israeli Corporation: Astronautics CA
Financial Relationship: Subsidiary.
Over the past two decades, a combination of factors has significantly reoriented the Israeli economy toward military production — weapons for Israel’s military and for export to juntas, minority regimes and dictators around the world.
Israeli officials justify this development of military industries and arms export markets on the need for independence from foreign suppliers and the consequent need to lower the per-unit cost to the Israeli military. Israel now appears to be the largest producer of armaments in the Third World. 
Forty years ago, arms production in the Middle East was limited to a few small factories producing rifles and ammunition. Today, arms production has become a very big business in the region, with annual output worth more than $4 billion and rising. Of the 23 Third World countries with extensive military production, five are in the Middle East. One Middle Eastern state, Israel, is the largest Third World arms exporter and has one of the largest arms industries in the world. Egypt and Turkey are the other two major arms producers in the region, followed by Iran and Pakistan. Munitions and small arms producers include Algeria, Ethiopia, Iraq, Jordan, Morocco, Saudi Arabia, Syria, Sudan and Tunisia.
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.
The scheme began to unravel last October 7. In Managua, the sole survivor of a downed American C-123 cargo plane full of weapons for the contras told a crowded press conference, “My name is Eugene Hasenfus.” In Washington, businessman Roy Furmark called on his old friend William Casey at CIA director’s hideaway office next to the White House. Furmark had been sent by Adnan Khashoggi; the Saudi tycoon said he had not been repaid more than $10 million he advanced for arms shipped to Iran. When Furmark returned to Washington on November 24, Casey phoned Lt. Col. Oliver North at the White House. “There’s a guy here who says you owe him $10 million on the Iran thing,” Casey said. Casey hung up and turned to Furmark.
Michael Klare, American Arms Supermarket (Austin, TX: University of Texas Press, 1984).
From the May-June 1986 issue of Middle East Report:
Israel’s increasingly visible presence throughout the Third World, including such disparate places as the Philippines, South Africa, Sri Lanka, Zaire, Botswana, El Salvador and Argentina, raises a number of questions about the objectives and character of Israel’s foreign policy, the nature of the Israeli state, and the US-Israeli relationship. One Third World connection — Israel’s involvement in Guatemala — involves several unique aspects, but the basic structure of the tie sheds considerable light on the larger issues.
Fifty thousand troops move across the desert in 100 degree-plus temperatures. F-18 jet fighters scream through the air and strafe the rock and sand below. Tanks maneuver over rough terrain to pound enemy positions. A buzzer goes off in a soldier’s helmet: The computer-guided laser network at the Army National Training Center, Fort Irwin, California, is telling this soldier that in a real war he would be dead.
Both sides in the Gulf war have had to import billions of dollars worth of weapons, ordnance and military services in order to maintain and expand their battle forces. As the tables show, the number of military suppliers to both belligerents has expanded greatly in the period since the war began. Before the war, the.US and the USSR were the major suppliers to Iran and Iraq respectively, although Iraq had already made efforts to diversify its suppliers. The present roster displays the extent to which European, South American and Asian industrializing countries have taken advantage of the war to boost their arms exports and improve their positions for other sales and contracts as well.
Although President Jimmy Carter pledged in January 1980 to “use any means necessary, including military force” to ensure “the free movement of Middle Eastern oil” and created the Rapid Deployment Force (RDF) for intervention in the Third World, the American military presence in the Middle East was still relatively small when President Ronald Reagan took office in January 1981.  Over the past three years, the Reagan administration has substantially expanded the size and strength of American military forces surrounding the Middle East.
On Wednesday, March 14, at 4 pm, an Iraqi Airways Boeing 747 jumbo jet took off from Santiago’s Comodoro Arturo Merino Benitez Airport reportedly loaded with “thousands” of 500-pound cluster bombs. The Iraqis apparently bought the bombs from the Chilean firm Industrias Cardoen SA. Cardoen had been displaying its various military wares at the annual International Air Fair (Feria Internacional del Aire, FIDA-84), which was held March 3-11 at the El Bozque Air Base in the Santiago community of San Bernando.
On January 2-6, 1983, I attended the Third International Conference on Psychological Stress and Adjustment in Time of War and Peace, sponsored by Tel Aviv University. The first two conferences in the series, convened in 1975 and 1978, were also held in Tel Aviv. According to the organizers, the conferences were designed to 1) facilitate the exchange of knowledge within the international scientific and professional community on topics of war-related stress and adjustment, and 2) enable Israeli scientists and professionals to exchange ideas and insights about various programs initiated during and after the October war of 1973.
The General Accounting Office (GAO), often referred to as “the congressional watchdog agency,” began a full-scale investigation of US aid to Israel in early 1982, without any public announcement or official congressional sponsor. The report was completed in early 1983 and circulated to the relevant government agencies for comment, as is customary. These included the State and Defense Departments, the Agency for International Development (AID) and the Central Intelligence Agency. The Israeli Embassy also had the opportunity to review the text, on the grounds that some information had been obtained from classified Israeli sources.
Egypt, with the earliest industrial economy in the Middle East, has engaged in some military production for many years, supplying its own armed forces with light arms and small naval ships. Such production remained minor until recently, both in terms of the Egyptian economy and in terms of the arms purchases of the Egyptian armed forces. Now, with encouragement from the United States and other Western governments and arms manufacturers, Egypt is planning a major arms industry. In the past, such investment plans have fallen short in actual implementation. If these plans do materialize, however, Egypt may soon fill much of its domestic arms orders and begin sizable arms exports to other countries in Africa and the Middle East.
President Ronald Reagan had just left Honduras, the last stop on his recent tour of Latin and Central America. Only two days later, on December 6, the red carpet was out again in Tegucigalpa, the Honduran capital. This time the guest of honor was Israeli Defense Minister Ariel Sharon. The official explanation for Sharon’s three-day visit was “exchanges of views.” The main topic was Honduran armed forces chief Gen. Gustavo Alvarez Martinez’s quest for new sophisticated warplanes. Washington and Paris, it seems, have felt politically constrained from selling Honduras new F-5 or Mirage jets to replace 12 French-made Super-Mystere fighters originally purchased from Israel some years back. 
Over the last decade, the Middle East has become a focal point of the world arms buildup. Each year, the regional arsenal grows, as the United States, the Soviet Union, France, Britain and others ship billions of dollars worth of weapons to the countries there. During the 1970s, while the world arms trade doubled, Middle East arms imports rose fourfold (in constant dollars).  Today, the region receives over half of all arms deliveries to the Third World, and more than a quarter of all world arms shipments.
For years, US leaders have attempted to muffle opposition to overseas arms sales by arguing that transfers of conventional, non-nuclear munitions reduce the risk of nuclear war. If we provide our allies with adequate conventional defenses, the argument goes, they will not be motivated to acquire nuclear defenses. But conventional arms sales to the Middle East have not reduced the risk of nuclear war. In fact, the opposite is true: Cascading arms sales to the region are making nuclear war more, not less likely.
Andrew J. Pierre, The Global Politics of Arms Sales (Princeton, NJ: Princeton University Press, 1982).
Paul Jabber, Not By War Alone: Security and Arms Control in the Middle East (Berkeley: University of California Press, 1981).
Steve Weissman and Herbert Krosney, The Islamic Bomb: The Nuclear Threat to Israel and the Middle East (New York: Times Books, 1981).
Ever since the end of World War II, the world has been sliding in and out of battles which have killed more than 10 million people. Even in the shadow of this bloody chronicle, 1982 represents something of a watershed: In addition to the two major international conflicts in the Falklands/Malvinas and in Lebanon, we witnessed the intensification or expansion of conflicts in Iran-Iraq, Afghanistan, Angola-South Africa, Ethiopia-Somalia and El Salvador. Territorial disputes and a certain level of destructiveness are nothing new to human history. Yet from this recent spate of conflicts we get a sense that some invisible restraint has been breached.