Israeli Security Personnel Seek to Translate U.S. Fears Into Dollars

The most notable new addition to the flourishing market for security and counter-terrorism consultants is Ilan Mizrahi, who was deputy head of the Mossad until recently. Mizrahi left the Mossad after 30 years because the prime minister preferred to appoint one of his own associates as head of the institution.

The most notable new addition to the flourishing market for security and counter-terrorism consultants is Ilan Mizrahi, who was deputy head of the Mossad until recently. Mizrahi left the Mossad after 30 years because the prime minister preferred to appoint one of his own associates, Major General Meir Dagan, as head of the institution.

Mizrahi considered a number of offers and finally decided to head a company called Terracon (Terror Assessment and Containment), which is seeking to compete in a specialized niche of the security industry: the fight against nonconventional terrorism.

Even though Mizrahi spent most of his career recruiting and running agents, he also dealt in the past few years with assessing and analyzing the dangers posed by the possibility that terrorists might use nonconventional weapons. The fear that a terrorist group might use chemical or biological weapons or a "dirty" bomb has in recent years become one of the most important professional challenges facing the international intelligence community.

Since the Israeli market is small and flooded with companies and experts (both genuine and feigned), it is clear that anyone who wants to succeed must penetrate international markets, especially the American one. For this purpose, an Israeli chapter of an American association, the Homeland Security Industries Association (HSIA), was recently established.

The establishment of this chapter is one link in the chain of decisions made in response to the September 11, 2001 terror attacks. One of the most important was the decision to establish a Department of Homeland Security with a budget of $140 billion. President George Bush and Congress have also decided that additional budgets and responsibilities, which in the past belonged to other departments, such as the Pentagon and the departments of transportation and energy, will gradually be transferred to this office. Thus, Homeland Security will soon become the second most important cabinet department in terms of development budgets for security, second only to the Pentagon. HSIA was established in order to unite all the producers, suppliers, companies, experts and consultants that operate in this field and are interested in selling their services to the Department of Homeland Security. A similar association operates vis-?-vis the Pentagon.

Selling drones to the Americans

HSIA is headed by Bruce deGrazia, a former assistant deputy undersecretary of defense for environmental quality, who in this capacity dealt mainly with the dangers posed by biological and atomic warfare. The association currently has 500 member companies, and it also has an Israeli representative: Rafi Sela, who owns a company that is registered in the U.S., is a member of the association's executive and chairs its steering committee on security. "It happened simply because I was in the right place at the right time," he says.

Sela, 57, served in the Israel Defense Forces' ordnance corps and worked on the Merkava tank project. After retiring from the IDF, with a rank of major, he went to the U.S. In 1988, he set up an international consulting company in Washington that specializes in security technologies. Among other things, this company was involved in selling Israeli pilotless drones to U.S. special forces units. A few years ago, Sela returned to Israel, but he has maintained his contacts in the U.S. And since he still owns a company, AR Challenges, which is registered there, he was eligible to become a member of HSIA.

One of Sela's contacts in the U.S. is attorney Howard Vine, who is considered close to Senator John McCain (R-Arizona) and former senator Thomas Hutchinson of Arkansas. Hutchinson is a friend of former president Bill Clinton but, perhaps more importantly, his brother, Asa, is the first undersecretary of the Department of Homeland Security and deputy to the secretary, Tom Ridge. "I attended a meeting with Asa Hutchinson last year," Sela relates, "and he said: `The president charged us with protecting the United States, and we don't know exactly how to do that. Our first obligation is to reduce the technological gaps between us and the terrorists and to do so we need an operational industrial arm."

Since the department and HSIA were set up, Sela says, two processes have taken place in parallel. The first is that HSIA began making contact with government officials at the state, county and municipal levels. It now has a list of some 1,500 local contacts that serve as a source of information about tenders that are being issued. For instance, the Department of Homeland Security recently issued a $165 million tender for experimental projects to supply technology and equipment to initial response teams - fire departments, ambulances, police and other emergency crews - in the event of a terror attack.

The second process is the result of what is known as the "Buy American" law, under which most contracts must be awarded to American companies and no more than 20 percent can be granted to foreign companies. This law enraged many of America's allies, and particularly Britain. Prime Minister Tony Blair complained to President Bush in approximately the following words: How is it possible that we are partners in the global war on terrorism and in the war on Iraq, but we are not allowed to participate in your tenders?

Chutzpah paid off

In response to this law, a decision was made to set up an international organization under whose umbrella foreign companies could compete for those portions of the tenders available to foreigners. The organization is divided into chapters by continent: North America, Europe, South America, Asia and the rest of the world. Israel was given the option of joining either Europe or the rest of the world, "but I, with great chutzpah, wanted an Israeli chapter," says Sela.

"It wasn't easy to convince the members of the executive that Israel deserved to be the only country in the world with its own chapter, but I had two winning arguments," he recalls. "I told them that, unfortunately, we have technology and know-how for defending against and fighting terror and, furthermore, Israel is the only (single) country that has a free-trade agreement with the United States."

The rest of HSIA's executive was convinced, and Sela established the Israeli chapter. Now, however, he is finding that it is even more difficult - almost impossible - to persuade Israelis to join it. All his applications to the Israel Export Institute, the Manufacturers' Association and the Industry and Trade Ministry were either ignored or rejected. And his efforts to persuade Israeli companies to join his association, for a relatively modest fee of between NIS 5,000 and NIS 20,000 for two years (the exact figure depends on the company's size), have so far elicited chilly responses.

Even the fact that his association has a star-studded executive board has not aroused Israelis' interest. One member of the board is Shabtai Shavit, a former head of the Mossad who currently heads Athena, a company that provides consulting services and supplies security equipment to countries overseas. Another is Avi Kostelitz, who has previously been both a department head in the Shin Bet security service and director-general of the Israel Airports Authority. He owns a company called Avi Kostelitz Innovating Systems, which specializes in developing X-ray machines using sniffer technology for the detection of plastic explosives.

Plastic explosives are considered the "soft underbelly" of the security services, because ordinary X-ray machines cannot detect them. Therefore, they are the dread of every port and airport security unit in the world. The company received some $200,000 from one of the Pentagon's research and development funds, and it recently concluded a successful test of its machine at Ben-Gurion Airport.

"The larger and stronger the Israeli chapter [of HSIA] is," says Sela, "the easier it will be for Israeli industry to obtain special status, access and a significant edge in finding American strategic partners and participating in huge tenders."