The Brilliant Marketing Maneuver Behind the Israeli Deal to Buy German Ships

How the Israel Navy exploited the need to protect gas reserves to get what it wanted.

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The Tamar gas platform situated off Israel's shores.
The Tamar gas platform situated off Israel's shores.Credit: Tomer Appelbaum

The affair of the acquisitions by the Israel Navy – which has already caused problems for the prime minister’s attorney David Shimron and led to the opening of a police investigation that is liable to involve Benjamin Netanyahu himself – is divided into two parts: the controversy surrounding the purchase of three new submarines for the navy and the story of the tender for supplying four new Saar 6 ships. In both cases, the manufacturer that won the tenders is the German company ThyssenKrupp whose Israeli mediator, Michael Ganor, is represented by Shimron.

In both cases there have been claims in recent weeks regarding extraneous considerations, crooked behavior and conflicts of interest accompanying the transactions. In the background there is an advanced criminal investigation against Brig. Gen. (res.) Avriel Bar-Yosef, who was Netanyahu’s candidate for head of the National Security Council.

Bar-Yosef, who played an active role in the acquisitions deals, is suspected of receiving a bribe from a German millionaire connected to the natural gas deal, but the defense establishment and police believe that the affairs are liable to be connected.

Bar-Yosef, former head of the Israel Navy’s equipment division, is considered the motivating force behind both transactions, which did in fact strengthen the navy substantially.

Last week we reported here on the developments in the tender for purchasing the ships, which after pressure by Netanyahu and his surroundings was discontinued in order to enable completion of the deal with the Germans. But it seems that’s only half the story. After interviewing a series of senior officials in the defense establishment who were involved in the acquisition deals and in defining the security needs of Israel’s exclusive economic zone in the Mediterranean, we discovered that the navy succeeded in securing approval of the purchase of the ships mainly because they were redefined as “protective ships” for the gas reserves.

The acquisition was approved after almost 10 years of postponements and cancellations encountered by previous plans. But apparently the practical connection between the ships and their declared purpose of providing protection is very slight at the moment. In effect, according to several of the people involved, it is doubtful whether the navy needs these ships in order to protect the gas drilling platforms and gas reserves. And still, not only will the ships be purchased as “protective ships,” but a large percentage of the project will be financed as part of a clause external to the defense budget that deals with protecting the exclusive economic zone – an ideal solution for the defense establishment.

However, it should be clarified that nobody in the top ranks of the navy is presently suspected of improper conduct in the affairs now being investigated. The claims relate only to the decisive, and apparently misleading, way in which the deal was marketed.

Already in 2002 the navy began to draw up a plan designed to acquire new missile ships, which were supposed to replace the old Saar 4 ships and to join the Saar 5s that were already in service. However, its recommendations were repeatedly rejected, due to the high cost of the ships and because the navy remained the stepchild of the General Staff: Most of the navy’s needs are considered low priority compared to the Israel Air Force, Military Intelligence and even the ground forces.

The Israel Defense Forces multiyear plan, Tefen, which was drawn up in 2007 after the Second Lebanon War, when Gabi Ashkenazi was serving as chief of staff, included the acquisition of new ships. But the ships remained of relatively low priority and the clause was not implemented due to constraints that in the end were presented as more urgent.

The change took place during the term of the previous Navy Commander Adm. Ram Rothberg. Netanyahu’s steps for approving the gas deal created a need for reinforced protection of the exclusive economic zone, a 200 nautical miles (about 370 kilometers)-wide strip in the Mediterranean west of Israel’s coastline, where Israel’s natural gas fields are located. Along with the changes in the transaction, from an open tender to a contract with the German shipyard, it also changed its description – the four ships to be purchased in the end have been rebranded as protective ships, assigned to protect the exclusive economic zone.

Moreover, due to Netanyahu’s enthusiastic support of the gas deal followed by the approval of most of the cabinet members, the navy and the National Security Council were able to secure an exceptional financing arrangement: Only one third of the cost of purchasing the ships will come from the defense budget, while the other two thirds will be financed by the government’s royalties from the marine gas reserves. The new solution was also convenient for the senior defense establishment officials and the Israel Defense Forces. This time the purchase of the ships is not coming at the expense of purchasing planes, tanks or other weapons systems.

The discussions about purchasing the ships were accelerated before 2013 and were approved by the cabinet, acting as the Ministerial Committee for Acquisitions, in 2014. A year later Israel also signed the deal with the German shipyard to purchase four ships for a total of 430 million euros ($456 million), 115 million of which were a grant from the German government.

According to a source who has filled senior positions in the defense establishment and has been very involved in gas protection issues, emphasizing the ships as the main component of the solution for protecting the gas reserves does not reflect the reality and security needs. The question of security relates to four sites: the Tethys Sea platform, which has been active for over a decade and is located about one nautical mile west of the boundary of Israel’s territorial waters, opposite the Ashkelon coast; the Tamar platform, which is about one and a half kilometers distant from it; the Tamar gas field, about 80 kilometers west of Haifa and the Leviathan gas field, which is northwest of Tamar, about 120 kilometers from Israel’s coast.

The various sites must be protected from varied threats: the firing of precision missiles (such as the Yakhont coast-to-ship missile that is in the possession of Syria and apparently Hezbollah), the firing of long-range high-trajectory missiles, and attempts to strike from short range, such as a raid accompanied by the firing of light weapons and anti-tank missiles, sabotaging installations and even abducting workers.

The Tethys platform is presently protected by a private firm, with the assistance of various navy coast guard ships operating from the nearby navy base in Ashdod. The team of security guards at the platform, which is composed of graduates of IDF combat units, also uses a fast boat belonging to the security company, which can be launched quickly in the wake of possible threats, as a rapid response force.

The Tamar platform, which is near Tethys, receives similar protection. The Tamar reserve, far out at sea, now includes a collection of pipes at a depth of 1,800 meters below the surface of the water and therefore needs no special protection. The Leviathan reserve, which has not yet been activated, is supposed to be used in future for exporting gas – and the need for regular protection is not clear. In other words: Two sites are already protected, one has no need for protection and the fourth will only be developed in future and then its protective needs will become clear. The same is true of other gas reserves that may be discovered in the future.

Former defense establishment officials told Haaretz that “the description of the Saar 6 as protective ships for the gas reserves is mainly a successful branding ploy. The Israel Navy’s need to renew its lineup of ships encountered the government leaders’ interest in advancing the gas deal. The IDF exploited an opportunity here to purchase equipment, almost without incurring expenses.”

One of the officials said that he watched former Navy Commander Rothberg on television sailing with military correspondents on a missile ship and explaining the role of the ships in protecting the exclusive economic zone, “and I couldn’t believe that the media was buying that story.”

But a senior naval officer who spoke with Haaretz Thursday rejected these claims, saying the gas fields are “strategic assets that need protection under any circumstances. We’re too serious and professional an organization to engage in marketing tricks. The government examined several alternatives before deciding to give the job to us. Every alternative would have entailed financial outlays, and I think our alternative is actually cheaper and more effective than the others.

“Protecting the gas fields is a major headache; they are relatively vulnerable assets scattered over a wide area that require a complex operational response,” he added, noting that Hezbollah leader Hassan Nasrallah had threatened to attack the gas fields in any future war. But the combination of the Iron Dome antimissile system and the ships’ Barak surface-to-air missiles will defend the gas fields against both precision missiles and less precise rockets, the officer said.

A non-mobile defensive platform “would be more expensive than any ship,” he argued, because it would require costly maintenance and a dedicated military force to man it. Moreover, the ships can also assist the air force, by serving as forward radar positions.

The ships will be especially important once Leviathan, which is farther from shore than Tamar, comes online, the officer said. But during the 2014 Gaza war, the navy was already providing constant protection to the Tamar and Yam Tethys fields.

“Israel got a good deal,” he concluded. “These ships aren’t that expensive. When we originally planned to buy upgraded Sa’ar 5 ships, the cost was more than double what we ultimately bought.”

Moreover, he noted, the ships are “dual-use”: In peacetime, they can patrol; the plan is to have one ship on patrol “24/7.” And in times of high tension or war, they can deploy to protect specific critical locations, like the gas rigs.

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