'I'm Comfortable With My Decisions, but Uncomfortable Talking About Them': Netanyahu’s Account in Submarine Affair Revealed

in 2018, Netanyahu he okayed Germany's sale of submarines to Egypt, but refused to tell why – even to the then-defense chief Ya'alon. The reason behind his concealment might be the biggest question yet to be answered by the State Commission of Inquiry

Gidi Weitz
Gidi Weitz
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Netanyahu on one of the submarines in Haifa, in 2016. "This is one of the most sensitive issues in national security," Netanyahu said when he refused to disclose his objections to the sale of submarines to Egypt
Netanyahu on one of the submarines in Haifa, in 2016. "This is one of the most sensitive issues in national security," Netanyahu said when he refused to disclose his objections to the sale of submarines to EgyptCredit: BAZ RATNER /Reuters
Gidi Weitz
Gidi Weitz

“Do you know what I talk about with Merkel regarding the submarines”? former Prime Minister Benjamin Netanyahu told the three police investigators sitting across from him in his study at the prime minister’s residence in 2018. “You don’t know. I hope you don’t know.” He lowered his voice to emphasize: “It’s a very, very sensitive subject.”

That wasn’t the first meeting between the ex-prime minister and personnel from the police anti-corruption unit Lahav 433, who had already questioned him a few times on other affairs. But this time, the conversation was not preceded by a warning that he is suspected of criminal action.

The investigators, headed by Brig. Gen. Eli Assayag came to take his statement on the submarine affair, which sparked a political storm and in which a number of people in his inner circle became enmeshed – his attorney, David Shimron, his emissary for special tasks, and Shimron’s associate Isaac Molho (the cases against them were closed) along with Netanyahu’s former chief of staff, David Sharan, who is accused of taking bribes and breach of trust. “The statements were for him [Netanyahu] a chance to return fire,” a person familiar with the matter told Haaretz.

Although Netanyahu was never defined as a suspect in the affair, former senior security officials, first and foremost a previous defense minister in his government, Moshe Ya’alon, claimed that Netanyahu had, for extraneous interests, promoted deals to purchase billions worth of vessels from the German conglomerate Thyssenkrupp, pressuring the defense establishment and sometimes behind the backs of its people.

The most serious accusation by Ya’alon was that Netanyahu had concealed from him and the army brass the fact that he had given former German Chancellor Angela Merkel a green light to sell advanced submarines to Egypt. “This could reach the level of treason,” the former defense minister said. In his statement, details of which became known to Haaretz, Netanyahu reversed his opposition to the sale of the submarines in a one-to-one conversation with Merkel, but refused to say why.

Former Defense Minister Moshe Ya'alon at a demonstration for the opening of a commission of inquiry into the submarine case in Jerusalem, in January.Credit: Ohad Zwigenberg

In his statement to the police, Netanyahu rejected the idea that he could have prevented the sale of the submarines to Egypt. “Do I really have the ability to do that? No,” he said. “We can wrinkle our noses. I wrinkled my nose. We present it as if we can tell the Germans sell, don’t sell. I wish.” Netanyahu conceded that “historic commitments” gave Israel some influence over Germany (“you can pressure. They come to you with a position that they want and apparently morally don’t want to scuffle with you”), but he stated clearly that this influence was limited.

According to Netanyahu, Merkel herself told him that he can’t thwart the submarine deal, and that it was her “prerogative.” “They [the Germans] live in a world of their own. They think they control the faucet," the former prime minister added. “Bogie [Ya’alon] thinks we can simply tell them, and they won’t sell.”

Netanyahu hinted in his statement that he had lifted his objections following secret agreements between him and Merkel, but he adamantly refused to disclose them to the investigators. “There are no games here, he said, adding that this was “one of the three most sensitive issues in national security.” He suggested to the investigators that the secret be shared with a limited forum, including former Attorney General Avichai Mandelblit and former State Prosecutor Shai Nitzan. “There is a certain aspect that has to be understood, and the moment it’s understood, everything is clear,” he said.

'Shake up the Germans'

The investigators tried to persuade him. When they told him they had already been exposed to very sensitive information, Netanyahu responded: “Not to the things I’m talking about.” One of them tried again. “What can be heard and to the extent possible, we would be happy to hear and of course we know how to keep [it to ourselves]. But the prime minister did not budge. “I feel very comfortable with my decisions, but I feel very uncomfortable talking about them,” he explained. According to a person familiar with the details of the affair, the investigators had their own guess as to the secret. “I think we’re talking about the same thing,” one of them told Netanyahu.

Ya’alon said that when he became aware of the deal he hurried to meet with Netanyahu, who vehemently denied that he had given Merkel the go-ahead. “You denied to Ya’alon that you gave the go-ahead for [the sale of] the upgraded subs?” one of the investigators said, presenting Ya’alon’s statement to the police. “Of course not. I’m not familiar with upgraded [subs]. Did he say it outside or did he say it to you during questioning?” During questioning, of course, the investigator replied. “I’m not familiar,” he said. “Do you remember a conversation with Ya’alon on the subject?” they asked him and he answered: “About upgraded [subs’] I don’t remember. To my mind, the supply of submarines to Egypt was bad enough.”

Netanyahu did remember that Ya’alon was aware of his secret discussion with Merkel. “It’s inconceivable that I would not inform him,” he declared. One of the investigators commented that the former minister and other senior defense officials said that they had been surprised by the authorization. “If Ya’alon is surprised, it is a mishap,” Netanyahu said. “This is a mishap. There’s no reason he wouldn’t know. I’m sure he knew.”

A few months later, on the eve of the April 2019 election, Netanyahu was interviewed on Channel 12 News. He called the claims against him in the submarines affair as “a blood libel,” but when interviewer Keren Marciano asked him whether he had concealed the details of the deal from Ya’alon, he hinted that that was indeed the case. “The defense minister at the time didn’t have to know, and it could be that he knows and didn’t say...there are secrets that only the prime minister and a handful of people know.”

In that same interview, Netanyahu claimed that he shared deep secrets with then-Attorney General Mandelblit, which the latter quickly denied. Haaretz has learned that the denial led to a stormy conversation between the two men: Netanyahu called Mendelblit, and said he had intended to tell him the secret in real time and asked to meet him to clarify what the subject was. Mandelblit rejected the suggestion, but believed Netanyahu that what motivated him was a sensitive security consideration, and he also said this in closed meetings about the affair in the Justice Ministry.

Ya’alon, for his part, is sure to this day that this was a manipulation. “The secret that the prime minister concealed from me and from the chief of staff was apparently greed,” he said in the past. His predecessor, Ehud Barak, is of the same opinion.

The German industrial group ThyssenKruppCredit: Michaela Rehle/Reuters

The question of the secret because of which Netanyahu concealed his approval of the sale of the subs from senior security officials, might be the biggest question presented before the state commission of inquiry appointed by the Bennett-Lapid government, and headed by former Supreme Court Justice Asher Grunis. The submarine affair revealed the intensity of the tensions between Netanyahu and the security establishment.

Ya’alon said in his statement to police that he became aware of Netanyahu’s desire to increase Israel’s submarine fleets to nine during a meeting of the security cabinet. This desire came contrary to the position of the security establishment, based on background work by an anonymous figure called “an expert,” that the five submarines that Israel has are enough. “After a heated discussion, Netanyahu said that National Security Council head Yossi Cohen would check further and formulate his position,” the former defense minister said. Cohen met a few times with the expert, and the bottom line was that the five submarines were enough.

Ya’alon also said that before Netanyahu’s visit to Germany, he was shocked to discover that the Prime Minister’s Office had prepared a memorandum of understanding for the purchase of three more submarines and anti-submarine vessels at a cost of 1 billion shekels ($284.2 million) from Thyssenkrupp – although the army did not need all of them. In Ya’alon’s opinion the reason for the shopping spree was corrupt.

Netanyahu denied this, of course. He explained that he still believed Israel’s submarine fleet should be augmented, but because of the opposition of Ya’alon and other senior defense officials, he compromised on six. He believed that this is “little considering the threats expected against us,” first and foremost a nuclear attack by Iran.

To Netanyahu, the opposition to increasing the number of submarines stemmed from fixation. “They think on the short term,” while Netanyahu sees “three or four years” ahead. “He also thought as IDF chief of staff that [Hezbollah] missiles would go rusty,” Netanyahu said of Ya’alon, referring to a statement that has haunted the former chief of staff since the Second Lebanon War.

“He has terrible criticism of our systems,” Netanyahu said, sharing his frustrations with the investigators. “I am guided by outcome, not by process. Systems that are guided by process and not outcomes are collapsing systems. I need to defend Israel, which is going to be threatened by nuclear weapons on five fronts, or at least three, okay? And I need to have the ability to respond to this thing. The systems did background work,” he added disparagingly. “To my mind this is exactly like the background work on the fence in Sinai, which they said was unnecessary to build. So they did background work.”

Netanyahu believed that the security establishment had made a serious mistake when it opposed the purchase of anti-submarine vessels. In his opinion, he was motivated to move the deal ahead by the concern over the “Egyptian danger” and because of the submarine base Iran wanted to build in Syria.

“The establishment says of course not, no, no, no, and when they said no, I took it off the table. But between us? They are wrong. They are wrong again." When he was asked why he backtracked, he replied: “Because you often compromise with the establishment. There are no kings and dictators here. And even kings and dictators compromise with the establishment.”

To reinforce his statements, Netanyahu said that the security establishment had failed to identify the dangers in Iran’s nuclear project and its agreement with the world powers. “What security are they talking about, on these things, every word they say is sacred,” he said angrily. “It can’t be that someone thinks differently. In so many things I think differently. The establishment said Iran would become more moderate. There was an agreement that would bring them into the community of nations. Meanwhile, they conquer another country with the money they got from this terrible agreement. All the systems were wrong. You can wonder today who was right in the wonderful background work and processes that were carried out.”

Netanyahu described himself as having to toe the establishment’s line in another explosive affair, the purchase of ships to protect the gas rigs. In November 2013, the security cabinet approved two alternatives for purchase: negotiating with Thyssenkrupp, in anticipation of a subsidy for quite a bit of the cost of the ships from the German government, or publishing an international tender. Ya’alon, who was in favor of the tender, claimed in an affidavit to the High Court of Justice that the prime minister and his inner circle heavily pressured him to support the deal with the German corporation instead.

Talks with Thyssenkrupp encountered obstacles. Berlin hardened its position and conditioned the grant on Israeli gestures to the Palestinians. Ya’alon and Defense Ministry Director General Dan Harel, felt that time was of the essence and asked that the tender be published. “I made clear that we could not allow a situation where the gas installations could be exposed to danger,” Harel wrote in his affidavit to the court. The Prime Minister’s Office, on the other hand, pressed to avoid publishing the tender, claiming that it would hurt the delicate fabric of ties between Israel and Germany.

Netanyahu secretly approached Merkel and asked her to move the deal ahead. In June 2014, on the eve of Operation Protective Edge, then-Foreign Minister Avigdor Lieberman landed in Berlin. After a luncheon with his German counterpart Frank-Walter Steinmeier, Lieberman invited the Israeli ambassador to Germany Yacov Hadas to his hotel room, and informed him of a message from Merkel: “You’ll get the subsidy.”

Shortly thereafter, the Defense Ministry published the first phase of the tender. According to Ya’alon and Harel, the goal was to pressure Germany, which had not set a price for the ships, and to signal to them that Israel had an alternative. Thyssenkrupp announced that it would not take part in the tender, and the prime minister and officials from his office demanded that the tender be withdrawn.

Netanyahu claimed in his statement to the police that he opposed the purchase of the ships. “I didn’t like it very much, because in my view I always say, what do I need those ships for? It won’t help me against submarines and missiles. But the navy and the army and the Defense Ministry were very aggressive and I didn’t argue with them, although I didn’t see the need.”

According to Netanyahu, the threat of publishing the international tender was meant to “shake up” the Germans to get the subsidy from them. When one of the investigators wondered what possibility was preferable, Netanyahu answered: “Technically, I don’t know anything. I don’t understand anything about ships. The last time I was on a ship that was sailing...on a missile ship opposite the shores of Beirut – I simply threw up. From the point of view of the strategic preference, in my opinion Germany outranks everyone because of the threads of influence we have over Germany.”

Netanyahu denied knowing of any pressures by officials in his office to cancel the tender before the German subsidy was approved, and claimed that he had instructed that it be cancelled only after the approval. “The Defense Ministry director general can blather with his counterparts, but in the end, the directive comes through me and through Merkel,” he said.

'Nothing. Gornisht. Zero.'

There were two elephants in the room with Netanyahu and the investigators – Shimron and Molho. Shimron, Netanyahu’s second cousin, represented him and his family and even conducted negotiations for Likud in the coalition talks. Another of Shimron’s clients was the representative of Thyssenkrupp in Israel, Miki Ganor, who became a state’s witness. Ganor said that he hired Shimron and paid him generously to the tune of hundreds of thousands of shekels, because of his proximity to Netanyahu, and claimed that Shimron was to have received a cut from the ship deal.

Molho was considered for years Israel’s unofficial foreign minister, and Netanyahu told investigators that Molho was a “genius” in negotiations. Molho was interrogated on suspicion of meeting with Ganor at Shimron’s request. Ganor has meanwhile retracted his statements.

Miki Ganor (in the middle), former representative of ThyssenKrupp in Israel and state witness, in the house of The German industrial group ThyssenKrupp, Israel's Supreme Court, in 2019.Credit: Emil Salman

“I don’t know their clients,” Netanyahu said of the attorneys, adding: “I had absolutely no idea that they have a connection to Thyssenkrupp or Ganor. I don’t know who Ganor is and what Thyssenkrupp is. I have no idea.” “You don’t know what Thyssenkrupp is?” one of the investigators asked the former prime minister. “No, I don’t know,” he said, of the gigantic corporation that has been operating around the world for more than 70 years. “I go up and down in their elevators, he remarked bitterly, referring to photos that accompanied reports of the affair. Later he said that a wall “three times the size of the Great Wall of China” separated him and the firm of Shimron-Molho, so he did not now and could not have known about the firm’s connection to Thyssenkrupp.

Netanyahu said he was not acquainted with the main star of the affair, Ganor. “I’m told that he’s my neighbor, that he lives in the same hole in Caesarea,” he told he investigators. “Nu, really, ask the streetcleaners there, I wouldn’t know him if I met him.” One of the investigators pushed: “Ganor tried to get to you in any way possible. He had to pay a lot of money for that.” Netanyahu was underwhelmed. “He didn’t come. A fact. He didn’t influence me or Merkel, he wasted his money.” Netanyahu described the middleman Ganor as a “fly trying to move a buffalo,” and failed.

On the day the international tender was issued for bids to sell ships to protect the gas rigs, Shimron called the Defense Ministry’s legal adviser, Ahaz Ben-Ari, and told him, according to the latter: “Why was the tender published although the prime minister asked to delay it?” This conversation seemed like circumstantial evidence that Shimron was in possession of sensitive information about what went on in the prime minister’s bureau.

When Netanyahu was asked how the information got to his attorney, he replied: “Not from me. Zero. Nothing.” According to Netanyahu, he did exchange “a word or many words” with Shimron about the matter. One of the investigators wondered whether Shimron had talked to Netanyahu about defense procurements. “He would have gotten a punch,” Netanyahu replied, adding: He doesn’t know anything from me. A total zero. Not about ships, not about submarines, not about Thyssenkrupp, not Ganor. Zero, Zero. Zero. That strikes me out of the blue.” With regard to the claim that Molho took advantage of his statesmanship role in favor of the submarine deal, Netanyahu said: “A comedy. A real joke.”

Netanyahu did not hide his disappointment over his associates’ stirring the pot of defense procurements. “They shouldn’t’ have gotten anywhere near these matters,” he said. He told the investigators that he himself had gotten tempting proposals for weapons deals, but he made sure he stayed “worlds away” from this realm, as opposed to his predecessor, whom he said “didn’t bother.” A person familiar with Netanyahu’s demeanor said: “He was very relaxed: the prime minister offered the investigators bittersweet chocolate and at the end of the meeting he said “an hour had opened up in his schedule” so that he could also answer questions about, “case 4000,” the Bezeq-Walla corruption case.

Haaretz has learned that Netanyahu was not asked about his connections with his late cousin Nathan Milikowsky, who supported him economically for years, and the connections of the latter with Thyssenkrupp. When he was head of the opposition, Netanyahu bought stock options in Milikowsky’s company, Seadrift Steel, in what seemed like a rock-bottom price, and after he was re-elected prime minister, he sold the shares for a huge profit.

Milikowsky was principle shareholder and director of GrafTech International, a supplier to Thyssenkrupp. Mandelblit, who examined the case, did think that Netanyahu had received a benefit from his cousin, but stated that there was no place for criminal investigation because the association between Milikowsky and the deals between Israel and Thyssenkrupp remained “cloudy.”

The testimony phase of the trial in the submarines affair is to start soon, and even before a verdict is rendered, the Grunis Commission is to complete its work, so the affair is not expected to be off the public agenda any time soon. Netanyahu will ask that his version of events be presented again before the commission and the court. There was nothing here,” he told the investigators, in 2018. “Nothing. Gornisht [“nothing” in Yiddish]. Zero.”

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