Last month the United States took a rolled up newspaper and swatted Israel on the nose with it. 

In early December, U.S. intelligence discovered that Ricor Systems, an Israeli Defense contractor (with an American subsidiary in Nashua), had sold military equipment to a French company. The French then proceeded to sell the equipment to China, who then may or may not have sold the equipment to Iran. The equipment in question: A cryocooler developed for electro-optical devices, lightweight drone payloads and homing head missiles. 

The United States and Israel have always shared a special relationship - Israel benefitting from American largesse and America getting a country in the Middle East that will return its phone calls - but in the new millennium there has been one inviolable rule: Don't sell to China. When Israel was caught with its hand in the proverbial cookie jar, the apology needed to be swift and significant.

No matter its roundabout trajectory, the Ricor sale violated a May 2012 prohibition on defense exports issued by the Israel Ministry of Foreign Affairs (and bolstered by a history of U.S. defense obligations). China is included on a list of several verboten countries for reasons that are not limited to its penchant for selling arms to countries like Iran, Iraq and Saudi Arabia. The technological advantage of Israeli weaponry is also considered bad for American business and a threat to its military hegemony. 

Speaking of which, after a visit to the United States to make a personal apology for authorizing the cryocooler sale, Meir Shalit resigned his position as the Head of Export Control for the Israeli Defense Ministry. 

This is not the first time Israel has bowed to the U.S. And, while it receives the largest annual economic and military subsidy of all its foreign allies, it is likely to bow whenever America cracks the whip. Approximately one-fifth of America’s foreign aid budget is spent on Israel, with Jeremy M. Sharp, Specialist in Middle Eastern Affairs, reporting $3.1 billion in Foreign Military Financing apportioned for 2013. That breaks down to roughly $8.5 million in military aid flowing to Israel per day. With that kind of investment, America can reason that it has bought the right to decide where Israel sends its weapons. 

Echoes of the Phalcon Debacle

This embargo on Israeli-Chinese trading has roots that stretch back to the Clinton administration, but it has only recently been enforced with such intensity. Israel boasts one of the most advanced militaries in the world, but its geo-political isolation has long made China a promising market for its high-tech munitions. Trade between the countries officially began in 1992, though Israel had been selling weapons to China for at least a decade in secret. By the ‘90s it was second only to the United States in its role as arms supplier. 

Trade between the U.S. and China began in 1972 to push back against the Soviets. However, after the fall of the U.S.S.R. the Sino-American relationship decayed and with it America’s willingness to countenance a Chinese buildup. No longer an ally but a potential rival for global supremacy, China fit nicely into the open question left by the end of the Cold War. 

Meanwhile the partnership between Israel and China reached its apogee with the planned sale of Israel Aerospace Industries’ EL/M-2075 Phalcon radar system to the Chinese military. Negotiations began in 1994 and were finalized on Prime Minister Benjamin Netanyahu’s visit to Beijing four years later. The Israeli defense contract would be worth between one and two billion dollars. 

In addition to the jobs and income generated by the China sale, Israel would gain a powerful ally in its endless brinksmanship with its Islamic neighbors. Decades of trade had transformed China’s pro-Arab policy into what Professor Jonathan Adelman refers to as a “nuanced appreciation of the Israeli position.” 

The United States’ tacit approval of the Phalcon deal was essential to that appreciation, but the late ‘90s saw too many conflicts for it to remain on the sideline. The Third Taiwan Strait Crisis, President Clinton’s reluctance to admit China to the WTO and the 1999 bombing of the Chinese embassy in Belgrade led America to pressure Israel into canceling the deal during the July 2000 Camp David summit.

Sino-Israeli relations were mortally wounded and entered a death spiral that would last five years. December talks between the countries in 2001 ended with Israel’s proposals rejected and China demanding over a billion dollars in compensation. They settled for $350 million in cash and undisclosed equipment and became more critical of Israel’s military maneuvers in the ensuing years.

Israel is Put on Notice

In 2004 the Bush administration forced Israel to cancel another arms deal, this time to upgrade the Harpy drones it had sold to China (with U.S. approval) in the ‘90s. It was concluded by the U.S. that the Harpies could be used for a potential invasion of Taiwan, a severe disregard to U.S. foreign policy. 

This led to two acts of contrition by Israel. First, Major General Amos Yaron retired from the Israeli Defense Ministry - though according to Israeli officials the timing was coincidental. Second, Israel signed a memorandum issued by the Pentagon that outlined exactly what sort of transactions would be permitted with China, “including those in which the U.S. and Israel are competing.”

Certainly this new security arrangement would affect Israel’s defense industry, which between 2000 and 2004 made an estimated profit of $15 billion. But Dan Schueftan, a Senior Research Fellow at the Shalem Center, insisted that it was in the best interest of both countries:

“The United States takes the threat of China very, very seriously. And when it comes to Israel, our relationship is so intimate that the United States expects from us, and I think they have the right to expect from us, not to mess with the Americans on matters like this.”

American Hegemony and Israeli Clientship 

Israel Hayom reports that the Obama administration has requested $3.4 billion in aid to Israel for the fiscal year 2014. As Mearsheimer and Walt point out in “The Israel Lobby and U.S. Foreign Policy,” this American “largesse is especially striking when one realizes that Israel is now a wealthy industrial state with a per capita income roughly equal to South Korea or Spain.” 

And such munificence comes with a hefty price tag, in the form of American hegemony over Israeli trade. That last December’s missile cooling equipment was unknowingly leaked through France into China makes no difference now that the countries’ security is contractually bound. When threatened, even tangentially, America will flex its muscles over its client state and crack the whip again.

After all, the United States has been Israel’s “one-stop shopping center” for years. It  has an interest in where Israel is taking its F-16s, tank engines, artillery, Black Hawks, Apaches and Popeye air-to-surface missiles. When Israel starts looking to other countries to sell to, perhaps Cambodia or Zambia or South Lebanon or Eritrea, America’s censure can best be described as protecting its brand.