White House Says U.S. -israel Co-production Blocked for Security Reasons, Not Anti-israel Act

The White House acknowledged today that the Pentagon blocked co-production of a radio communications system for military use by American and Israeli companies but it declared it was for “security reasons” and not an action directed against the government of Israel.

Requests from West Germany and France to join in the production of the system, Presidential Press Secretary Jody Powell said, also were turned down for the same reason. He pointed out they do not have a “memorandum of understanding” with the United States regarding co-development and co-production of items within a certain “highly classified” range of items. When the Jewish telegraphic Agency, which questioned Powell on the subject, observed that the Pentagon apparently does not trust Israel’s security, the Press Secretary said the request for the joint production was not from the government of Israel but from the Sylvania Electronics System group. This company is engaged in a project with an Israeli company, Tadiran Israel Electronics Industries, Ltd. Sylvania is a subsidiary of General telephone and Electronics which also is said to be part owner of the Israeli concern.

Great Britain and Canada have the memoranda of understanding, and a British bid to join in the communications project is under U.S. consideration. Canada, Powell said, has not entered a request. Germany and France are seeking such memoranda, but Israel, he thought, has not entered such a request.

DENIES STATEMENT MADE

Powell said he personally inquired at the Pentagon about a published statement that an unidentified senior Pentagon official told Sylvania “not to do business with Israel” and Powell said he was informed to “specifically deny such a statement was made.”

Emphasizing that “the allegations and insinuations” that the Pentagon acted against Israel are “totally untrue,” Powell said that “we already have co-production” agreements with Israel on parts for the F-15 warplane, and that the U.S. is considering co-production for additional elements for the F-15 as well as for the F-16 fighter, a hydrofoil, and the Israeli “Chariot” tank. He said that decisions on some of these considerations will be made “within the next several weeks” while others will take longer.

Congressional sources characterized the Pentagon’s “security” reasons as a “lame excuse.” They said that Administration officials in the State and Defense Departments are deliberately stymieing Israeli requests for co-production, at least partly towards inducing Israel to give up occupied areas. They noted Israeli Premier Menachem Begin will be visiting President Carter July 19 and 20 and that at that time the prospects of economic benefits for Israel through military contracts might be used as pressures to move Begin to accept diplomatic tactics desirable from the U.S. point of view, including movement from the West Bank.

Carter was presented with a memorandum last month by leading members of Congress that pointed out various requests by Israel for joint production arrangements have been rejected.

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