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Despite Dismay at Phalcon Deal Delay, Optimism Runs High on Sharon Visit in India

September 10, 2003
See Original Daily Bulletin From This Date

With police snipers on every street corner, endless traffic rerouting and large swathes of airspace shut down, New Delhi on Tuesday could have been mistaken for a city under siege.

But it was merely what authorities called a “Delta alert” — India’s way of showing visiting Israeli Prime Minister Ariel Sharon that it, too, knows the business of security.

Perhaps more than anything else, Sharon’s trip to India this week underscored how much security indeed is a business.

As Sharon was whisked from his suites in the palatial Taj Mahal Hotel to meetings in various colonial-era government buildings, Israeli defense contractors were hammering out lucrative deals with Indian counterparts safe from prying eyes.

New Delhi journalists were kept at bay — sometime literally by miles of cordons and barricades. The Israeli press delegation, which was brought in for perfectly timed photo-ops, otherwise had to make do with milling about in the Taj lobby, eyed by strapping Shin Bet bodyguards and Sikh doormen.

“We regard India as one of the most important countries in the world,” Sharon said at a reception at the presidential palace before going off to scatter rose petals at a monument to Mahatma Gandhi. “I believe this visit — the first by an Israeli prime minister — will help us move forward.”

For some Muslims in India, however, the trip was a step backward. India police arrested more than 100 Muslims in Bombay during one of many protests held around the country on Tuesday.

Despite the protests, Indian-Israeli cooperation deepened this week.

On Wednesday, Sharon was to sign several agreements with top Indian officials, cementing bilateral relations between the two countries.

India recognized Israel in 1950, but full diplomatic relations between the two countries were not established until 1992. Non-military trade volume — from diamonds to textiles– has ballooned to $1.6 billion this year from $200 million in 1992.

But the real deals were in Israeli ordnance and military exports, for which India has become a prime customer, spending up to $2 billion a year.

The prize product was the Phalcon, an Israel Aircraft Industries early-warning radar system that, if acquired, would give India a tactical edge over neighboring nuclear rival Pakistan. India seeks to purchase three Phalcons, mounted on Russian-made Ilyushin IL-76 aircraft.

Before the trip, both sides had raised hopes of signing a deal during the Sharon visit.

But it was not to be.

New Delhi officials cited reluctance to portray the ex-general Sharon — vilified by India’s massive Muslim minority and much of its media — as a sort of overblown gunrunner. And Indian officials did not want to stoke tensions with Pakistan, which has warned that a military alliance between India and Israel could destabilize the nuclear-armed region. The Phalcon deal could be closed next month, Indian officials said.

Israeli officials had a somewhat different account of the turn of events, blaming last-minute haggling by accountants in the Indian Defense Ministry for the delay.

IAI had said the Phalcons would sell for between $1.2 billion and $1.3 billion, but in New Delhi one of the IAI’s high-level executives grudgingly put the price at $1 billion.

According to Israeli sources, the Russians also were clamoring for a clause in the contract.

Ilyushin is not producing new IL-76s, so Israel will probably have to procure the aircraft from second-hand markets. Moscow likely wants a guarantee that Russian technicians will maintain the Phalcon platforms for the Indian air force, sources said.

The United States is watching the deal with interest. Sources in Washington said the Bush administration, which holds sway over Israel’s major defense deals, approved the Phalcon sale in May after ascertaining that India and Pakistan had backed down from the nuclear standoff they reached last summer.

“India is one of Israel’s most important markets for defense exports,” said Moti Amihai, head of the Asia desk at the Foreign Ministry in Jerusalem. “We have identical interests in several areas and hold contact on various levels of security and counterterrorism.”

The White House was less inclined to give the nod to Israel to sell India its $2.5 billion Arrow anti-ballistic missile system, which uses Israeli and U.S. technology.

Washington sources said that the Arrow, unlike the Phalcon, would give India such a decisive strategic advantage over its nuclear adversary, Pakisatan, that Islamabad could use it as a reason for upgrading its nuclear arsenal.

Yet in India, the Taj’s marble halls still shivered with whispers of a surprise U.S. turnaround in the works on the Arrow deal, as if the United States was loathe to spoil New Delhi’s shopping spree.

The two democracies are building a reciprocal dynamic that defies their demographic imbalance; Israel’s population of 6.7 million is minuscule compared with India’s almost 1 billion citizens. But officials on the trip did not find it hard to draw similarities, especially with the second anniversary of the Sept. 11 attacks on the United States looming.

“Call it friendship between the world’s biggest democracy and the Middle East’s only democracy, with the U.S. war on terror making it a strategic triangle,” a Sharon confidant said.

According to one veteran Indian journalist, it was a matter of national image and even envy. “Israel is seen as the great warrior state, surviving against the odds. Many of us would like to be like that, too.”

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