WASHINGTON — Defense Secretary Frank C. Carlucci and Israeli Defense Minister Yitzhak Rabin signed an agreement Monday giving Israel the status as an ally second only to that enjoyed by members of the North Atlantic Treaty Organization. That upgraded relationship will allow Israeli companies to bid for Pentagon contracts on an equal footing with American firms. It also would give the Jewish state access to a range of U.S. weapons and military technologies restricted from export, according to Administration officials. It stopped short of committing the United States to automatically come to Israel's defense.
The formal accord designating Israel as a "major non-NATO ally" follows a congressional directive issued last year calling on the Defense Department to re-examine Israel's access to U.S. defense contracts and equipment. Outside of NATO allies, only Sweden and Australia have been granted similar status by the Defense Department, said U.S. officials, who added that Egypt is next in line to receive the special designation.
Previously, Israel had general status as an ally and was permitted to compete for Pentagon contracts only in areas negotiated in advance by the two governments and to receive restricted exports only after a lengthy review process.
Israel's elevated ally status will position it to compete for a range of lucrative defense contracts, including those covering maintenance of U.S. equipment in Europe and the Middle East. Sources said that Israeli shipyards and aircraft firms are eager to reap profits in serving U.S. forces stationed abroad, such as the 6th Fleet, which operates in the Mediterranean Sea.
Israeli firms also hope to get a share of the technology contracts issued for the Pentagon's Strategic Defense Initiative. Israel is one of only two U.S. allies that has signed a government-to-government agreement to help research and develop missile defenses.
Price Break Sought
Rabin, in Washington during a weeklong U.S. visit in which he will visit several U.S. defense contractors, also is seeking funding to help his nation develop weapons to counter tactical ballistic missiles in the arsenals of its Arab neighbors. And, in the wake of Israel's decision to cancel its program to develop the Lavi fighter, the Israeli defense minister is hoping to persuade Washington to offer a price break on 75 to 100 F-16s that Israel plans to buy from the United States.
The Pentagon has pledged to explore ways to assist Israel in both missile and fighter projects, but Israel is seeking a greater commitment.
In meetings with Carlucci on Monday, U.S. officials said, Rabin pressed Carlucci to increase U.S. financial support for development of the Arrow missile, which Israel maintains will be valuable to the Strategic Defense Initiative. Israel wants the Arrows to defend against short-range missiles that it fears Syria and other Middle East foes may acquire from the Soviet Union.
The Arrow is designed to intercept short-range ballistic missiles in flight. The United States is now providing nominal funding for the research, and Rabin is asking the United States to underwrite at least 80% of its development costs.
Carlucci on Monday repeated a U.S. offer to split the cost of developing the Arrow system, officials said.
The two countries also remained far apart on the arrangements under which Israel would order as many as 100 of the U.S. Air Force's front-line F-16 fighters to replace its aging F-4 Phantom and A-4 Skyhawk combat aircraft. The top-of-the line Air Force fighters cost $13 million apiece, without special electronic equipment, armament or the Pentagon's surcharge for foreign sales.