Israel Ministry of Defense (MOD)

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Last Updated: January 1, 2011
Other Name: N/A
Location: Tel Aviv, Israel
Subordinate To: Minister of Defense
Size: Unknown
Facility Status: Operational

The Israeli Ministry of Defense owns and oversees Rafael Advanced Defense Systems, Israel Aerospace Industries (IAI) and Israel Military Industries (IMI). Rafael, IAI and IMI account for over seventy-percent of Israel's defense production. [1] The continued status of these defense firms as state-run enterprises is an ongoing source of debate. While many in Israel's state-owned defense firms view privatization as an opportunity to expand their businesses, increase their profitability, decrease their vulnerability to government budget cuts, and escape tedious government oversight requirements, they face significant opposition from Israeli labor unions and their allies in the Israeli legislature. [2] Both IAI and IMI entertained plans for privatization. In April 2010, the Ministry of Defense, the Ministry of Finance, and IMI management agreed to either make an initial public offering or sell the company outright, as a result of the firm's indebtedness and failed profitability. [3] Unlike IAI and IMI, Rafael's government-owned status is not in question over the short term. [4]

[1] According to SIPRI, $3.59 billion of Israel's $5 billion (71.8%) in 2007 arms sales, domestic and international, were made collectively by IAI, IMI, and Rafael. Stockholm International Peace Research Institute, SIPRI Yearbook 2009: Armaments, Disarmament and International Security (New York: Oxford University Press, 2009), p. 262, pp. 288-291.
[2] "Israeli Defense Industry; In the Lion's Den," Jane's Defence Weekly, 26 February 2003.
[3] Merav Ankori, "Breakthrough in Treasury, Defense Ministry IMI battle; If an IPO is deemed impossible, the company will be sold outright," Globes, 21 April 2010; "Israel Aerospace Industries punches above its weight and believes it could get even bigger without government ownership," Flight International, 26 January 2010.
[4] Merav Ankori, "R&D investment pays off for Rafael; The orders backlog rose to NIS 13 billion by the end of 2009," Globes, 17 March 2010.

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