Deal comes as ministers advance probe of purchase

Israel signs scandal-ridden €3 billion deal with Germany to buy new submarines

Agreement will see three new vessels delivered to Israeli Navy, includes reciprocal contract for German shipbuilder to make €850 million in purchases from Israel

Defense Ministry Director-General Amir Eshel, right, and ThyssenKrupp Marine Systems Rolf Wirtz sign an agreement for Israel's purchase of three submarines at the Kirya military base in Tel Aviv, January 20, 2022. (Defense Ministry)
Defense Ministry Director-General Amir Eshel, right, and ThyssenKrupp Marine Systems Rolf Wirtz sign an agreement for Israel's purchase of three submarines at the Kirya military base in Tel Aviv, January 20, 2022. (Defense Ministry)

Israel closed a deal Thursday to purchase three submarines from Germany, even as cabinet ministers are set to vote on establishing a commission of inquiry into the agreement, which is entangled in an investigation into alleged corruption and bribes that has already resulted in multiple indictments.

The deal will see Israel buy the advanced vessels from German shipbuilder Thyssenkrupp for €3 billion. The first of the vessels, which will form a new class called Dakar, is to be delivered within nine years, the Defense Ministry said in a statement.

Part of the cost will be financed by the German government via a grant in accordance with an agreement signed between the two countries in 2017.

The submarines, an upgraded version of the existing Dolphin-class diesel-electric model that Israel already has, will be among the most advanced of their kind in the world. The agreement also calls for the construction of a simulator in Israel, as well as logistic support and the supply of spare parts.

“The procurement of three advanced, operational submarines joins a series of measures that we have taken in the past year in the process of arming and strengthening the IDF,” Defense Minister Benny Gantz said in the statement.

He said the new submarines will upgrade naval capabilities and will assist in preserving Israel’s military edge in the region.

Gantz thanked the German government for its support in advancing the deal and for “its commitment to Israel’s security.”

The agreement was inked by Defense Ministry Director-General Amir Eshel and Thyssenkrupp CEO Rolf Wirtz at the Kirya military base in Tel Aviv. Among the small number of senior officials at the ceremony was Israeli Navy commander David Salama.

This file photo taken on January 12, 2016, shows the German-made INS Rahav Dolphin 2-class submarine arriving at the military port of Haifa on January 12, 2016. (AFP Photo/Jack Guez)

The Marker news site reported earlier this week that over the past year of negotiations to finalize the deal, the price of the submarines was raised by some €1.2 billion, nearly doubling the total cost.

A parallel industrial strategic cooperation agreement signed by the Economy and Industry Ministry with the German company also calls for reciprocal purchases by Thyssenkrupp and its suppliers of Israeli products, including security equipment, worth over €850 million to be purchased over 20 years.

“This will result in the opening of new markets, professional training, technological development, employment opportunities and a positive influx for both the Israeli economy and the defense establishment,” Gantz’s ministry said. “This is a detailed agreement, with investment components that were agreed upon in advance.”

Economy and Industry Minister Orna Barbivai said the second deal aligns with the goals and targets of her ministry to promote Israeli industry “while increasing productivity, expanding employment, promoting exports and promoting the periphery”

“It is very important that in the framework of the understandings, projects that enable the development of new specializations and opportunities will be included for Israeli companies, particularly in priority areas,” she said.

Meanwhile, cabinet ministers are expected to vote Sunday on the establishment of a state commission of inquiry into the submarine purchase, according to a Wednesday release of the agenda for the weekly cabinet meeting.

Economy Minister Orna Barbivai at the Knesset in Jerusalem on October 6, 2021. (Yonatan Sindel/Flash90)

The vote on establishing the probe into the so-called submarine affair was originally slated to be held this week, but was struck from the agenda at the last minute. The Haaretz newspaper reported that worry that the submarine purchase deal could be canceled was behind Prime Minister Naftali Bennett’s decision to delay the cabinet vote.

However, unnamed sources familiar with the deal told the newspaper that the signing of the new agreement could in fact pave the way for Israel to establish the commission of inquiry since Germany has signaled that the sale could go ahead even if the probe ends up revealing prior corruption.

Several ministers, led by Gantz himself and Foreign Minister Yair Lapid, have long promised to investigate allegations of a massive bribery scheme in the murky deal for naval vessels. There have also been street demonstrations by activists demanding a state inquiry.

Israelis protest against then-prime minister Benjamin Netanyahu, in Tel Aviv on March 19, 2021. (Neuberg/Flash90)

Several of those involved in setting up the purchase have been indicted over the affair, including close confidants of former prime minister Benjamin Netanyahu, who called for the procurement, though not the ex-premier himself. The corruption suspicions and subsequent indictments were handled by police in what is known officially as Case 3000.

The scandal also involved the sale of two Dolphin-class submarines and two anti-submarine warships by Germany to Egypt, allegedly approved by Netanyahu without consulting or notifying then-defense minister Moshe Ya’alon and then-IDF chief of staff Gantz. Israel had long been granted an unofficial veto over such sales by Germany.

In October, the state prosecution told the High Court of Justice that it believed there was no justification to open a criminal probe into Netanyahu’s actions in the matter.

The now-opposition leader is already on trial in three unrelated corruption cases, although he is reportedly close to inking a plea deal.

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