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Cablegate: Response to Blue Lantern Post-Shipment Check,

VZCZCXYZ0012
OO RUEHWEB

DE RUEHTV #2014/01 2541247
ZNR UUUUU ZZH
O 111247Z SEP 09
FM AMEMBASSY TEL AVIV
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3412
INFO RUCPDOC/USDOC WASHINGTON DC PRIORITY
RUEKJCS/SECDEF WASHDC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RUETIAA/DIRNSA FORT GEORGE G MEADE MD PRIORITY

UNCLAS TEL AVIV 002014

SENSITIVE
SIPDIS

PM/DTCC - BLUE LANTERN COORDINATOR

E.O. 12958: N/A
TAGS: ETTC KOMC IS
SUBJECT: RESPONSE TO BLUE LANTERN POST-SHIPMENT CHECK,
LICENSES 050128442 AND 050136115

REF: STATE 76036

1. (SBU) Summary: MOD officials and representatives from
Reshef Technologies confirm that the components from reftel
shipments have been and will be used to produce proximity
fuzes. Reshef Technologies has produced and delivered 8,333
proximity fuzes assembled from shipment components to the
MOD, and is currently working on an additional order of
proximity fuzes comprised of components from reftel shipments
for the Israel Defense Force (IDF) to be delivered by the end
of the year. Shipment components are stored in a bunker at
the Reshef production plant in Sderot; the MOD restricts
access to the bunker and maintains a computerized inventory
of the components. Reshef Technologies acknowledged that
typically one to three percent of components from shipments
such as these are not used; such overstock is ordered to
compensate for faulty components or parts damaged during the
fuze production. These overstock components remain stored in
the bunker at the Reshef plant for future use by the MOD.
Both the MOD and Reshef Technologies are aware of the proviso
barring the use of these components to produce cluster
munitions fuzes, and maintain that the components will only
be used to produce proximity fuzes. End summary.

2. (SBU) Polmiloff and FCS senior commercial specialist met
with Kobi Fogler from the MOD Directorate of the Security
Defense Establishment (MALMAB) on September 1. Fogler
confirmed that components from the two shipments were
purchased in order to produce M582 proximity fuzes.
According to Fogler, Reshef Technologies, LTD., used these
components to produce 8,333 proximity fuzes, which have
subsequently been delivered to the IDF Ammunition and
Missiles Center. Fogler stated that an additional 32
proximity fuzes were used during a "firing test" performed by
Reshef Technologies and the IDF. Fogler said an additional
series of proximity fuzes comprised from components from
these two shipments were currently being assembled by Reshef
Technologies; the IDF expects the delivery of these fuzes by
the end of 2009. Fogler acknowledged the proviso disallowing
these exported items from being used to produce cluster
munitions. He stated that all components from these
shipments will be used to produce proximity fuzes -- and not
for timed fuzes used in cluster munitions.

3. (SBU) Polmiloff and FCS senior commercial specialist met
with Reshef Technologies Managing Director Shlomo Manoach and
fuze plant manager Eitan Shemesh at Reshef Technologies'
headquarters in Or-Yehuda (15 minutes outside of Tel Aviv) on
September 10. MALMAB's Kobi Fogler also attended the visit,
as well as the MOD's Ran Bar-Ner, who introduced himself as
the MOD's facility security liaison for Reshef, but whose
business card identified him as working for MALMAB. Manoach
and Shemesh explained that Reshef Technologies was
established in 1984, and is publically-owned by Aryt
Industries, LTD. According to Manoach, Reshef Technologies
comprise approximately 95 percent of Aryt Industries'
business. Manoach said Reshef Technologies bought out
Soltam's 10 percent-owned shares in December 2007. According
to a technical brief, Mr. Zvi Levi is the major share holder
with 52 percent of Reshef's shares.

4. (SBU) Manoach and Shemesh said Reshef Technologies have
been an approved supplier for the MOD since 1988, and is the
main supplier to IDF ground forces for fuzes used in mortar,
artillery, tanks, and rockets. Shemesh said approximately 80
percent of Reshef's company business lies with the IDF; the
remaining 20 percent of sales includes customers in Romania,
Canada, Bulgaria, and Belgium -- the end user in these cases
is always the host country's Army or MOD. According to
Manoach, Reshef Technologies is well-versed in Israeli and
U.S. export control regulations, while Reshef representatives
have participated in all Israeli Defense Export Control
Division (API) conferences, and participated in the most
recent conference of the Society for International Affairs
(SIA) held in December 2007.

5. (SBU) Shemesh said the Reshef fuze production plant
located in Sderot includes a storage bunker for the
components. The MOD maintains a computerized inventory
system for the components; Fogler noted that all plant
employees possess MOD "confidential" security clearances,
while access to the storage bunker is restricted to essential
personnel only. Shemesh said the components are stored in
original manufacturer boxes in the bunker; when the
components are finally removed to produce the fuzes, they are
often mixed on the production line with components from

another subcontractor.

6. (SBU) Manoach and Shemesh stressed that the components are
only used for the products Reshef Industries was ordered to
produce -- in the case of these shipments, M582 proximity
fuzes (or their commercial name, the M180 Omicron fuze).
They confirmed that Reshef Technologies is working on another
order of M582 proximity fuzes that will be assembled from
components from these two shipments, which they plan to
deliver to the IDF by the end of the year.

7. (SBU) Manoach and Shemesh also noted that any remaining
component stock is stored in the bunker, and is available
only to the customer -- in this case, the MOD -- according to
the customer's instructions. They explained that typically,
one to three percent of components from shipments such as
these are not used -- this intended overstock is typically
ordered in the event some of the components are faulty or
harmed during fuze production. Manoach explained that this
overstock remains in the plant storage bunker for the MOD's
future use. Fogler added that the MOD annually conducts an
inventory check at the storage bunker.

8. (SBU) Manoach and Shemesh confirmed that the components
from these shipments have been and will only be used to
produce M582 proximity fuzes. Polmiloff inquired whether
these components could be used to produce fuzes for cluster
munitions. Shemesh said cluster munitions use timed fuzes,
which are entirely different from proximity fuzes. As such,
most of the components from these two shipments could not be
used to produce timed fuzes, he said. Shemesh did
acknowledge that the cover lower components from shipment B
(DTC Case 050136115; reftel) could potentially be used in the
manufacture of timed fuzes for cluster munitions. Both
Manoach and Shemesh reiterated, however, that Reshef
Technologies would only use the components to produce
proximity fuzes, as ordered by the MOD.

9. (SBU) Manoach was able to produce documents submitted in
support of these license applications, including DSP-83
Nontransfer and Use Certificates, purchase orders, end-use
statements, and certificates of delivery. Polmiloff and FSC
senior commercial specialist inquired why the Interglobal
Forwarding Service was listed as the seller in these cases,
when Amtec Corporation and R.A. Zweig Inc. appeared to be the
component manufacturers. Both Manoach and Fogler replied
that the shipments were arranged by the GOI MOD mission in
New York using foreign military financing (FMF); any further
questions on the matter might be raised with the mission.

********************************************* ********************
Visit Embassy Tel Aviv's Classified Website:
http://www.state.sgov.gov/p/nea/telaviv
********************************************* ********************
CUNNINGHAM

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