economicsanctionsandtheir!unintended! effects
TRANSCRIPT
Economic sanctions and their unintended effects:
A case study of the French weapon embargo on Israel of 1967
Faculty of Economics and Business
MSc. International Economics and Globalization
Name: Maxime van Gelder
Student number: 5927560
Email address: [email protected]
Supervisor: Dr. D.J.M. Veestraeten Second reader: Drs. N.J. Leefmans
Date: August 15th 2016
Number of words: 18,902
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Table of Contents Section Content Page
1. Introduction
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2. Economic sanctions
2.1 Classification of objectives of economic sanctions
2.2 The construction and trends in the use of economic sanctions
2.3 Types of economic sanctions
2.4 Effectiveness of economic sanctions
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3. The development of the French Israeli relationship from 1948 to 1967 3.1 French arms policy to the Middle East from 1948 to 1967
x 3.1.1The Tripartite Declaration of May 1950
x 3.1.2 The Suez War of October 29 to November 7 1956
x 3.1.3 The French-‐Israeli nuclear cooperation from 1949 to 1957
x 3.1.4 The Six-‐Day War from 5 to 10 June 1967 3.2 The early development of Israel's military industry up to 1967
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4. The unintended effects of the French weapon embargo on Israel in 1967 4.1 Short term effects for Israel
4.2 Short term effects for France
4.3 Long term effects on Israel's economy
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5. Conclusions 45
6. Reference list 47
Statement of Originality
This document is written by Student Maxime van Gelder, who declares to take full
responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and that no sources
other than those mentioned in the text and its references have been used in creating it.
The Faculty of Economics and Business is responsible solely for the supervision of completion
of the work, not for the contents.
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Section 1: Introduction The role and usefulness of economic sanctions as a tool of foreign policy have been debated for
almost a century (Elliot and Hufbauer, 1999). Much of the literature about economic sanctions is
focused upon the effectiveness of economic sanctions (Nossal, 1989). An economic sanction is seen
as a tool of the governments of one or more sender countries to do economic harm to a target
country (Baldwin and Pape, 1998). Whether economic sanctions are effective or not, and what the
factors are that make them an often used instrument in foreign policy by governments have been
discussed (Kaempfer and Lowenberg, 1988). An extensive literature has been written on the
negative effects that economic sanctions can bear for the target country and the positive effects
they may have for the sender country. While these findings contribute to the understanding of the
effects of economic sanctions, there seems to be an absence of literature focused on the positive
externalities that can result from economic sanctions. These externalities are the unintended effects
for both the sender and target country and can have large consequences both on short and long-‐
term for the national economy. Marinov (2005) argues that economic sanctions vary a lot in scope and intensity. One of the most
harsh economic sanctions is a comprehensive trade boycott, also referred to as an embargo
(Greenwood, 2012). This paper examines one specific case, namely that of a weapon embargo. The
purpose of this paper is to explore the relation between an economic sanction and the positive
effects it can have for a local industry in the target country. Such positive effects would undermine
the economic sanction and make it ineffective or even counterproductive in the long run. This paper
examines one specific case, namely that of a weapon embargo. By studying a case, the French
weapon embargo of 1967 on Israel, this paper looks for an answer on the following research
question:
How did the weapon embargo of 1967 of France on Israel had a positive effect on Israel's economy? In order to provide a substantiated answer to the research question a literature review is conducted.
This paper is structured as follows. Section 2 gives an overview of the extant literature on economic
sanctions and describes the most important concepts such as the different objectives, types, the
construction of and trends concerning economic sanctions and their effectiveness. Section 3
describes the development of the French-‐Israeli relationship prior to the imposed weapon embargo.
This section describes the French arms policy towards the Middle East from 1948 to 1967, and the
early development of Israel’s military industry up to 1967. Section 4 examines the unintended
effects of the French weapon embargo on Israel, both for Israel and France. For Israel these
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unintended effects are described for the short-‐term as well for the long-‐term. Section 5 presents the
conclusions.
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Section 2: Economic Sanctions In order to create a better understanding of the notion of economic sanctions this section focuses on
four main elements that are relevant while looking into economic sanctions. Although there are
numerous more elements when it comes to sanctions, for the sake of clarity and link to the below
case study the following four will be discussed. First the variety in objectives of economic sanctions
are discussed and classified in a structured manner. Secondly, the construction and trends in the use
of economic sanctions are discussed. Furthermore, different types of economic sanctions are
outlined. Finally, an overview is given of the voluminous literature on the effectiveness of economic
sanctions.
2.1 Objectives of economic sanctions The need to intervene is a practical necessity in a world in which the government and citizens of
some states choose to, or are forced to, take interest in activities that take place beyond the border
of territory they live in (Marinov, 2005). According to Baldwin and Pape (1998) economic sanctions
are part of a larger set of policy instruments available to governments, in addition to diplomacy,
propaganda, and military interference. Since economic sanctions are a tool for governments it is
useful to conceive them as instruments of state power within the context of international relations
(Baldwin and Pape, 1998). Convicting via a diplomatic note of protest is a mild and common
measure, while sending troops to invade a country is a dramatic but infrequent example of
intervention (Marinov, 2005). Marinov (2005) states that economic sanctions occupies the middle
ground between 'words and war' and its relatively frequent use can be explained as a result of high
demand and available supply. Thence Pape (1997) argues that economic sanctions have come to be
seen by the 'traditional understanding’ as a more advanced alternative to war, being potentially as
effective as military force nevertheless more humane.
In order to make any insightful statement about the effectiveness of economic sanctions it is
meaningful to have a better understanding about the different objectives that sanctions can have.
Barber (1979) categorizes the objectives of economic sanctions into three main categories and in this
section the varying (sub)objectives are outlined on the basis of Barber's framework. Barber (1979)
states that economic sanctions can have 'primary objectives' which are concerned with the actions
and behaviour of the target state. The 'primary objectives' can be explained easiest as trying to hurt
the target state (Barber, 1979). These primary objectives are themselves diverse and may include
attempts to induce internal political change within the target state as a consequence of economic
harm, in line with the so-‐called 'traditional understanding' (Barber, 1979). This so called
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'traditional wisdom' is best described by the idea that target countries suffer the disutilities that
result from the actions of sender countries imposing the economic sanctions, and therefore will
change policy in the direction of the sender countries (Baldwin and Pape, 1998). Baldwin and Pape
(1998) explain economic sanctions as such that it is an attempt from a sender country to change the
target country's behaviour. In line with this, Galtung (1967) states that economic sanctions have
either or both of two purposes namely, to punish the receivers by depriving them of some value
and/or to make the receivers comply with certain norms the senders deem important. The resulting
costs, or the fear of such costs, in turn may cause target countries to moderate their behaviour in the
direction demanded by the sending countries (Dasthi-‐Gibson, Davis and Radcliff, 1997). Much of the
'traditional wisdom' on sanctions implicitly assumes that their real goal is to alter policies by
imposing economic harm in the target country, making economic sanctions an instrumental tool for
achieving political objectives (Kaempfer and Lowenberg, 1988). An economic sanction that is
instrumental is designed for the results it is expected to produce instead of for its own sake or any
symbolic reason, which can be a 'secondary objective' (Nossal, 1989). Drury (1988) argues that when
used properly, these economic sanctions can assist policymakers of sender countries to avert war by
enforcing their nation's will while still allowing time and room to settle the dispute diplomatically
and without bloodshed. Nossal (1989) categorizes the instrumental role of economic sanctions into three smaller purposes,
namely for prevention, for compulsion, and for retribution. Nossal (1989) explains that firstly a
sanction can be imposed in order to deter or prevent future wrongful behaviour. Secondly,
punishment may be inflicted in order to compel an offender to directly stop wrongful behaviour
(Nossal, 1989). In this case sanctions are inflicted until the target country obeys to the sender's will.
The third purpose is retribution, whereby the economic sanction is a response to the target as a
return for an evil inflicted on the sender state or community of sender states (Nossal, 1989). In the
case of retribution the harm is seen as an appropriate response of the sender countries to the target
country that had the choice to act otherwise but chose to act wrongfully (Nossal, 1989). The response
of the sender countries can be seen as a result of a 'Tit for Tat' strategy. A 'Tit for Tat' strategy is a
strategy whereby an agent, first cooperates and then subsequently replicates the other agents action
(Hargreaves-‐Heap and Varoufakies, 2004). In the case of retribution, the sender states reply the non-‐
cooperative action of the target state by imposing economic sanctions. Nossal (1989) argues that the
first two purposes are oriented to influence a change in direct or future behaviour of the target
country, while the third purpose is backward looking and based on what has occurred and went
wrong in the past. Although there is no clear future oriented end in such a formulation, this does not
suggest that the sanctions cannot be instrumental (Nossal, 1989).
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Kirshner (2007) argues that a state may initiate economic sanctions not just to comply action on the
part of the target state, but also to communicate its preferences, support allies, deter other states to
behave alike, and dissuade the target from expanding its objectionable activity. Economic sanctions
may also be designed to punish, weaken, distract, or contain the adversary (Kirshner, 2007). Lindsay
(1986) argues that states installing economic sanctions are seeking to achieve one or more of five
broad ends: compliance, subversion, deterrence, international symbolism and/or domestic
symbolism. In line with these broader objectives, Barber (1979) argues that economic sanctions that serve
'secondary objectives' are designed to enhance the status, behaviour and expectations of the sender
countries government(s), directed to both domestic and international audiences. For instance, it can
be a secondary objective for politicians to increase domestic support by imposing an import
embargo (Barber, 1979). These economic sanctions often contain a substantial symbolic element
and are imposed to demonstrate a willingness as well capacity to act (Barber, 1979). Furthermore
they provide a way of symbolising a general stance in international relations and these symbols are
very important in political relationships since it demonstrates which countries are more powerful
and in control within the political domain (Galtung, 1967). Barber (1979) explains that if the primary
objectives are achieved the status of the imposing state is likely to be enhanced and therefore the
symbols as well actions it is seeking to condemn take on greater meaning. Secondary objectives are
easiest to be explained as reinforcing the sender state's government via symbolism (Barber, 1979).
Kaempfer and Lowenberg (1988) exemplify these 'secondary objectives' by arguing that the level and
type of economic sanctions are an outcome of the relative effectiveness of interest groups in
pressuring domestic policymakers. Thereby the purpose of economic sanctions is to appease
domestic pressure groups interested in expressing their disapproval of the practices of a foreign
country (Kaempfer and Lowenberg, 1988). A common case is that in order to align with the interests
of domestic pressure groups sanctioners typically restrict imports from the target country rather
than exports to that country (Kaempfer and Lowenberg, 1988). These measures are installed to
reduce the competition on the domestic market via the exclusion of foreign competitors. Kaempfer
and Lowenberg (1988) state that since domestic industries seeking protection from foreign imports
have common and/or overlapping interests with other interest groups seeking to sanction the
exporting nation, it is likely that the groups will ally themselves. As a consequence the type of
economic sanctions are unlikely to be designed to impose the maximum amount of economic harm
on the target (Kaempfer and Lowenberg, 1988). Instead of that it is more likely that the types of
sanctions observed are designed to serve the interests of influential domestic pressure groups
operating in the sender country, a so-‐called public choice approach (Kaempfer and Lowenberg,
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1988). In the United States (US), Non-‐Governmental Organisations (NGOs) often succeed in
mobilizing congressional support for economic sanctions, even in the face of inconsistency of the
foreign policy (Elliot and Huffbauer, 1999). For instance, via lobbying groups members of US
congress can be influenced to vote in a specific direction that contradicts the position of the
government. Elliot and Huffbauer (1999) explain this seemingly contradictory phenomena by
showing that the objectives of the sender country's politicians are not necessarily 'primary' to
influence the target country, moreover to receive support from domestic groups that strengthens
the status of the politicians, i.e. a 'secondary objective'. This is one of the reasons why sender
country politicians frequently claim that economic sanctions constitute an expressive activity, a so-‐
called 'release of internal tension' directed at a domestic audience without other ends (Nossal,
1989). 'Tertiary objectives' of economic sanctions are those that deal with the composition and behaviour
of the international system in general, or those parts of it that influence the imposing states (Barber,
1979). Barber (1979) states that this includes efforts of the imposing states to ensure a certain
pattern of behaviour in international affairs in order to favour their own position and interests.
According to Barber (1979), tertiary objectives are usually directed to defending or promoting
existing structures or organisations, whether it be an alliance or an international body. For instance,
economic sanctions with a tertiary objective may be an attempt to defend the balance of power in a
certain region, of which the Tripartite declaration that is discussed in section 3.1.1., is an example. Or
to delegitimize a nation and its rights, which is an attempt of Arab countries over the years with
regards to Israel and exemplified in section 3.1.4. by the Yugoslav resolution (Barber, 1979). Tertiary
objectives are easiest to be explained in order to form international bodies and alliances by sender
states (Barber, 1979).
2.2 The construction and trends in the use of economic sanctions This section briefly discusses why international cooperation is necessary in order to impose effective
economic sanctions, explains why the US is leading in imposing economic sanctions and outlines the
general trends that could be observed over the last decades. Prior to the imposition of economic sanctions towards a target, a domestic political process takes
place within the sender country (Major and McGann, 2005). The initiative in imposing international
sanctions normally rests on one or two particular states, but to make the economic sanctions
effective the economic sanctions have to be multilateral (Martin, 1993). Therefore the 'leading' state
have to recruit and involve other states and/or international agencies and is referred to as the
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cooperation problem (Martin, 1993). A significant level of international cooperation is necessary to
be effective. For instance, unilateral trade restrictions give the target country an opportunity to
move to other trading partners and thereby bypassing the trade restrictions (Martin, 1993).
According to Kirshner (1997) trade restrictions are the most common form of economic sanctions and
can be divided into two categories: export sanctions and import sanctions. The export sanctions ban
export to the target state while the import sanctions prohibit imports from the target state (Kirshner,
1997). Kirshner (1997) states that although the two categories differ from each other both aim to
deprive the target from the gains of international trade. Martin (1993) argues that in order
for economic sanctions like trade restrictions or an embargo, a complete prohibition of commerce,
to be effective international cooperation is crucial. Martin (1993) outlines that in many unsuccessful
cases the lack of international cooperation was the main issue, since states considering the use of
export restrictions rarely have unilateral control over the goods they wish to deny to the target and
therefore the target can purchase the goods from other states. The target state may have to pay
higher prices for imports due to transition costs, but unless sender states achieve a significant level
of international cooperation trade restrictions and/or embargoes in general will fail (Martin, 1993).
Martin (1993) explains that the process of organizing multilateral economic sanctions, trade
restrictions from more than one state to one target state, typically occurs under conditions of
significant asymmetry of interests among potential sanctioners. The asymmetry of interests is
because one state has a strong interest in seeing sanctions imposed on the target while other
potential sender states have lower interests in doing so (Martin, 1993). Martin (1993) explains that
due to this asymmetry one state is usually taking a leading role in organizing the multilateral effort,
the so-‐called 'leading sender'. While the leading sender attempts to organize sanctions, other states
often appear willing to free ride on its efforts and need extensive persuasion before they will agree
to cooperate (Martin, 1993).
The US government was in many cases, particularly between 1945 and 1989, the leading force and
has turned more frequently than other countries to economic sanctions in response to demands to
'do something', about ethnic conflict, human rights violations, drug trafficking, terrorism, or nuclear
proliferation (Elliot and Hufbauer, 1999). Cox and Drury (2006) state that two democracies would
preferably sanction each other instead of engage in military action, since the key factors that
underlie the democracies are the common norms for conflict resolution as well the high level of
trades between democracies provides a shared interest not to go into war. Cox and Drury (2006)
suggest that democracies may use non-‐military types of coercion, like economic sanctions, as a
substitute to military confrontation when engaged in a dispute with another democracy. These
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norms for conflict resolution as well the pursuit of human rights and democratization goals explain in
part why democracies employ sanctions more than any other type of regimes (Cox and Drury, 2006).
In the vast majority of cases, 77 out of 120 between 1970-‐1998, the US was the leading sender of
economic sanctions and in even 52 sanctions the US acted unilaterally (Elliott and Huffbauer, 1999).
Elliot and Huffbauer (1999) state that over the years the targets as well senders have changed,
reflecting the end of the Cold War. During the Cold War the Soviet Union and/or its allies were targets
of the Western economic sanctions mainly led by the US, while after the Cold War Western sanctions
to former Soviet Union states decreased but Russia subjected more sanctions to these states (Elliot
and Huffbauer, 1999). Furthermore the US saw itself forced to impose several economic sanctions in
its 'backyard' to Latin American countries to settle disputes and to push these states towards a more
democratic governance (Elliot and Huffbaeur, 1999). Another big change was the
rise in initiative of European countries when ethnic unrest struck in the Balkans or when their
traditional sphere of influence in Africa declined (Elliot and Huffbauer, 1999). According to Marinov (2005), around 1950 only five countries were subject to economic sanctions
while that number had increased to 47 by the mid-‐1990s. In June 2016 economic sanctions are still
active on 44 countries in one form or another, varying from Afghanistan to Zimbabwe, showing that
they still are a commonly used tool in international politics (Business and Sanctions Consulting
Netherlands, 2016). In the last decade, virtually nowhere could democratic rights and freedoms be
suspended, human rights grossly abused, or a civil war break out without causing a group of states
to react with economic sanctions (Marinov, 2005). Cortright and Lopez (2000) even referred to the
1990s as 'the sanctions decade'. Kirshner (1997) foresees that economic diplomacy will play an
increasingly large role in the post-‐Cold War era for the following four reasons. Firstly Kirshner (1997)
explains that although conflicts between Eastern and Western European countries are likely to
increase, these conflicts will almost certainly be fought with economic tools as opposed to military
techniques as a consequence of the democratization process. Furthermore, due to the collapse of
communism the number of small market economies has increased and thereby the number of states
that are vulnerable to economic coercion increased (Kirshner, 1997). Thirdly, many great democratic
powers such as US, Japan, Germany appear reluctant to use force to resolve conflicts since they
prefer to settle disputes in a more peaceful manner (Kirshner, 1997; Cox and Drury, 2006). Fourthly,
Kirshner (1997) explains that due to the lack of urgency that was related to many Cold War crises,
states are likely to apply economic sanctions as an early method to affect the conflict whereby the
use of force is only brought in as a last resort.
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2.3 Types of economic sanctions Similar to the variety of objectives of economic sanctions, the types of economic sanctions are also
various and numerous. For the sake of clarity this section briefly touches upon the most common
types of economic sanctions.
Marinov (2005) states that coercive measures vary a lot in scope and intensity. Some are relatively
mild like partial withholding of economic aid, while others are much harsher like a comprehensive
trade boycott (Marinov, 2005). Such comprehensive trade boycott is in general referred to as an
embargo and is considered as a complete prohibition of commerce and trade with a particular
country or group of countries (Greenwood, 2012). Kirshner (1997) argues that due to the fact that each particular case has different goals and
constraints it is useful to differentiate economic sanctions. Kirshner (1997) argues that since
economic sanctions have distinct characteristics varying over robustness, publicity and speed making
one kind of economic sanction not uniformly better or worse than others. According to Kirshner
(1997) economic sanctions take five general forms: Firstly, the so called trade restrictions that are
most common in use and disrupt trade, finance, currency, and trading in assets of the target state.
These trade restrictions are further divided into export sanctions and import sanctions (Kirshner,
1997). Another form of economic diplomacy is aid, which has been employed to advance political
goals and has traditionally been seen as a mechanism for maintaining alliances (Kirshner, 1997).
Kirshner (1997) refers to it as a positive economic sanction that is quite popular because of its
exchangeability for things like basing rights, for instance for oil or mining companies, and other
privileges. Thirdly, a relatively modern instrument of sender states to influence a target is to
manipulate international financial relations of the target state (Kirshner, 1997). Kirshner (1997)
clarifies that financial sanctions can involve the withdrawal of either loans or investments, but both
techniques aim to restrict the flow of financial resources to the target and thereby increase pressure
on the target. Fourthly, Kirshner (1997) mentions monetary sanctions that aim to destabilize the
stability and value of the target state's currency. Monetary sanctions have been used in a
considerable amount of cases with dramatic consequences for the target due to its real economic
effects like increasing inflation and debt burdens, and upsetting public and private economic
planning (Kirshner, 1997). For instance, the ability of the US to force the withdrawal of Great Britain
during the Suez War of 1956 by exploiting the weakness of the pound is an example of a threat of a
monetary sanction (Kirshner, 1997, II). Fifthly, Kirshner (1997) mentions the least commonly used
form of economic sanctions, the seizure of a target's assets. This can take the form of physical
property, securities and bank accounts in order to prevent the target from accessing them (Kirshner,
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1997). Furthermore in extreme cases, such as wartime, ownership of the assets can be transferred
from the target to the sender state as part of a strategy to weaken the opponent or providing
leverage to influence the target (Kirshner, 1997).
In a more general way, Pape (1997) categorizes international economic sanctions into two main
categories, trade restrictions and financial restrictions, each of which can be employed with varying
intensity and scope. In order to be more effective, economic sanctions can be employed on a
personal base, for instance freezing the personal assets of political, military and/or economic leaders
in rogue states (Elliot and Huffbauer, 1999). Recent effective types of economic coercion in the case
of Iran are the increase of trade costs, restrictions on cross border imports of financial and transport
services and eventually a full embargo (Ianchovichina et al., 2016)
2.4 Effectiveness of economic sanctions This section gives an overview of the broad literature on the effectiveness of economic sanctions. In
order to state anything insightful about effectiveness it is important to understand what the
objectives of a sender state were at forehand. Therefore to evaluate effectiveness, Barber's (1979)
framework of objectives is useful to differentiate between 'primary objectives' and 'secondary
objectives'. To simplify, if economic sanctions are imposed for primary objectives the aim is to shift
the target's behaviour towards a more favourable policy for the sender state, therefore these
economic sanctions are also referred to as 'instrumental' tools of foreign policy (Barber, 1979). If
economic sanctions serve secondary objectives they concern the status, reputation and position of
the government(s) imposing them, thereby serving a more symbolic purpose (Barber, 1979). In the
case of 'tertiary objectives', the structuring and behaviour of international bodies, evaluation of
effectiveness is too hard to measure since the range of factors to be taken into account is so large
that it is impossible to isolate the particular part played by the economic sanctions (Barber 1979).
Therefore this section focuses on the effectiveness of instrumental and symbolic economic
sanctions.
Wagner (1988) refers to a situation whereby two countries have trade relations and the large
country, with a relatively smaller stake in the common trade than the small country, wants to bend
the small country into a different policy by threatening with the use of economic sanctions. In this
case there is an asymmetrical interdependence, because of the different relative stakes that the
trade relation has, and the threat or use of economic sanctions could in theory be effective (Wagner,
1988). Nevertheless, Wagner (1988) argues that in such case economic sanctions are seldom an
effective instrument for foreign policy for the following two reasons. Firstly, Wagner (1988) argues
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that one of the most important reasons that the economic sanction is not effective is because the
commitment of the weaker/smaller/target state can be much greater than the bigger sender state,
and the target state is more willing to suffer. Another argument that Wagner (1988) refers to is that
the cost of the target state to agree upon the terms of the sender state can be higher than the
possible burden of the economic sanctions. In such case the expected costs of an economic sanction
is too small to change the target's policy. Furthermore, Hovi et al. (2005) argue that if economic
sanctions are installed unilaterally, the target might reduce the effects by moving to other clients or
suppliers, and by employing other counterstrategies such as rationing, stockpiling, import
substitution and if necessary smuggling.
Bergeijk (1989) agrees that quite generally economic sanctions are ineffective, but for different
reasons. Bergeijk (1989) argues that economic sanctions like trade restrictions and/or embargoes are
ineffective since it is practically impossible to create the necessary political unity for a forceful
embargo, and even if embargoes are established they are easy to circumvent. This might explain
why Elliot (1998) claims that in the early post-‐World War II era economic sanctions were a relatively
effective tool of US foreign policy. During that period, from 1945 to 1970, the US had a political and
economic hegemony making US economic sanctions at least a partial success in half of the cases
(Elliot, 1998). As a result of the increasing international economic integration, economic sanctions by
the US decreased in effectiveness since target countries had more alternatives to trade with (Elliot,
1998). Furthermore, Bergeijk (1989) mentions that the plausibility of a change in behaviour as a
consequence of economic sanctions is doubtful since the target can have strong incentives not to
comply. Bergeijk (1989) mentions that one of the incentives not to comply is the fear of losing face
by the target's leadership. Since economic sanctions are public measures, compliance may damage
the target leadership's international prestige or diminish the leadership's domestic support (Bergeijk,
1989). Pape (1997) argues that the target's leadership can misuse the economic sanctions that are imposed
to stimulate nationalistic feelings among the target's country population. By framing the economic
sanctions to the population as a foreign threat the target's government can even strengthen its own
position making the economic sanctions counterproductive (Pape, 1997). Pape (1997) argues that
this pervasive nationalism can result in the fact that states and societies are willing to undergo
substantial punishment as well economic damage rather than leave what is framed as the interests
of the nation. Pape (1997) refers to this phenomenon as the 'dance around the flag', and this trend
may be seen nowadays in Putin's Russia after the international criticism as a result of the annexation
of the Crimea.
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Another reason why economic sanctions are ineffective as instrumental tools is that modern states
have administrative capabilities to mitigate and/or transfer the damage done by economic sanctions
(Pape, 1997). For instance, in the case of a monetary sanction whereby the national currency of a
target is depreciated, the target government can buy its own currency to undo the depreciation.
Furthermore, Pape (1997) argues that in case of economic damage is done by sanctions, the target's
government is still capable to protect itself and its supporters by shifting the economic burden to
opponents or disenfranchised groups. For instance, in case of an economic sanction like freezing
assets of a target that hurts the ruling elite, the ruling elite might be able to transfer the burden to
the population by raising taxes or reducing subsidies. Major and McGann (2005) explain that if costs
are transferred to other groups the economic sanctions are not likely to be effective since those
groups are potential agents of change within the target state. If, on the other hand, the costs of
sanctions are borne by groups that do have the ability to change policy but are unwilling to do so,
the economic sanction will be ineffective as well (Major and McGann, 2005). On the other hand, Hovi et al. (2005) argue that economic sanctions can be effective under certain
conditions. According to Hovi et al. (2005), economic sanctions can be effective only if the target
country initially underrates the consequences, miscalculates the sender's determination to impose
them, or wrongly believes that economic sanctions would be imposed and maintained irrespectively
of the target's behaviour. Before an economic sanction is imposed, the sender state usually threatens
to do so, if the target does not comply to its demands (Hovi et al., 2005). Hovi et al. (2005) explain
that this threat should bear the following three elements in it: credibility in the eyes of the target,
the threat should be potent, meaning that the costs of sanctions for the target outweighs yielding,
and the threat should be non-‐contingent, meaning that the economic sanctions will not be installed if
the target complies to the sender's demands. In the situation where the target has complete
information and the threat of an economic sanction does not make the target yield, nor will the
imposition of the economic sanction do so since policymakers made an informed decision (Hovi et al.,
2005). On the contrary, economic sanctions can only be effective if the target's policymakers
misinterpreted at least one of the three factors, namely credibility, potency and non-‐ contingency, of
the sender's threat (Hovi et al., 2005). In spite of the fact that this reasoning is highly intuitive, in fact
it represents something completely new in the literature on economic sanctions (Hovi et al., 2005) Marinov (2005) looks at the effectiveness of economic sanctions via the destabilizing effect they can
have on the target's government. The reasoning behind this is that sender states impose economic
sanctions if the target does not yield to the sender's demands to weaken the target's government in
the hope the target will eventually change their policy (Marinov, 2005). Marinov (2005) shows, by
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using panel date on 136 countries over an average of 37 years, that the presence of economic
sanctions in a given year makes it significantly more likely that the target's government will lose
power in the following year. In a number of cases, the entrance of new leaders has brought a policy
change in favour of the sender country and makes it more likely that economic sanctions are lifted
(Marinov, 2005). Marinov (2005) argues that imposed economic sanctions increase the baseline risk
of losing power by 28% for the target government. Numerous scholars refer to the study by Hufbauer, Schott and Elliot of 1985, that was later revisited
in 1990, (hereafter HSE) as key evidence that economic sanctions can achieve ambitious foreign
policy goals. HSE published the first empirical large N-‐study of economic sanctions, reviewing
economic sanctions from 1914 to 1990 and identifying 115 cases in total of which they reported 40
cases as a success. This 35% of success rate of economic sanctions was much higher than most
scholars expected, and in many cases the use of economic sanctions is to be viewed as a credible
alternative to military force (Hufbaeur et al., 1990). Hovi et al. (2005) argue that the HSE study is also
the most important attempt to point out the conditions for effective economic sanctions. Hufbauer et
al. (1990) conclude that economic sanctions work best if the following eight conditions are met:
(1) the goals of the sender are limited, (2) the target is already experiencing economic difficulties, (3)
there are generally friendly relations and/or trade relations between sender and target countries, (4)
sanctions are forcefully implemented in a single step so that the target does not have the
opportunity to adapt itself, (5) sanctions entail significant costs for the target, (6) the costs for
sender countries are modest, (7) the sanctions are not accompanied by covert action or military
operations, (8) few countries are needed to implement the economic sanctions.
As a response on the HSE study, Pape (1997) argues in his article 'Why economic sanctions do not
work' that the HSE study is seriously flawed. Pape's (1997) standard of judging the success of
economic sanctions requires three criteria. Firstly, that the target state concede to 'a significant part
of the sender's demands' (Pape, 1997). Secondly, economic sanctions were threatened and/or
actually applied before the target changed its behaviour (Pape, 1997). If this is not the case the
change of behaviour can also be a result of any other cause. Finally, no other plausible explanation
exists for the target's change of behaviour (Pape, 1997). These criterion do not allow for gradations
in the degree or kind of success (Baldwin and Pape, 1998). Pape (1997) claims that practically none of
the 40 cases that are claimed as a success of economic sanctions in the HSE study stands up this type
of examination. Pape (1997) outlines that eighteen cases were actually settled by direct or indirect
use of force, in eight cases there is no evidence that the target made the demanded concessions, six
cases do not qualify as instances of economic sanctions and three cases are indeterminate. This
leaves the HSE study with only five out of 115 cases that can be considered
16
effective (Pape, 1997). Since in very few of the cases the criteria of an economic sanction are
verified, Pape (1997) claims economic sanctions to be ineffective.
Kirshner (2007) argues that although economic sanctions fail to change a target's policy as the sender
demands, they may be successful along in serving secondary objectives, complement other policies,
and remain an appropriate policy instrument. Morgan and Swebach (1997) state that economic
sanctions continue to be applied in a variety of contexts, yet we have not developed a sufficient
understanding of the processes involved to determine when, or even if, sanctions can work.
According to Gordon (1983), in general there is little evidence indicating that economic sanctions
alone have been effective in past instances. Though some have argued that the main function of
sanctions is symbolic or to serve the domestic political interest of the sanctioning state and that
sanctions have often served these ends (Gordon, 1983). This symbolic function of economic
sanctions might explain why policymakers often seem to hold contradictory views to scholars and do
impose economic sanctions on a frequent base (Nossal, 1989). Nossal (1989) states that with the
ongoing debate about the effectiveness, economic sanctions as an instrument of foreign policy have
become more and more controversial. Therefore, Nossal (1989) outlines that it is perhaps not
surprising that much of the literature on economic sanctions focuses on a dominant puzzle: if
sanctions do not work, why do states continue to impose them? Lindsay (1986) provides a possible
answer to this question by outlining the broad objectives of economic sanctions, to be known as
compliance, subversion, deterrence, international symbolism and domestic symbolism. Both
compliance and subversion can be categorized in primary objectives, while the latter two are
examples of secondary objectives. Deterrence is hard to put into one of these two categories, since
both instrumental sanctions as international symbolism can deter other states. In general, it seems
to be that economic sanctions are quite effective in serving a secondary objective as a symbolic
function, and they can often be useful in support of other policy initiatives (Daoudi and Dajani, 1983;
Baldwin, 1985; Lindsay, 1986; Nossal, 1989). Section 2 has aimed to present an overview of the most relevant concepts and underlying principles
of economic sanctions. The different objectives, construction and trends, types and effectiveness of
economic sanctions were outlined to get a better understanding of the notion of economic
sanctions. Section 3 outlines the development of the French-‐Israeli relationship from 1948 to 1967,
prior to the French weapon embargo.
17
Section 3: The development of the French-‐Israeli relationship
from 1948 to 1967
To understand the effects of the French weapon embargo of 1967 it is important to gather a better
understanding of the French-‐Israeli relationship before and at that time, as well the condition and
development of the Israeli military industry. Therefore section 3.1 focuses on the French arms policy
to the Middle East from 1948 to 1967, and section 3.2 outlines the early development of Israel's
military industry up to 1967.
3.1 French arms policy to the Middle East from 1948 to 1967 According to Kolodziej (1980), to understand the direction and scope of French arms sales policy and
decisions with regards to the Middle East we have to take into account three factors. Firstly, French
arms sales decisions are based on the regional and global security issues and the efforts of the
French governments to influence and adapt France to this environment. Furthermore, the economic
incentives that encourage an open arms transfer policy play an important role in decisions made by
the French government. Thirdly, the decision power of a political figure and his/her preferences to
influence the transfer of production, arms and knowhow to Israel or any Arab state (Kolodziej,
1980). This section looks into the three factors mentioned above that vary over time and provides insights
in the French-‐Israeli relationship prior to the weapon embargo of 1967. The French foreign policy
towards the Middle East from 1948 to 1967 is mainly influenced by four events, which are
distinguished. At first, the Tripartite Declaration of 1950, secondly the Suez War of 1956, thirdly the
nuclear ambition of both countries and finally the Six-‐Day War of 1967.
3.1.1 The Tripartite Declaration of May 1950 During the Nazi occupation of France powerful political and military connections had been made
because of the Jewish exploits within the Résistance and in the Free French Forces (Crosbie, 1974).
Due to this, a large number of Jewish leaders could count on the support of leading figures in the
first Gaullist government, 1944-‐1946 (Crosbie, 1974). Crosbie (1974) states that in 1946, Ben Gurion
and other Haganah -‐ Jewish underground defence army -‐ leaders established their headquarters in
Paris with the tacit acceptance of the French government. During a meeting in Paris, the Zionist
Directory openly collected money to purchase arms, while the police closed their eyes for the
comings and goings of underground leaders (Crosbie, 1974). According to Crosbie (1974), it is in
18
large part due to the personal relations and effective diplomacy that the Haganah combed France
for arms and ammunition right after WWII. The ties were even so close that one of the French
Zionist leaders, Blumel, flew to Prague in a plane at the disposal of the French government to
negotiate for arms (Bar Zohar, 1964). Crosbie (1974) states that it was also with the help of French
financial sources that Israel bought airplanes and twenty light aircraft guns. The Résistance became a
major source of weapons and by a secret agreement of the French forces that withdrew from Syria,
much of their equipment like ancient tanks and other weaponry found their ways into Jewish hands
(Crosbie, 1974).
Immediately after Israel declared its independence, on May 14 1948, France worked on a policy of
military and scientific cooperation with the new state (Crosbie, 1974). Yet the official position of the
French government at that time was pro-‐Arab, designed to maintain some measure of French
influence in the Arab heartland (Crosbie, 1974). According to Crosbie (1974), this apparent
contradiction in French foreign policy is largely explained by the difficulties that afflicted the
government of the Fourth Republic: authority was fragmented and the execution of policies often
sporadic, inconsistent and hesitant while responsibility was diffused. Crosbie (1974) illustrates that
generally each minister treated his ministry as an independent domain, whereby the Minister of
Defence and the Interior Minister executed divergent policies. When it came to the question of
support for Israel and reached the Prime Minister usually the matter was decided in favour of Israel
(Crosbie, 1974).
Although in the early part of 1949 Israel and the Arab states had concluded an armistice agreement
that put an end to the 1948 Arab-‐Israeli conflict, by mid-‐1949 Israeli concern was growing over the
emergence of a Middle East arms race (Slonim, 1987). In fact, Arab leaders were increasingly calling
for a 'second round' of fighting to eliminate the Jewish state and Arab governments tried to obtain
vast quantities of arms that were intended for a new military campaign (Slonim, 1987). In order to
deescalate the rising tension it was necessary to prohibit a Middle Eastern arms race, for which the
Tripartite Declaration was designed (Slonim, 1987). The Tripartite Declaration was a joint statement,
signed on May 25 1950, by the US, Great Britain and France to preserve the status quo in the Middle
East and thereby stating their opposition to the development of an arms race (Bickerton and
Klausner, 2005). According to Tal (2009), the declaration outlined the parties' opposition to the use
or threat of force and their commitment to peace and stability in the area, as well as a pledge to
take action to prevent violations of the frontiers. Although peace in the region may not have been
the main priority for the parties, they did at least aim at preserving the status quo and preventing
the Arab-‐Israel arms race from eluding Western control (Crosbie, 1974). Besides the trade restriction
of arms to the Middle East the Tripartite Declaration also served a so-‐called tertiary objective,
19
namely the structuring of an alliance between three great Western powers. Crosbie (1974) argues
that the main interest of France in deescalating the tensions in the region was because France
controlled Algeria, Tunisia and Morocco, and traditionally had great influence in Syria. The Tripartite
Declaration stated:
"The three governments recognize that the Arab states and Israel all need to maintain a
certain level of armed forces for the purposes of legitimate self-‐defence of the area as a
whole. All applications for arms or war materials for those countries will be considered in the
light of these principles" (US Department of State, 1950).
Due to the Near Eastern Arms Coordinating Committee (NEACC), that handled requests for arms
under the terms of the declaration, there was a relatively controlled and balanced flow of arms to
the area from 1950 to 1954 (Crosbie, 1974). Although Steinberg (1998) argues that the declaration
did not prevent the Arab states from obtaining weapons through their relationships with the Soviet
Union, that was not part of the Tripartite Declaration, so that effectively Israel was the only one
excluded. On the other hand, since the declaration was initiated by the US and Great Britain, and
France was invited to join in, consequently France was less committed to the declaration and found
it relatively easy to abandon the declaration when its national security or economic interests
justified this (Tal, 2009). It is important to outline that over the past decades France had developed a
significant and highly successful arms industry, for a big part based on the export of arms (Major,
2008). Still today France belongs to the biggest arms producers in the world and the French arms
industry has a large influence on France' economy (Major, 2008). According to Tal (2009), France struggled to uphold its position in the Middle East, especially in Syria.
Its unofficial alliance with Syria placed France in a hostile position towards Iraq, Britain's ally, which
had the idea for a 'Greater Syria' that would terminate the French hold over Syria (Tal, 2009). When in
1954 a pro-‐France Syrian colonel was replaced and about the same time the Arab League announced
to support the Algerian opposition to France, France’s focus shifted to North Africa (Tal,
2009). France took an anti-‐Egyptian course, since it blamed the Egyptian President Nasser of inciting
Algerian rebellion against France (Tal, 2009). According to Tal (2009), Israel and France now had
mutual interests in the region, to take stand against President Nasser. This mutual interest served as
the major incentive for the French government for a significant increase in arms sales in 1954–1955
towards Israel (Tal, 2009).
According to Steinberg (1998), it was the 'Czech arms deal' in September 1955, in which the Soviet
Union sold modern weaponry consisting of 200 tanks and nearly 100 fighter jets for $250 million to
Egypt, that broke the Western control over the flow of arms to the area and made the declaration
20
collapse. The consensus within the French government was that Egypt was the main source of aid for
the Arab nationalistic movement during the Algerian War of Independence from 1954 to 1962
(Evron, 1970). As a response the French government increased the sale of planes and heavy
weapons to Israel in April 1956 to counter the Soviet Union's arms supply of Egypt (Steinberg, 1998).
According to Evron (1970), both Israel and France now had identical interests with regards to Egypt.
The French government saw the link with Israel as the base of an informal alliance that was formed in
order to depose the Egyptian President Nasser (Evron, 1970). Evron (1970) argues that this
military cooperation took an unprecedented level and secured a large export market for France since
the entire Israeli air force had been built up with French fighter jets. At this stage France was seen as
the closest ally of Israel (Pinkus, 2002). According to Rubenberg (1998), President Nasser, as a
response to the increase in arms sales between France and Israel, nationalized the French-‐controlled
Suez canal on July 1956. Thereby prohibiting Israeli shipping through the Straits of Tiran, a vital link
for Israel’s imports and exports to the rest of the world (Rubenberg, 1998). 3.1.2 The Suez War from October 29 to November 7 1956 Since the establishment of Israel in 1948, cargo shipments to and from Israel via the Strait of Tiran
had been subjected to Egyptian approval (ElBaradei, 1982). The Egyptian authorities controlled the
goods while attempting to pass through the Suez Canal (ElBaradei, 1982). Besides this Egyptian
control of goods, Nasser encouraged the Fedayeen, Palestinian nationalistic militants, to attack on
Israeli soldiers and civilians (Azar, 1972). The French had their own reasons to oppose Nasser, whom
actively incited the Algerian rebels in their battle against France and through the shipment of arms
(Bickerton and Klausner, 2005). Crosbie (1974) outlines that when the Algerian struggle for
independence erupted in violence, on November 1 1954, France was afraid that the Arab nationalist
movements would force the end of French presence in the region and would remove once and for all
any illusions that France could retain its position as a global power. French Prime Minister of the
Fourth Republic from 1957 until 1958, Mollet, saw the removal of Nasser as the best way to protect
French interests in the region and Israel and France had mutual animosity towards Egypt (Bickerton
and Klausner, 2005). The remnants of French influence in Syria had further declined, French interest
in Tunisia and Morocco eroded progressively and the threat of a pan Islamic danger to French Sub-‐
Saharan Africa rode with the spectre of a hostile coalition on France's exposed southern flank
(Crosbie, 1974).
Another important aspect was that around 50% of French oil was imported through the Suez Canal
and France feared that Nasser, by controlling the Suez Canal, might use his power against France
(Crosbie, 1974). Also for the British the Suez Canal was still the most important gateway as well of
21
strategic importance to their oil interests in the Persian Gulf (Bickerton and Klausner, 2005). The
British were also concerned about Nasser's policy to destabilize the region, in particular because of
big interests and military presence in Jordan, and agreed to take action on Nasser (Bickerton and
Klausner, 2005). By nationalizing the Suez Canal on July 26 1956 Nasser supplied France the excuse
for intervention that it sought already (Crosbie, 1974). An alliance between Great Britain, France and
Israel was set up to prepare for war with Egypt and on July 29 French defence officials began formal
contingency planning with Israeli air and naval forces and exchanged personnel with Israel to secure
the flow of information (Bickerton and Klausner, 2005). For instance, Israeli pilots received intensive
training on the French aircrafts during the preparations of the Suez invasion (Crobsie, 1974).
From October 22 to 27 French war material was brought into Israel for the preparation of the
planned Suez invasion. Some of the equipment, consisting of more than 100 planes, 200 tanks and
200 army trucks, was paid for at commercial rates while part of the supply was a gift to Israel
(Crosbie, 1974). On October 29, Israel invaded the Sinai followed by an ultimatum for Egypt to
withdraw ten miles on either side of the Suez Canal, issued by France and Britain (Rubenberg, 1998).
As expected, Nasser rejected the ultimatum and this provided France and Britain with an excuse to
"intervene in such strength as was necessary" (Rubenberg, 1998). Therefore British and French
troops landed along the canal and by November 7 the coordinated campaign was completed
(Rubenberg, 1998). From a military perspective the Suez War can be seen as a victory for the French-‐British-‐Israeli
alliance, but from a political perspective it was not successful for French and British esteem within
the international community (Farr, 1999). At the end of the Suez War Israel was in command of the
Gaza strip, where the bases of Fedayeen terrorism were, and the entire Sinai up to ten miles from
the Suez Canal thereby affording control over entry to the Strait of Tiran (Rubenberg, 1998). But the
French and British attempts to move South along the Suez Canal was stopped due to fierce pressure
of both the US and the Soviet Union (Farr, 1999). For instance, the US threatened with a monetary
sanction to exploit the weakness of the pound if British troops would not withdrew immediately
(Kirshner, 1997, II). Both for Britain and France this was a tremendous loss of face that showed the
new world order and hierarchy (Farr, 1999). For Britain the situation is been referred to as 'The Lion's
Last Roar' since it abruptly decreased the British influence in the region, specifically in Jordan that
was inspired by Nasser's idea of Arab nationalism, and accelerated the process of decolonisation
(Bickerton and Klausner, 2005). For France, the Suez War had an immense impact on French
domestic politics since much of the French army officers felt betrayed by their politicians
(Sowerwine, 2009). According to Sowerwine (2009), the Suez War helped to set the stage for the
military disillusionment with the Fourth Republic, which contributed to the collapse of the Republic
22
in 1958. Besides all political damage France was cut off from export markets in the Middle East
worth of 51 billion Francs annually and lost cultural influence and prestige in the region (Crosbie,
1974). According to Crosbie (1974), at this stage Israel was the most certain and solid ally of the
West in the region, but the alliance came with big consequences for France and Britain. The French
support for Israel was repeated in public by Mollet in March 1957 during a foreign policy debate
(Crosbie, 1974). Mollet stated that security guarantees for Israel's borders as well free navigation
through the Suez Canal were essential and that France was committed to ensure that this would be
respected (Crosbie, 1974). Egypt agreed to the stationing of a United Nations Emergency Force
(UNEF) in the Sinai to ensure all parties would comply with the 1949 Armistice agreements
(Rauschning et al. 1997).
3.1.3 The French–Israeli nuclear cooperation from 1949 to 1957 The French-‐Israeli nuclear cooperation between 1949 and 1957 originated that the relationship
moved from friendly ambivalence to an unwritten alliance (Pinkus, 2002). Eventually this tacit
alliance led to far reaching cooperation and exclusive friendship in some of the most sensitive areas
of national interest (Pinkus, 2002). This 'nuclear connection' was initially formed right after the
establishment of the state of Israel and peaked around the mid-‐1950s (Pinkus, 2002). De Gaulle, the national figure most involved in developing the French atomic bomb, realized soon
the role that nuclear power would play in international relations (Mongin, 1997). De Gaulle stated,
"From this point on there would be two classes of countries, those who have the bomb and the
others" (Mongin, 1997). According to Gaullist doctrine, the capacity of a state to remain
independent and to make authoritative judgement for other states, was ultimately based on its
ability to enforce them (Koldziej, 1971). Therefore De Gaulle believed that France's international
authority was derived from its own military power (Kolodziej, 1971). Kolodziej (1971) argues that
during De Gaulle's second period as the head of French government from 1958 to 1968, France's
global status tended to be identified with this creation of a nuclear strike force. An elaborate
strategic doctrine developed around the force de frappe -‐ strike force-‐ as a credible military
instrument (Kolodziej, 1971). Besides, first Mollet and later De Gaulle thought that when Israel had
nuclear capability it could be a counterforce against Egypt in France’s fight in Algeria (Farr, 1999).
Israel's early leaders realized the possibilities that the exploitation of nuclear power offered and soon
after the establishment of the state nuclear research and development began under the wings of
Weizmann, an acclaimed organic chemist (Cochran, 2000). Weizmann had a vision and actively
expressed his hope that via the development of nuclear science Israel would become "a centre of the
new scientific development which would get the world past the conflict arising from the monopolistic
23
position of oil" (Cochran, 2000). The first political figure aware of this post-‐WWII hierarchy and
unwavering supporter of Israel's atomic development was Ben Gurion (Pinkus, 2002). The nuclear
ambition have to be seen in the primary lesson that Ben Gurion took from the Holocaust. That was
that other nations would not sacrifice their interests to fight a 'Jews' war (Cochran, 2000). According
to Cochran (2000), the traumatic impact of the Holocaust made the Jewish people aware that the
matter of physical survival was too important to leave to others. Cochran (2000) argues that in
contrast to Israel's counterparts, security is not just about safeguarding political values, institutions
and a way of life. Security is first and foremost about the very existence of a people and therefore
Israel must strive to be as self-‐reliant as possible in matters of defence and security (Cochran, 2000).
Ben Gurion foresaw that Israel needed nuclear capability, before any Arab country, to solve its
security problem (Cochran, 2000). According to Farr (1999), right after WWII, Israel and France were at a similar level of expertise in
nuclear science and Israeli scientists could make significant contributions to the French effort.
Progress in nuclear science and technology in France and Israel remained closely linked throughout
the early 1950s (Farr, 1999). World class research institutions, first-‐rate chemists and nuclear
physicists would be needed and Israel already had three top institutes, Hebrew University in
Jerusalem, Technion in Haifa and the Weizmann Institute for Science in Rehovot, active in nuclear
development (Pinkus, 2002). The fact that a number of Jews worked in top positions as nuclear
scientists and administrators in the 1950s in France had a positive influence on the rapprochement
between the atomic energy commission of France (CEA) and Israel’s equivalent (IAEC) (Pinkus, 2002).
During the first half of the 1950s, two atomic research centres began operating in France (Pinkus,
2002). According to Farr (1999), Israel supplied essential technology and hardware and several Israeli
observers were at the French nuclear tests where they had 'unrestricted access to French nuclear
test explosion data'. According to Pinkus (2002), one of the factors that helped Israel in
strengthening ties with France was the belief of top CEA administrators that via Israel, France could
profit from the fruits of already existing international Jewish nuclear expertise. Another essential
factor in the cooperation was the possibility of sending Israeli chemists and nuclear physicists to
advanced studies in French universities (Pinkus, 2002). The collaboration was a pragmatic and
fruitful two-‐sided affair, resulting in progress in nuclear technology, avionics and missiles (Cochran,
2000). According to Cochran (2000), the cooperation was so close that Israeli engineers even worked
on the development of French weapons system like the design of the new Mirage fighter jets that
were able to carry nuclear bombs.
Cochran (2000) notes that it was in 1957, right after the Suez War in which France and Israel fought
together against Egypt, that the greatest boost to the Israeli nuclear programme came. France
24
agreed to construct an underground reactor and associated research facilities in Dimona, a town in
the Negev desert that served as the base for Israel's nuclear weapons (Cochran, 2000). The
cooperation between France and Israel created an historical conjuncture that was both
advantageous and exceptional, and resulted in the full implementation of the bilateral 'nuclear
initiative' (Pinkus, 2002). Pinkus (2002) argues that the basis of cooperation between the nuclear scientists of both countries
was the determination of Prime Minister Ben Gurion, Minister of Defence Peres and a number of
French leaders in their pursuit of nuclear weapons. The Suez War created a French obligation to its
ally, and France was ready to risk harming its relations with the Arab world by extending assistance
to Israel for establishing a nuclear infrastructure with an indisputable military capability (Pinkus,
2002). 3.1.4 The Six-‐Day War from 5 to 10 June 1967 For a long time, the arms trade and nuclear cooperation between France and Israel was a tangible
expression of their growing friendship (Evron, 1970). Over the years, the entire Israeli air force,
consisting of 300 combat aircrafts, had been built up with French planes not only securing a large
export market that became increasingly important for the French arms industry, but also secured a
form of French presence in the Middle East (Evron, 1970). According to Evron (1970), from the end
of the Algerian War of Independence in 1962, the French foreign policy gradually and cautiously
shifted to rebuild French relations with Arab countries. The appointment of De Murville as French
Foreign Minister, whom was known to favour a pro-‐Arab policy, might have been seen as a sign that
things would change (Evron, 1970). The return to power of De Gaulle in 1958, and the centralization
of power, led to the revival of traditional French policy in the Middle East (Crosbie, 1974). Although
the Constitution makes no provision for such a situation, French foreign policy since 1958 was part of
the private preserve of President De Gaulle (De Carmoy, 1969). De Gaulle conducted his own foreign
policy of which the tenet was: independence is the prize held out to national ambition (De Carmoy,
1969). This means that for France, in order to entirely make its own decisions within the context of
the Cold War, it has to create a form of independency. De Gaulle linked this desire for independency
to the nuclear ambition of France. In De Gaulle's point of view alliances are unstable, and so France
"must keep her options open and maintain her own freedom of action" (De Carmoy,
1969). That policy was not, as other policies were, first formulated by the responsible minister,
debated in the cabinet and then, so far as the major policy decisions were involved, submitted to
parliament for approval (De Carmoy, 1969). De Gaulle wanted France to establish an independent
position, that would reassert France as a global power and keep distance from Cold War
25
entanglement (Evron, 1970). By aligning with the Arab countries and maintaining close relations with
Israel, a so-‐called dual approach, De Gaulle thought France could secure a strong independent
position for herself (Evron, 1970).
While France developed her dual approach towards the Middle East, the new Eshkol government,
1963-‐1969, gradually shifted Israeli foreign policy from French oriented more towards an US
alignment (Evron, 1970). The replacement of Ben Gurion in 1963 with Eshkol as the new Prime
Minister of Israel and the removal of Peres in 1965 from government had negative effects on the
relations with France (Crosbie, 1974). Crosbie (1974) argues that when it came to policymaking, the
differences between Ben Gurion and Eskhol were more a question of style than of substance.
Nevertheless, Eshkol's lack of awareness of Israel's need for good public relations as well his
misunderstanding of France were criticized (Crosbie, 1974). At the same time decentralization of the
defence ministry in Israel opened France-‐Israel relations to the precariousness of coalition politics, a
process that could only have damaging effects when rapid decisions, discretion and manoeuvrability
were crucial to success (Crosbie, 1974). Crosbie (1974) argues that these internal political
developments played a role in the diverging alliance. Despite continued goodwill between the
defence establishment and the arms industries, developments within the governmental structure of
both countries and the changing role of France in regional politics increasingly weakened the alliance
(Crosbie, 1974). Crosbie (1974) mentions that the two countries had simply diverged to the point
where France no longer felt a need to protect Israel's interests in imports and exports.
It was during the Arab-‐Israel War of June 1967, known as the Six-‐Day War, that the special
relationship that had survived for more than a decade was unilaterally disrupted by De Gaulle
(Crosbie, 1974). Tensions heightened again between Egypt and Israel due to the Egyptian takeover
of UNEF positions and the closing of the Strait of Tiran to Israeli shipping on May 22 1967 (Crosbie,
1974). Until this closing of the Strait of Tiran, the limits of French-‐Israeli co-‐operation had not been
fully tested (Kolodziej, 1971). The end of the Algerian War of Independence in 1962 and the
continuous decrease of French influence in the region had effectively eroded much of French and
Israeli foreign policy perspectives (Kolodziej, 1971). Eskhol replied to Egypt that Israel would see any
interference with freedom of Israeli shipping as an act of aggression and immediately sent Foreign
Minister Eban to Paris to outline the threat posed by Egypt (Bickerton and Klausner, 2005). Eban
reminded De Gaulle to France's commitment from 1957 to interpret any Egyptian attempt to close
the Strait of Tiran as an act of war and respond adequate to that act of war (Bickerton and Klausner,
2005). The refusal of France to honour its obligation to defend Israel's access to the Strait of Tiran is
to some degree explained by the fact that De Gaulle's thought no settlement of the Middle East was
possible without the approval of the Soviet Union (Kolodziej, 1971). France was not willing to oppose
26
against the Soviet Union, whom supported Egypt, and thereby make a mess of its foreign policy since
the possibility of a global war arising from a regional conflict was a genuine concern of De Gaulle
(Kolodziej, 1971). In case of such an event the Eastern Mediterranean struggle would inevitably spill
over into the Maghreb, France's sphere of influence, and threaten to spread into Sub-‐Saharan
Francophone Africa (Kolodziej, 1971). Siding with Israel would also extinguish the emerging French
effort to improve its relations with the Arab countries (Kolodziej, 1971). Furthermore, De Gaulle
hoped to secure France's oil supply independently from other Western nations and saw
opportunities for the widening of export markets for French arms sales (Crosbie, 1974). During the
meeting with Eban, De Gaulle acutely said the following: "You must on no account start a war. The
country that fires the first shot will lose the friendship of France" (Kimche and Bawley, 1968). As a
response Eban explained that in fact the war had already started by the closing of the Strait of Tiran
and reminded De Gaulle of the French statement supporting the right of free passage in the Strait of
Tiran that had been issued in 1957 (Kimche and Bawley, 1968). According to Kimche and Bawley
(1986), De Gaulle answered by saying that, "Times have changed since then, and besides, I was not
President then".
In reaction to the Egyptian mobilisation and the closing of the Strait of Tiran, Israel launched a pre-‐
emptive airstrike attack destroying most of the Egyptian air force on the ground (Bickerton and
Klausner, 2005). This strike gave Israel air control over the region, which was crucial in its strategy.
Because of a signed defence pact between Egypt, Syria and Jordan and misleading information from
Nasser that Egypt was successful at the southern front with Israel, Jordanian troops began to fire
from across the borders of Jerusalem (Bickerton and Klausner, 2005). This gave the Israelis the
possibility to take control over the Old City of Jerusalem and the entire West Bank from Jordan
(Bickerton and Klausner, 2005). Israel then turned towards Syria that had been attacking Israel's
northern towns by air and artillery. Israel destroyed two thirds of the Syrian air force and did not
stop until the Golan Heights were captured and a ceasefire was signed (Bickerton and Klausner,
2005). According to Kolodziej (1971), although France officially announced its neutrality in response to the
Six-‐Day War, within the UN it supported the general Arab position. France biased neutrality in favour
of the Arab view is also confirmed in its UN votes on key issues, like the Yugoslav resolution from June
1967, where it called for the immediate withdrawal of Israeli forces without reference to security
guarantees for Israel (Kolodziej, 1971). This pro-‐Arab vote of France has to be seen in the
context of the structuring of an international alliance and therefore can be typed as serving a tertiary
objective in Barber's (1979) framework.
27
It was on June 5, the first day of the Six-‐Day War, that De Gaulle on behalf of France officially
imposed an embargo, thereby suspending the delivery of war materials to Israel (Evron, 1970). The
official definition of the embargo was that it applied to all offensive weapons, but it later appeared
that this definition effectively only covered the delivery of new Mirage V fighter jets that had to
replace the Mirage III's, until then Israel's main striking force (Evron, 1970). France refused to deliver
the fifty Mirage V’s that were ordered by Israel previously, and continued to refuse even after the
Six-‐Day War and complete payment in April 1968 (Crosbie, 1974). The French embargo has to be seen in relation to the threat of an Arab oil boycott in 1967. On June
4, oil ministers from a number of Arab oil producing countries gathered in Baghdad and agreed upon
an embargo that was aimed at countries that 'commit or take part in aggression against the
sovereignty, territory or territorial waters of any Arab state' (Daoudi and Dajani, 1984). The Arab oil
embargo was firstly installed in order to deter Western nations from lending military support to
Israel in its war with the Arab states and secondly to punish those nations which did not responded
to Arab warnings, but actively intervened on Israel's side by supplying it with arms and ammunition
(Daoudi and Dajani, 1984).
3.2 The early development of Israel's military industry up to 1967 Since the beginning of the post WWII era Israel has been most concerned with its national security
(Rodman, 2001). Israel's preoccupation with security must be seen in the context of an alien and
hostile environment in which the state is established by force of arms (Naaz, 2000). The primary
motivation for Israel to build a military industry was survival and a series of wars made it natural for
Israel to develop a military industry of its own (Naaz, 2000). Only during the first five decades of its
existence Israel already fought six full scale wars with its Arab neighbours: The 1948-‐1949 War of
Independence, the 1965 Suez War, the 1967 Six-‐Day War, the 1969-‐1970 War of Attrition, the 1973
Jom Kippoer War and the 1982 Lebanon War (Rodman, 2001). In order to survive as a state and even
try to prevent future wars Israel had to develop a capable arms industry, which had great
consequences for the state's economy. This section describes the early launch and development of
Israel's military industry from 1933 until the Six -‐Day War in 1967. The Israeli military industry is older than the state itself and traces its origins back to the days of the
Haganah fighters (Naaz, 2000). During the struggle for a Jewish independent state, the military
strategy was focused on self-‐reliance (Naaz, 2000). Therefore in the period, 1946-‐1948, Haganah
fighters were in need of small arms and explosives and in order to produce these, early efforts were
made to improvise a munitions base (Naaz, 2000). According to Naaz (2000), the military workshops,
28
collectively known as Israeli Military Industries (IMI), were set up from 1933 onwards and formed
the base of the defence industry that played a vital role in the survival of Israel during the War of
Independence in 1948. As soon as the British left Palestine, the Haganah fighters came out from
underground and set up several military plants for production and increased the level of arms
procurement in order to create military preparedness in case of war (Naaz, 2000). According to Naaz (2000), during the first two decades Israel's priority was to establish proper
circumstances for modern military production lines. In the early 1950s, the military industry was still
small and its extent was quite limited, nevertheless it was already providing employment and
specific training for its workforce and introduced some new technology (Steinberg, 1985). Due to the
continuous threat to national survival, Israel had to find an external source for the procurement of
weapons and military technology and found its partner in France (Sadeh, 2001). Minister of Defence,
Peres, outlined in an early stage the significance of self-‐sufficiency and demanded that all necessary
equipment, including more sophisticated material, would be produced in Israel (Sadeh, 2001).
Nevertheless, such level of production both in quantity and quality would take a long time, and until
then Israel had to fight for its existence with imported military equipment (Sadeh, 2001). According
to Sadeh (2001), this concept of Israeli self-‐sufficiency in the military industry was a result of four key
principles varying from political to economical and pragmatic. Firstly, the refusal of foreign powers to
sell essential weaponry (Sadeh, 2001). Secondly, the accomplishments of Israeli developers that
allowed the Israeli Defence Force (IDF) to obtain a crucial advantage on the conventional battlefield.
Thirdly, the lower cost for producing the military equipment in Israel, instead of importing. Finally,
the necessary weapons systems that were needed for a regional deterrence posture were not
attainable from other sources. Despite the fact that in the decision to launch a military industry, political factors such as security
were leading, Ben Gurion, Eshkol and Peres foresaw a pioneering role for the military industry in the
economic development of the state (Steinberg, 1985). According to Steinberg (1985), the
industrialization of Israel was second in importance, only after the security issues, and technology
was seen as the base of industrialization. The military industry in lower developed countries, like
Israel at that time, could be an important force for both modernization and industrialization and
thereby for economic progress (Benoit, 1978). Benoit (1978) argues that the military industry has
positive effects on the national economy via four main channels. Firstly, in creating employment for
the workforce. Furthermore, in providing education, technical training and medical care that can
have a high civilian utility. Thirdly, for military operations a variety of public infrastructure like
airports, communication networks, roads, etc. were needed. Finally, the military industry stimulated
29
scientific and technical progress that was necessary for the military industry and that could have spill
over effects for the civilian industry (Benoit, 1978).
According to Steinberg (1985), local military production would be valuable in providing high-‐level
employment for the more educated immigrants and bring opportunities for others to learn technical
skills while contributing to their country. Steinberg (1985) argues that many high-‐skilled employees
might have left the country given the underdeveloped state of the civilian industry and the absence
of a military industry. However, the employment in the military industry averted such a 'brain drain'
and even attracted high-‐skilled immigrants (Steinberg, 1985). One of the immigrants and
representative of the Israeli approach towards modernization was the American aviation engineer,
Al Schwimmer (Senor and Singer, 2009). Schwimmer was asked personally by Peres to launch the
Israeli aviation industry, after Peres stated that "A high standard of living, and a rich culture of
spiritual, political and economic independence are not possible without aerial control" (Senor and
Singer, 2009). This was in line with both the short-‐term military strategy as well the bigger purpose
of creating industries in Israel (Senor and Singer, 2009). Schwimmer argued that there was no reason
why Israel could not buy planes cheaply, repair and improve them, and export them to militaries and
airlines while building its own commercial industry (Senor and Singer, 2009). Within five years,
Bedek, the airplane maintenance company Schwimmer founded in 1953 that later was renamed
Israel Aircraft Industries (IAI), became the largest private employer in Israel (Senor and Singer, 2009).
In 1966 already around 4,000 people worked at IAI and by 1980 the workforce was around 22,500
(Naaz, 2000). Soon the military industry had the capacity to tailor and develop new weapons that
were not available yet on the market and created for Israel a possibility to even export military
products (Sadeh, 2001). The development of the military industry in the first two decades after the proclamation of the state
of Israel can be best explained in two different stages. The first stage, from the late 1940s until the
mid-‐1950s, focused on increasing the degree of self-‐sufficiency in the field of small arms,
ammunition and mortars and repairing WWII remnants in order for direct use by the IDF (Sadeh,
2001). During that time around 5,000 people were directly employed by the military industry (Sadeh,
2001). The second stage, between 1955 and 1967, was marked by the close cooperation between
Israel and France and resulted in licensed production of more complex weaponry (Sadeh, 2001). As a
consequence of the Suez War of 1956, Israel faced a swift inflow of fighter jets, tanks, helicopters
and new communication systems that led to a growing demand for the maintenance facilities
(Sadeh, 2001). As a result, several military-‐related industries and military concerns like IAI and the
National Armaments Development Authority (RAFAEL) expanded quickly (Naaz, 2000). Israel now
gained the capability to modify and disassemble aircrafts, tanks and even electronic systems and in
30
the early 1960s attention shifted to establish an electronics industry (Naaz, 2000). By the 1960s,
Israel's military industry had developed from producing small arms into coproducing sophisticated
weaponry like aircrafts and complex electronics (Naaz, 2000). This expansion was also reflected in
the growth in employment of the military industry, that by 1967 had reached 14,000 employees, a
significant amount for Israel (Sadeh, 2001). Benoit (1978) outlines that for lower developed
countries military establishment can have a significant impact in the process of modernization via so-‐
called productive investments and spill overs from the military to the civilian industry. In Israel the
growing military industry had a tremendous impact on the national economy and over the period of
1950 until 1965 Israel's annual GDP growth was around ten percent, making the GDP growth the
second highest of all lower developed countries, while Israel's investment rate was highest with
around 30% (Benoit, 1978). Section 4 focuses on the unintended effects of the French weapon embargo on Israel in 1967. First
the short terms effect for both France and Israel are outlined, and finally the long term effects of the
embargo for Israel are discussed.
31
Section 4: The unintended effects of the French weapon
embargo on Israel in 1967
This section describes what the unintended effects of the French weapon embargo on Israel in 1967
have been for the target country, Israel, and the sender country, France. The short term effects for
Israel and France are focused around three segments that are heavily intertwined with each other
for both countries: military, economically and politically. Section 4.1 focuses on the short term
effects for Israel, while section 4.2 outlines the short term effects for France. Section 4.3 focuses on
the long term effects for Israel's economy, specifically with regards to spill-‐over effects from the
military industry to the civilian industry.
4.1 Short term effects for Israel According to Galtung (1967), a nation that is exposed to an embargo is forced to find either internal
or external substitutes for the goods in question. Galtung (1967) explains that the receiving nation of
an economic sanction, in this case Israel as a target of the French weapon embargo, is left with three
options. The first option for the target is to train itself in doing without certain commodities that are
embargoed (Galtung, 1967). In the case of Israel this counterstrategy was not an option since the
supply of weaponry was necessary for its survival and existence, and building up an own capacity
was not possible in the short term. Therefore Israel fell back to its pre-‐state manner in getting
weaponry, namely smuggling (Crosbie, 1974). De Gaulle's main miscalculation while imposing the
embargo was that he did not fully understood the depth and extent of pro-‐Israel feeling that was
apparent in French society and particularly at a few important leaders of the military industry
(Crosbie, 1974). According to polls on June 6 1967, 65% of the French population pronounced itself
as pro-‐Israel, while only 20% was pro-‐Arab (Crosbie, 1974). Some key figures in the French aircraft
industry were powerful political and funding personalities and of Jewish origin, for example Dassault
and Szydlowski (Crosbie, 1974). Szydlowski was the owner of a manufacturer of engines for
helicopters called Turboméca, and visited Israel several times since his company had a long history
of doing business with the Israel defence establishment (Crosbie, 1974). The response of the
industry not to follow the imposed embargo was without a doubt driven by the fear that the
embargo would obstruct future arms sales both with Israel and other countries (Crosbie, 1974).
Particularly once Israel had completed the $65 million payment for the Mirage V and France still
refused to deliver the planes (Crosbie, 1974). According to Crosbie (1974), on the eve of the Six-‐Day
War large-‐scale arms shipments were ferried to Israel by French military transport, while twenty
Mystere III jets loaned to the Israeli Air Force. The military establishment and related defence
32
industries continued to elude the embargo on arms to Israel (Crosbie, 1974). Crosbie (1974) states
that spare parts, replacements, 'defensive material' and 'low offensive capacity material' evaded the
embargo until by the end of 1967 only the Mirages remained under embargo. In fact, during 1968
arms supplies from France to Israel reached the high pre Six-‐Day War levels and relations between
the French arms industry and Israel could never have been better (Evron, 1970). For De Gaulle it was
extremely irksome to be confronted with such disobedience from a vital industry and in particular
from people he expected to be among his closest supporters (Crosbie, 2015). Besides smuggling, the second counterstrategy for an embargoed nation could be to trade via third
parties or change imports to a third party (Galtung, 1967). This is what Israel had to do now that the
arms race in the Middle East was accelerated at the moment that Israel lost its most reliable arms
supplier (Senor and Singer, 2009). Israel immediately initiated a new and apparently more effective
source of arms with the US, that already had begun to sell weapons to Israel in 1962 (Evron, 1970;
Senor and Singer, 2009). From the Six-‐Day War on the US–Israeli relationship assumed a profound
new orientation and dimension with Israel as a strategic asset to American interests (Rubenberg,
1989). According to Rubenberg (1985), the idea of Israel as a strategic ally became an absolute
doctrine of orthodox American politics and resulted in virtually unlimited quantities of military
equipment and economic assistance, so de facto a new alliance was formed. Nevertheless the
French betrayal had built a consensus in Israel that it could no longer rely so heavily on foreign arms
suppliers and Israel had to find ways for not becoming too dependent (Senor and singer, 2009). This
succeeded partially due to the activism of the American Jews that stimulated the general public's
fascination with Israel since the Six-‐Day War and was also due to the broad ties with American
business that benefitted from trade with Israel (Steinberg, 1985; Oberg, 1975). Rodman (2001)
mentions that at an early stage Ben Gurion foresaw that perhaps Israel could never be completely
self-‐sufficient, leading to a guiding principle in Israel's national security. Ben Gurion realized that as a
small state with limited resources, Israel could not afford to be isolated from the world community
during wartime and Israel should always have at least one 'great power patron' (Rodman, 2001). The
relation that Israel established with the US was broader, also in the civilian field, than the previous
relation with France (Oberg, 1975). According to Oberg (1975), the US established 63 manufacturing
subsidiaries in Israel of which 22 were active in the electronics and aerospace industries, but not
mainly in the production of arms. Companies like General Electric Engines and Wright Aeronautical
were keen to establish research and development centres in Israel, in part due to the advantage of
relatively low labour costs of Israeli high-‐skilled engineers with $6 an hour compared to $15 in the
US (Oberg, 1975). All this in combination with a specific government policy to stimulate the high-‐
skilled industry brought employment towards Israel and secured the basis and infrastructure for a
33
local high tech industry (Oberg, 1975). As if today Israel is also known as the "Startup Nation" and
has an economy that is strong in technological innovation that traditionally had been pushed by the
demands of the military industry (Senor and Singer, 2009).
Thirdly, the target could restructure its national economy in order to absorb the shock of the
boycott, by producing locally the imported commodities denied (Galtung, 1967). In order to survive,
Israel had to restructure its economy and focus on the development of a full-‐scale military and
civilian industry that were closely integrated (Oberg, 1975). The embargo included weaponry for
which Israel already had paid, specifically Mirage aircraft and fast patrol boats (Steinberg, 1985). Now
that the Mirage could not be imported anymore, IAI started to produce an Israeli version of the
Mirage III, the Nesher and later the more advanced version called the Kfir (Oberg, 1975). This led to
gradual accumulation of technical capabilities and production skills that later resulted in the
development of tanks, various types of missiles, artillery and ammunition for these various weapons
(Steinberg, 1985). Or as one of Israel's first high tech entrepreneurs, Yossi Vardi said "The two real
fathers of Israeli high tech are the Arab boycott and Charles De Gaulle, because they forced on Israel
the need to go and develop an industry" (Senor and Singer, 2009).
Immediately after the French weapon embargo of June 1967, Israel had to shift its policy towards
more self-‐sufficiency with regards to producing its defence needs (Naaz, 2000). According to Naaz
(2000), it was this sense of urgency that led Israel into a ground breaking industrial revolution of
which the main priority was the manufacturing of military equipment. Israel launched its military
industry on a large scale and within three years it had established an advanced arms industry that
was unmatched in terms of technological sophistication by other lower developed countries (Naaz,
2000). Naaz (2000) argues that, partly in line with Benoit (1978), besides the urgent need for security four
economic arguments form the base of Israel's policy on the military production of that period.
Firstly, an increase in employment opportunities for both the low-‐skilled as well as the high-‐skilled
labour force (Naaz, 2000). Secondly, Naaz (2000) mentions the spill-‐over effects that are a result
from research and development in the military industry. These spill-‐over effects could increase the
level of sophistication, technological innovation and other applications in the civilian industry (Naaz,
2000). Thirdly, domestic production would reduce the amount the import of military products and
thereby narrow or reduce the Israeli trade gap (Naaz, 2000). Fourth, Naaz (2000) argues that foreign
sales of Israeli military products would earn foreign currency through import substitution and
subsequent export promotion.
34
In the period from 1967 to 1970, the military industry intensified research and development and its
output quadrupled (Naaz, 2000). Benoit (1978) mentions Israel as an example of a country where
because of military tensions employees cooperated more effectively and productively, which had
positive effects for the national economy. Benoit (1978) explains that a threat on national security
inflicts a strong influence on most individual consciences and appears to justify imposing difficult
and often painful adjustments on the individual, like pay cuts or working more shifts. Furthermore, a
common enemy can work as an amplifier in nation building and national pride, which both can have
positive effects for the nation's productivity since employees believe their work is essential (Benoit,
1978). Employment in the military industry rose from 14,000 in 1966 to 34,000 in 1972 and Israel
was now able as an independent producer to make major military subsystems as well fighter jets
(Sadeh, 2001). In particular the aircraft industry grew rapidly with 4,000 employees in 1967 to more
than 7,500 one year later (Steinberg, 1985). As Table 1 shows, in the period from 1968 to 1979
employment almost tripled, making the IAI Israel's largest employer with 21,500 employees
(Steinberg, 1985). As a result, the procurement of local produced weapons system experienced a
real growth of around 85% in that period and the metals and electronics industries also benefited
from that growth by absorbing around 35% of industrial investment (Naaz, 2000). It was this post
Six-‐Day War period that set the basis for the Israeli military industry to become the fifth largest arms
exporter in the world, competing successfully against market leading conglomerates (Sadeh, 2001). Table 1: Number of employees in the Israeli Aircraft Industries
Source: Steinberg (1985). According to Sadeh (2001), the tremendous growth of the Israeli military industry was a combination
of policy and circumstances, of which the French embargo and the sense of urgency due to the Six-‐
Day War were crucial. Sadeh (2001) argues that in spite of the traumatic experiences of WWII, the
Jewish nation and state were still subjected to existential threat by the Arab world and this led to
the institutionalization of the 'centrality of security' concept, both psychologically as well materially.
The 'centrality of security' is best explained by the principles of defence and foreign affairs policies
35
that had a pro-‐Western orientation, a preference for self-‐reliance, a 'Realpolitik' that is based on
practical rather than ideological considerations, acceptance of the territorial status quo of 1948, a
military strategy of deterrence and pre-‐emptive war and striving for autarky in military weapons and
equipment (Peri, 1981). The unexpected embargo by Israel's closest ally, France, strengthened this
philosophy and reaffirmed that in order to survive Israel has to be as self-‐sufficient as possible when
it came to military needs (Sadeh, 2001).
4.2 Short term effects for France Evron (1970) outlines that the French embargo had three negative effects for France. Firstly, France
lost the position of potential mediator in the Arab-‐Israeli conflict and this further reduced its status
as a superpower (Evron, 1970). Since De Gaulle returned as President in 1958 he was determined to
regain the French status as an international superpower and therefore was not willing to jeopardize
its relation with the Soviet Union by supporting Israel (Heimann, 2010). De Gaulle believed that a
four power agreement between the US, Great Britain, the Soviet Union and France, should settle the
conflict between Egypt and Israel without war (Heimann, 2010). France's role as a potential mediator
in the Middle East legitimized in large part its presence on the security council of the UN (Kolodziej,
1971). Since France supported Israel during the 1950s and the early 1960s it had some amount of
influence in Middle East affairs (Crosbie, 1974). Moore (2010) argues that arms sales are
fundamentally different from other commodities since it represents a direct transfer of the
capability to carry out political violence, making arms export decisions uniquely political decisions.
Nevertheless, when it came to Israel's decision to launch an attack on Egypt at the beginning of the
Six-‐Day War in 1967, France failed to deter Israel to do so and thereby lost its reputation and
prestige as a superpower (Heimann, 2010). Heimann (2010) argues that the threat of a French
embargo was ineffective since the Israelis perceived the crisis very differently from the French. For
Israel survival was at stake and therefore French war material mattered less than political support
from the US (Heimann, 2010). The Six-‐Day War exposed the limits of France's patronage of Israel and
is best symbolized by De Gaulle's words, "Israel has nothing to ask from us and we have nothing to
offer it." (Heimann, 2010). At the same time the disobedience of some military industry leaders in
combination with the public rage in the case of the embargo on Israel, weakened the prestige of De
Gaulle's internal position (Kolodziej, 1980). Secondly, one of the motives of the Tripartite Declaration signed by France, was to reduce the
polarization between the US and the Soviet Union by controlling the arms supply to the Middle East
(Evron, 1970). By imposing an embargo, France lost this special role and forced Israel into a situation
whereby it had to purchase a large part of her arms from the US, thereby accelerating the
36
polarization in the Middle East since the Soviet Union delivered arms to Egypt (Evron, 1970). It
appears that these so-‐called 'superpower arms sales' reinforce, rather than restrict, arms sales
resulting in an arms race (Kolodziej, 1980). Evron (1970) states that an embargo in the Middle East or
the idea that future supplies of arms are endangered, paradoxically leads to an acceleration of the
arms race since it gives a strong argument for buying immediately. Evron (1970) states that the third, negative effect for France was the fast drive of Israel towards self-‐
sufficiency in arms production as a consequence of the embargo. As a result, France lost a lucrative
market if it would ever decide to lift the embargo, as well a new competitor in the market for arms
sales since Israel joined the weapons producing and exporting countries (Evron, 1970). It was only
when De Gaulle imposed a complete embargo, on 3 January 1969 as a response to the Israeli attack
on Beirut airport, that the drop in orders for French arms fell (Evron, 1970). Compared with orders of
1968 in the aircraft industry fell by 52% and in overall arms industry sales decreased by 38% (Evron,
1970). Evron (1970) states that this fall in arms sales created heavy pressure since the French arms
industry employed 280,000 workers and its production could not be fully absorbed by the French
demand. Therefore the continued sales of arms and aircraft were thought necessary in order to
sustain the French arms industry (Crosbie, 1974). Nevertheless, as a result of the loss of Israel as an
export market, new opportunities arose. Kolodziej (1980) argues that France was no more restricted
in arms sales to Israel and the economic considerations, not strategic or foreign policy, have become
the major pillar for French arms transfer. By 1970 French focus concerning arms sales moved from
Israel towards Latin and South America, but mainly to the Arab states (Crosbie, 1974).
As a reward from the Arab world, orders were placed in France from February 1968 to 1970 worth of
$296 million in heavy weaponry by Saudi Arabia while Iraq placed an order of $150 million for the
delivery of 52 Mirages fighter jets (Crosbie, 1974). By 1970 total arms export increased by 11,5%
over 1969 with a total of $453 million and arms exports was around ten percent of all national
exports (Crosbie, 2015). Now France was able to expand arms exports and focused on the Arab
countries with successful deals with Iraq, Saudi Arabia, Libya, Algeria and Lebanon (Evron, 1970;
Kolodziej, 1971). In 1970 already 25% of all French heavy arms sales was to Arab countries and it
opened more commercial opportunities with a population of 100 million compared to Israel with 3
million at that time (Kolodziej, 1971). Specifically the French sale to Libya in 1970 of 110 Mirage
aircrafts strengthened France's alignment with the Arab countries and was seen as a support for
Libya as an independent state (Kolodziej, 1971). Kolodziej (1971) argues that this sale of $400 million
opened the way to the delivery of more supporting military equipment as well gave French oil
companies some limited rights in Libya. This was in particular important since at that time 90% of
French oil imports was provided by six Arab countries while France itself could only supply two
37
percent of its petroleum energy need (Kolodziej, 1971). Because oil supply was crucial to French
economic growth, there was a big incentive to take the role as main arms supplier for the Arab
countries, even if this would further destabilize the region (Kolodziej, 1980).
The argument that economic incentives shifted France's policy towards a pro-‐Arab position is
supported by the data shown in Table 2 (Kolodziej, 1971). Table 2 shows the trade relations between
France and the Arab states in the period 1965 to 1970, divided into Eastern and Western
Mediterranean states. The reason for this division is that the Eastern Mediterranean states were
more involved in the wars and conflicts with Israel than the Western Mediterranean states. This
table gives a clear overview of the fast growth in trade between France and the Eastern Arab
countries particularly after 1967. The total growth of French imports from the East Arab countries in
the period of 1965 to 1970 is 56%, while exports even increased with 136% over the same period of
time. Most of the trade growth happened after 1967 and can be directly linked to the French
weapon embargo on Israel and the subsequent extensive arms sales to these Arab countries. At the
same time the increase of French imports from Western Arab countries over the same period was
less than 5%, while French exports even decreased with 0,4% to Western Arab countries.
Table 2: French imports and exports, including oil, with selected Eastern and Western Arab states
from 1965 to 1969 in millions of Francs.
Source: Kolodziej (1971).
38
4.3 Long term effects on Israel's economy This section describes the long term effects on Israel's economy that are a result from the French
weapon embargo of 1967. The effects on the Israeli economy are versatile, but this section focuses
mainly on the spill-‐over effects of the military industry. Two successful cases that are both
connected to the French weapon embargo of 1967, are highlighted. Firstly, Israel's exports of
Unmanned Aerial Vehicles (UAVs) and secondly the revolutionary medical device called PillCam. According to Senor and Singer (2009), Israel's economic development is one of two great expansions
of which the first occurred from 1948 to 1970 and the second from 1990 until today, see Figure 1
and Figure 2. During the first great leap, GDP per capita almost quadrupled and the population
tripled, despite of Israel's confrontation in three full scale wars (Senor and Singer, 2009). The first
great leap was accomplished through an entrepreneurial government investing heavily in the
military industry (Senor and Singer, 2009). Israel's military industry at that time was bigger than the
primitive private sector (Senor and Singer, 2009). Figure 2 shows that in one year, between 1967 and
1969, Israel's arms exports increased from about $280 million to $1.3 billion. The quadrupling of the
arms export can be seen as a direct result of the Six-‐Day War and Israel's accelerated arms industry.
The second period of great expansion was realized because of a thriving entrepreneurial private
sector, specifically in the high tech industry, that at first was catalysed by government action (Senor
and Singer, 2009). Figure 1: Israel’s GDP per capita compared to World average from 1960 to 2014
Data: World Bank (2016).
39
Figure 2: Israel's arms exports from 1960 to 2014
Data: World Bank (2016). According to Naaz (2000), the acceleration in development of the military industry had two primary
reasons, namely: the unreliability of arms suppliers and economic factors that played an important
role. The years between the Six-‐Day War and the Jom Kippoer War, from 1967 to 1973, were marked
by a tremendous rise in defence expenditures because of new security requirements and the shift to
more costly US technology, see Figure 3 (DeRouen, 2000). In general Israel's overall defence
production strategy is one of military import substitution and more of the defence consumption is
spend domestically as Figure 4 shows (DeRouen, 2000). Economically, the potential to save foreign
capital via the export of military goods, and secure spinoffs from the sophisticated defence research
and developments are perhaps the most salient factors (DeRouen, 2000). After the Six-‐Day War
Israel devoted around two thirds of its military budget to domestic enterprises (see figure 4). At the
same time there was an increase in total defence consumption in Israel from 7% of GDP in 1965 to
20% in 1969 (see figure 3). A spill over effect that Looney (1989) mentions is that defence spending
leads to an increase demand for industrial sector products and this in turn creates a greater demand
for high-‐skilled employees. According to DeRouen (2000), the Arab-‐Israeli arms race moved more
towards a qualitative arms race, which essentially is a competitive hunt for high-‐tech defence
systems (DeRouen, 2000). These factors created facilities as a pull factor for high-‐skilled labour and
stimulated a 'brain gain' to Israel, in particular from former SU states that faced a brain drain. For
instance, in 1990 about 184,000 Jews left the SU for Israel of which 40% was highly educated
(Jałowiecki and Gorzelak, 2004). In the period from 1980 to 1987, about 70,000 specialists and
40
10,000 students emigrated from Poland to Israel and them were 47,000 engineers and technicians,
3,500 physicians, 4,800 economists and about 4,000 science professionals (Jalowieckie and Gorzelak,
2004). According to Senor and Singer (2009), although less than two percent of the Soviet population
was Jewish they counted for 30% of doctors, 20% of engineers and so on. Senor and Singer (2009)
explain this phenomenon as an unintended effect of fierce antisemitism in the SU. The only way to
build some kind of protection, in such an anti-‐Semitic society, was to be exceptional in your
profession (Senor and Singer, 2009). Once the SU collapsed and borders were open to
emigrate, a lot of Jewish scholars left to Israel to build a new life and expected to find high-‐level
employment in the military industry (Senor and Singer, 2009).
Figure 3: Defence spending and overall investments as percentage of GDP from 1953 to 1992.
Source: DeRouen (2000). Figure 4: Defence consumption as percent of GDP from 1956 to 2002
Source: Central Bureau of Statistics (2016)
41
DeRouen (2000) argues that Israel is the only third-‐world country that has done more than
reinventing first-‐world arms technology. The level of sophistication of the Israeli arms industry
exceeds that of most countries (DeRouen, 2000). The Israeli aircraft industry developed at a fast
pace and as a consequence of new security needs the development of UAVs, also known as drones,
took off, see Table 3. Israel's pioneering work with drones dates back to the 1970s and in 1973 the
Israeli 'Tadiran Mastiff' was operational and seen as the first modern battlefield drone since it was
able to send data such as live video streaming (Tucker and Roberts, 2008). Because of this new
technology during the 1973 Yom Kippoer war, the IDF was able to look "over the hill" into hostile
territory in a safe manner (Tucker and Roberts, 2008). According to Tucker and Roberts (2008) the
use of drones was a big advantage for the field commanders and gave them a lead in the battle. This
early development and production of UAVs driven by military needs, led to a worldwide export
market for IAI. Nowadays Israel is considered to be the leading exporter of UAVs (Stockholm
International Peace Research Institute, 2015). According to Stockholm International Peace Research
Institute (2015) Israeli defence companies exported more than 60% of all drones in the world from
1985. As Figure 5 shows, the UAV industry is nowadays around $10 billion and is expected to grow
over the next decade in both military as well civilian use (the Drones Report, 2015).
Figure 5: Global Unmanned Aerial Vehicle market Source: http://uk.businessinsider.com/uav-‐or-‐commercial-‐drone-‐market-‐forecast-‐2015-‐
2?r=US&IR=T
42
Table 3: Israel's progress in weapons and military technology from 1940s to 1990s
Source: Sadeh (2001). According to DeRouen (2000), Israel went from a developing economy to a mature and diversified
one. DeRouen (2000) argues that along the way Israel experienced an increase in skilled-‐labour
through immigration, investment in high tech companies, defence spending as a result of the
entrenched military industry and the qualitative arms races and defence spin offs to the civilian
industry and these phenomena are all interconnected. Due to a certain level of production in the
military industry and the qualitative arms race, many former SU scholars immigrated to Israel in their
pursuit of high-‐level employment. This influx of high-‐skilled employees raised the level of production
as well launched a boom in high tech companies, since not all of the high-‐skilled workers could find
employment in the military industry and moved to the high tech industry. The role of the military
has been a critical factor in government supported research and development, and the issue of
civilian spill overs continue to be a major topic of interest (Honig et al., 2006). Military research and
development has generated a wealth of civilian industries, including commercial aircraft, computers,
semiconductors, microwaves, radar, satellites and nuclear energy, see Table 4 (Honig et al., 2006).
According to Honig et al. (2006), the Israeli military accounts for the majority of government
research and development expenditure and has a tradition of operating in an innovative, cost-‐
efficient manner. Employees of Israeli military research and development firms seem to
demonstrate considerable entrepreneurial behaviours that may account for a vibrant and robust
industrial environment (Honig et al., 2006). Since Israel has a conscription army while in other
countries students are preoccupied with deciding which college to attend, Israeli students are
43
focusing on the benefits of different military units (Senor and Singer, 2009). In Israel, the military can
selects from the best, while in most countries that is the other way around and the military can just
hope for the best (Senor and Singer, 2009). According to Senor and Singer (2009), the IDF provides a
broad and deep training to adolescents to produce innovative, adaptive, communicative, leadership
and problem solving skills under tremendous pressure of life and death. This kind of training
accelerates the process of maturity and at the same time can increase practical technical skills that
cannot be taught in university, like disassembling a tank. All these skills can be useful in case of
entrepreneurial activity. According to Senor and Singer (2009), in Israel private sector experiences
and education are important, but at every job interview the recruiter asks about the military service
of the candidate. It is the military service that provides the critical standardized metric for
employers, since everyone knows what it means to be an officer or to have served in an elite unite
(Senor and Singer, 2009). Thus, the IDF is often credited with playing a major role in the creation and
sustained success of the Israeli high tech industry (Breznitz, 2002). In 2015 the high tech industry
accounted for about 40% of Israel's exports and around a third of Israel's GDP. The high tech
industry employed around 12% of Israelis and technology exists in 2015 were about $15 billion
(Ackerman, 2016). The institutionalized development of Israeli high tech industry since the 1960s has been connected to
the state's security needs, to academic research, to entrepreneurial activity, and to government
policies (Zilber, 2006). According to Roper and Frenkel (2000) the Israeli high tech industry has
become an international leader for research intensive activities funded by both Israeli and
international venture capitalists, overcoming Israel's lack of prolonged industrial tradition and
shortage of capital. Part of Israel's current economic success in the field of high tech entrepreneurial
activity is explained by the spill overs of the military research and development centres (Senor and
Singer, 2009). Table 4 exemplifies how developments in certain military research fields had their
effect on civilian applications. For instance, most of the technology that is integrated in modern
smartphones originate from communication systems used in the military field.
According to Honig et al. (2006), a technology spill over arises when the activities of one organization
lead to an upgrade in the technology or productivity of another organization (Honig et al., 2006). To
highlight one case, out of many, as an example of spill over effects from the military industry to the
civil/medical industry we look at PillCam, a medical device with disruptive technology in it. PillCam is a
pill with a tiny colour camera inside that transmits data to a computer and reconstructs the image of
the patient's insides on the screen (Shamah, 2015). This new technology changes the way doctors can
diagnose their patients and treat all sorts of diseases and problems in ways that were never possible
before (Shamah, 2015). Iddan, the founder of PillCam, was employed at Israel Military
44
Industries (RAFAEL). While speaking with an Israeli doctor about the challenges in using traditional
endoscopies, Iddan realized that the optics work he was doing could provide an alternative solution
for looking into the digestive track (Shamah, 2015). Iddan used technology that was a result of
developments in different fields in the military industry, such as micro-‐electronics, electro optics,
communication and computing, to create a medical device like the PillCam, see Table 4. Eventually
the PillCam company, in which Rafael was a stakeholder, was sold in 2013 for $860 million (Shamah,
2015). Table 4: Area of military research that facilitated civilian applications in Israel
Source: Sadeh (2001).
45
Section 5: Conclusions Economic sanctions are part of a larger set of policy instruments available to governments, which
among various also consists of diplomacy, propaganda, and military interference (Baldwin and Pape,
1998). In general, economic sanctions are categorized into two main categories: financial restrictions
and trade restrictions, each of which can be employed with varying intensity and scope (Pape, 1997).
A weapon embargo is a form of a trade restriction that is very harsh, since arms sales are different
from all other goods because they give a state the most powerful tool of statecraft.
Economic sanctions also vary within the objectives they have. Economic sanctions with so-‐called
‘primary objectives’ are imposed to change the target’s policy towards a more favourable stand of
the sender(s) (Barber, 1979). Economic sanctions that have ‘secondary objectives’ are both directed
to domestic and international audience and are more symbolic in nature (Baber, 1979). These
economic sanctions are imposed to reinforce the sender state’s government or to showcase where
the sender stands (Barber, 1979). From the establishment of Israel in 1948 to 1967, France was Israel’s greatest ally and main arms
supplier (Crosbie, 1974). Once the mutual interests of France and Israel diverted, due to the end of
the Algerian War of Independence with France, the alliance also collapsed (Kolodziej, 1971). In this
context, of diverting interests and international symbolism, we have to interpret the unilateral
French weapon embargo on Israel. The French threat of economic sanctions might have served a
primary objective to shift Israel's behaviour to avoid a war, but was ineffective and did not changed
Israel's policy. The main reason for Israel not to comply, was that for Israel the blockade of the Strait
of Tiran was a matter of national security. Therefore the costs of a potential economic sanction was
too small to deter Israel from going into war. The moment Israel went into war with Egypt, France
imposed a weapon embargo, but arms were still shifted from France's military industry to Israel.
Therefore, I tend to believe that this economic sanction predominantly served a secondary
objective, namely signalling. President De Gaulle signalled France’ position to the Arab world which
improved trade relations with the Arab states and opened an export market for the French arms
industry (Crosbie, 1974).
The French weapon embargo effectively resulted in the fact that Israel was not able to receive the
fighter jets that it already had ordered. Since the supply of such weaponry was necessary for its
survival and existence Israel had to substitute its main arms supplier and did so by shifting towards
the US as its new source of arms (Evron, 1970). At the same time the French weapon embargo led to
the ‘centrality of security’ concept, which means that Israel’s security needs in order to physically
46
survive were too important to let to others (Cochran, 2000). The embargo shifted Israel’s policy
towards more self-‐sufficiency and Israeli leaders were aware that political and economic
independence were not possible without aerial control (Naaz, 2000; Senor and Singer, 2009).
Therefore Israel restructured its national economy and focused on the development of a full-‐scale
military and civilian industry that were closely integrated (Oberg, 1975). The Israeli Aircraft Industry
(IAI) started to produce an Israeli version of a fighter jet, the Kfir, and from now on would be the
only third world country able to produce very sophisticated weapon systems (Oberg, 1975;
DeRouen, 2000). Out of security needs the IAI developed further into a qualitative arms race and
attracted more high-‐skilled employees, and eventually became Israel’s largest employer with more
than 20,000 employees (Oberg, 1975). For instance the IAI was pioneering in the development of
Unmanned Aerial Vehicles (UAVs), also known as drones, and Israel was the first country that had a
battlefield drone operational (Tucker and Roberts, 2008). Furthermore the military industry has
been crucial in government supported research and development (Honig et al., 2006). According to
Honig et al. (2006), the Israeli military industry accounts for the majority of government research
and development expenditures and has a tradition of operating in an innovative, cost efficient
manner. Many of nowadays technology originates out of security needs or military research and
development and spilled over to the civilian industry that gave the technology a different
application. The Israeli high tech industry has become an international leader for research-‐intensive
activities, funded by both Israeli and international venture capitalist, overcoming Israel’s lack of
prolonged industrial tradition and shortage of capital (Roper and Frenkel, 2000). Thus the IDF is
often credited with playing a major role in the creation and sustained success of the Israeli high tech
industry (Breznitz, 2002). The spill over effects of the military industry can be found in nearly every
industry in Israel, varying from software developing companies, online security, communication
systems, electronics industry and even medical devices. Therefore it is reasonable to agree with Vardi, one of Israel’s most successful high tech
entrepreneurs when he says that: “The two real fathers of Israeli high tech are the Arab boycott and
Charles De Gaulle, because they forced on Israel the need to go and develop an industry” (Senor and
Singer, 2009).
47
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