Israel puts $17bn price on peace

Israel is stepping up pressure on the US to be given an arsenal of new military equipment - including cruise missiles - as a reward for making peace with Syria, amid suspicions that it wants to acquire free American technology to adapt and sell on the world's weapons market.

Israel is stepping up pressure on the US to be given an arsenal of new military equipment - including cruise missiles - as a reward for making peace with Syria, amid suspicions that it wants to acquire free American technology to adapt and sell on the world's weapons market.

A $17bn (£10.5bn) package of requests to Washington is seen by some analysts as partly motivated by Israel's desire to obtain US systems so that its defence industry can incorporate them into Israeli weaponry.

The issue has caused strain between Israel and its closest ally, not least because the Pentagon believes that US military technology transferred to Israel in the past has been sold to other countries including China.

Peace talks between Syria and Israel were suspended last month, with no sign of their resuming. As the process, which began anew in December after four years on ice, staggered on, attention focused on the issues that have long divided the neighbours: the Golan Heights, water, troop deployments and early-warning systems. Less has been said of the haggling over missiles and money.

The Israelis are publicly lobbying to persuade Washington that it must pay dearly if Israel is to strike its final peace deal and hand Bill Clinton the place in history as Middle East peacemaker that he covets. Israel seems undeterred by the fact that it is already by far the largest recipient of US aid, or that the US Congress may balk at being asked to contribute billions to settle a distant dispute. The price for peace is what senior Israeli officials now openly refer to as "the list".

High on this list - the cost of which is estimated at $17bn but may be far higher - is a request for cruise missiles, which the US has supplied to only one other country, Britain. Israel no longer seriously tries to deny that it has an arsenal of nuclear weapons - its nuclear stockpile was debated in the Knesset for the first time last week - but it believes it needs cruise missiles in order to maintain its strategic upper hand in the Middle East.

Israel now sees the main threat to its security as coming not from the West Bank, Gaza or the Golan, but from long-range ballistic missiles in the hands of their old enemies in Tehran and Baghdad. Western intelligence believes the Iranians already have Shihab-3 missiles, with a range of 1,300 km, and are working on Shihab-5s, intended to fly 5,000km.

The US would be in violation of international treaties limiting missile proliferation if they supplied Israel with cruise missiles, but that also apparently does not worry the Israelis. They already have a useful document to flourish: in 1998, as a reward for agreeing to withdraw from part of the West Bank, Mr Clinton signed a memorandum of agreement committing the US to enhance Israel's "defensive and deterrent capabilities", which specifically cites the threat of ballistic missiles.

Neither do top Israeli officials make any secret of their desire for the cruise weapon, or of its presence on their list. That was clear last week when the Israeli military took a small party of foreign correspondents to meet the commander of the air force, Maj-Gen Eitan Ben Eliyahu, at Ramon airbase in the southern Negev desert. It is home to Apache attack helicopters and F-16 fighter jets which daily fly to Israel's occupation zone in south Lebanon to fire smart bombs at a small force of Iranian-backed Hizbollah guerrillas.

The Israelis showed off the base, a complex of bunkers and bungalows with a population akin to a small city, with evident pride, pointing out that it was paid for by the Americans as a reward for signing a peace treaty with Egypt in 1979. Now Israel wants another big pay-off.

Although he declined to give many details of "the list", Maj-Gen Eliyahu confirmed that it included a request for Awacs, compensation for redeploying forces from Golan, "real time" access to US satellites (allowing the Israelis, among other things, to target missiles) and cruise missiles.

But suspicions abound in the US that Israelis has a parallel agenda. Its defence industry - the fifth largest in the world - is renowned for its skill at adapting technology. Israeli engineers are thought to have a hungry eye on cruise, as well as other items on the list, including Awacs, with a view to exploiting the technology.

Fears about Israeli skills in "reverse technology" were graphically illustrated by a separate wrangle which surfaced last week. The Israeli air force has ordered 12 Apache Longbow combat helicopters from the US. Ultimately, it wants to buy 48. However, there is a hitch: the Americans are refusing to allow the Israelis to have access to the aircraft's "secret codes" within the software used by on-board computers. It is, said one source, a proprietary issue, driven by American concerns that the Israelis will adapt the software to their own purposes and market it themselves.

As one Washington observer put it last week: "Sometimes we seem more like Israel's cashpoint."