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DE RUEHTV #2430/01 3091013
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O 051013Z NOV 09
FM AMEMBASSY TEL AVIV
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4105
INFO RUETIAA/DIRNSA FORT GEORGE G MEADE MD PRIORITY
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RUCNFB/FBI WASHDC PRIORITY
RUEKJCS/SECDEF WASHDC PRIORITY
RUCPDOC/USDOC WASHINGTON DC PRIORITY

UNCLAS TEL AVIV 002430 
 
SENSITIVE 
SIPDIS 
 
PM/DTCC - BLUE LANTERN COORDINATOR 
 
E.O. 12958: N/A 
TAGS: ETTC KOMC IS
SUBJECT: RESPONSE TO BLUE LANTERN LEVEL 3 POST-SHIPMENT 
END-USE CHECK, LICENSES 050121146 AND 050098938 
 
REF: STATE 68122 
 
¶1. (SBU) Summary:  Emboffs conducted site surveys at Israel 
Aerospace Industries (IAI) and Silver Arrow/Elbit to verify 
the receipt of gyroscopes from U.S. suppliers to be installed 
in Israeli-made unmanned aerial vehicles (UAVs).  Both IAI 
and Silver Arrow acknowledged receipt of the gyroscopes, 
noting that some of the gyroscopes had been installed in UAVs 
and delivered to the Israel Air Force (IAF), while the 
remaining gyroscopes are stored either in the companies' 
secure facilities or with the IAF.  Both IAI and Silver Arrow 
maintain sophisticated computer tracking systems that 
allegedly prevent the gyroscopes from being used in any other 
project than as stated on the export license.  Neither 
company conducts maintenance or repairs the gyroscopes; in 
one instance, Silver Arrow sent one of its gyroscopes back to 
the U.S. supplier for maintenance.  Both companies are quite 
familiar with U.S. defense export regulations.  End summary. 
 
IAI 
--- 
 
¶2. (SBU) Polmiloff conducted a site visit at Israel Aerospace 
Industries (IAI) at its facilities at Ben Gurion Airport on 
September 16; Kobi Fogler from the MOD's Directorate of 
Security Defense Establishment (MALMAB) was present during 
the visit.  IAI MALAT Procurement and Logistics Director Rami 
Cohen briefed on is division's work.  He noted that the 
MALAT divsion was founded in 1974, and currently is 
resposible for USD 330 million in annual sales with a 
wo-year backlog.  Cohen said MALAT has produced an 
delivered over 800 unmanned aerial vehicles (UAs), and 
employs over 900 persons dedicated to UA design, 
development, production, and integratio.  He listed 42 
customers from around the world, including 17 branches in 
India.  In response to polmiloff's question regarding 
potential sales to Georgia and Russia, Cohen declined to 
mention some country clients due to clauses in their 
contracts preventing public disclosure. 
 
¶3. (SBU) Cohen acknowledged IAI/MALAT's receipt of 15 
vertical VG700MB dynamic measurement unit (DMU) gyroscopes 
from Crossbow Technology, Inc., and provided copies of 
documents in support of the transaction, including the 
purchase order, end-use certificate, and export license. 
According to Cohen, three gyroscopes were installed in Heron 
UAVs and delivered to the Israel Air Force (IAF).  An 
additional gyroscope was sent to the IAF as a spare part. 
Cohen stated that the remaining 11 gyroscopes have yet to be 
assembled in UAVs; five of the gyroscopes remain in IAI 
storage, while the last six gyroscopes are currently with the 
IAF.  Fogler confirmed this account from the MOD's 
perspective. 
 
¶4. (SBU) Cohen walked polmiloff through IAI's elaborate 
computer accountability and tracking system, which includes 
the gyroscopes' serial numbers, purchase orders, project 
numbers, and whether a component is a controlled item. 
According to Cohen, controlled items are logged into this 
computer system for tracking, marked with three separate 
end-use stickers, and stored in a secure, controlled-access 
facility.  He noted that the computer system tracks the 
project for which the gyroscopes are intended.  In order to 
remove the gyroscopes from storage, an individual must access 
the computer system.  If the component is used for a project 
for which it is not intended, the computer system locks down 
after sending a system wide alert. 
 
¶5. (U) Cohen confirmed that IAI conducts no maintenance or 
repair of the gyroscopes, nor possesses the facilities or 
knowledge to repair the gyroscopes.  He explained that the 
gyroscopes are essentially closed-components -- if IAI were 
to try and crack the component open, it would harm the 
component further.  He stressed that any component requiring 
maintenance would be sent to Crossbow Technology for repair. 
Cohen was intimately familiar with regulations government the 
import of U.S.-origin defense articles, including 
restrictions on re-transfer or re-export. 
 
Silver Arrow/Elbit 
------------------ 
 
¶6. (SBU) Polmiloff and senior commercial specialist conducted 
a site visit of Silver Arrow at its facilities in Nes Tziona 
on November 2.  MALMAB's Kobi Fogler was present for this 
 
site visit, as well.  Silver Arrow General Manager Shimon 
Sarid explained that Silver Arrow was formed in 1987; Elbit 
Systems assumed 100 percent control of Silver Arrow in 2000. 
According to Sarid, Silver Arrow, or Elbit's Unmanned Aerial 
Systems (UAS) division, sells its services to Elbit and does 
not directly interface with customers. 
 
¶7. (SBU) Sarid said the UAS division employs over 1,000 
persons, and maintains strategic partnerships with Thales UK, 
General Dynamics, and UEL (UK-based rotary engines plant). 
Silver Arrow's primary UAVs are the Skylark and Hermes 
models; the Hermes 450 is the backbone of the IAF's UAV 
fleet.  Silver Arrow also provides Hermes 450s to the United 
Kingdom (Watchkeeper and Lydian programs) and Singapore. 
According to Sarid, other Silver Arrow UAV customers include 
Macedonia, Mexico, France, Canada, Australia, and Sweden. 
Sarid said Georgia was a previous customer; following the 
Russia-Georgia conflict, the MOD instructed Silver Arrow to 
cease its relationship with Georgia, Sarid said. 
 
¶8. (SBU) Silver Arrow Purchasing Manager and export control 
officer Ayelet Rott presented a thorough brief on Silver 
Arrow export control compliance, citing regulations and 
restrictions governing the import of U.S.-origin defense 
articles.  She explained that export controlled items are 
managed and traced through Silver Arrow's BAAN-ERP 
computerized system.  Rott said the BAANN-ERP system is 
interactive through all stages of the supply process, 
including product number definition, purchase order, 
inventory, and production issuance/final inspection.  All 
items requiring an export license/end-use statement are 
defined in the BAAN-ERP system as a controlled item, Rott 
said -- each tab on the interactive BAAN-ERP "windows-based" 
system includes a "pop-up" window alerting that the item in 
question requires an export license. 
 
¶9. (SBU) Rott explained that once export licenses for 
controlled items are received and filed, the item's export 
license number is entered into the BAAN-ERP computer system 
along side the item's purchase order number.  Silver Arrow's 
warehouse receives the controlled items, and enters the 
item's lot and designated project information.  The warehouse 
also marks the stored item with an export-control sticker. 
Once an item is designated to a lot and project, the BAAN 
system will block any attempt to use the item for another 
project. 
 
¶10. (SBU) Rott confirmed Silver Arrow's receipt of 22 
vertical VG34-0803 gyroscopes from Goodrich Corporation, and 
produced copies of documents in support of the transfer, 
including the purchase order, export license, and end-use 
certificate.  She noted that two of the gyroscopes have been 
installed in Hermes 450 UAVs, and have subsequently been 
delivered to the IAF.  Rott noted that one gyroscope was 
returned to Goodrich Corporation for maintenance, as Silver 
Arrow does not repair any gyroscopes.  Rott said the repaired 
gyroscope has since been returned to Silver Arrow; the 20 
remaining gyroscopes are stored with Elbit/Silver Arrow, and 
are expected to be installed in Hermes 450 UAVs and delivered 
to the IAF in the near future.  Fogler confirmed this account 
from the MOD's perspective. 
 
CUNNINGHAM