Blood and Iron DomesStrategic significance and American-Israeli cooperation in the future of missile defense

James HasíkWilliam Powers Doctoral FellowThe Lyndon B. Johnson School of Public AffairsThe University of Texas at Austin

16 May 2013

Introduction

As John Reed wrote in the Financial Times after the Gaza War, “if one product has come to define the high-tech military apparatus of Israel Inc., it is the Iron Dome.”1 This is timely, as the rocket bombardments of 2012 were just the latest episode of a history ballistic attacks dating back to 1969. The story of the Iron Dome has the hallmarks of other projects of military-bureaucratic insurgents: a relatively modest technical development, initially funded surreptitiously, and pushed to completion over the objections of the senior leadership of (in this case) the Israeli Defense Force. The system’s apparent success has cheered residents of southern and northern Israel alike, if it has concomitantly alarmed Hamas, Hezbollah, and ideological opponents of missile defense. But whatever the objections, defense against Islamist rocketry had become a political imperative for the Israeli government. The relative success of Iron Dome tells us that within certain limits of expectation, and subject to a sensible accounting of the costs, missile defense can accomplish strategic goals. And perhaps of great interest to the United States, the particular path of the system’s development indicates that bilateral industrial cooperation with Israel provide for excellent ongoing investment in systems born in the crucible on constant combat.

A short history of the Arab-Israeli rocket wars

Rocket attacks on Israeli civilians are really a rather old problem: the first rocket strike on Israeli, a salvo of Katyushas by the Palestine Liberation Organization (PLO), hit the

1 John Reed, “Israel: Shields Raised,” Financial Times, 31 March 2013.

northern town of Kiryat Shmona from Lebanon in 1969,2 and the PLO again fired large volumes of Katyushas (as well as 130 mm artillery shells) at northern Israel during the 1982 First Lebanon War.3 Of course, the Scud bombardment of the 1991 Gulf War cannot be forgotten. It has even been some years since Israeli and its enemies first entered a cycle of retaliation over smaller rocket attacks. A barrage by the Lebanese Shi’ite militia Hezbollah against several towns in the north back in April 1996 prompted the Israeli government to invade southern Lebanon once again, in a campaign it dubbed Operation Grapes of Wrath.

Hamas, the Islamist organization now controlling the Gaza Strip, did not actually attack Israel with rockets until April 2001, but the initially desultory fire increased to perhaps a launch or mortar attack every other day from 2003 through 2004.4 From 18 to 23 May of 2004, the Israeli Defense Force (IDF) undertook Operation Rainbow, a campaign to retaliate to find and destroy smuggling tunnels bringing in munitions-making materiel from Egypt. On the second-to-last day of this effort, the IDF eliminated Hamas leader Ahmed Yassin in a targeted airstrike. While intendedly surgical, this sort of killing would later prompt a more vicious recurrence of a cycle of violence.

For the Israelis, direct defense has been difficult, as the actual launchers for short-ranged rockets are extraordinarily difficult to find. As they are basically expendable steel tubes, attacking them after launch has had little suppressive effect. Over time, retaliation was also proving only somewhat deterring. But later in 2004, Brigadier General Dan Gold, an engineering officer with a doctorate in mathematics, became chief of the research and development directorate (Maf'at) of the Israeli Defense Force (IDF). That August, he put out a call to industry for help with defenses against rockets. In March 2005, he surreptitiously decided to fund the project without higher approval, and assigned it to Rafael without a competition. Israel’s auditor general would strongly complain about this in 2008, but for the time, the project was on.5

Also in March 2005, the Israeli government evacuated all its troops and settlers from Gaza. “Almost immediately thereafter," as airpower theorist Benjamin Lambeth wrote, Hamas stepped up its rocket attacks, firing fully 1,200 rockets into Israel the next year.6 The rocket problem got even uglier in 2006. After Hezbollah killed several Israeli soldiers patrolling the south side of the border, the Israeli cabinet launched the Second

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2 Ian Spierco, “Shield of David: The Promise of Israeli National Missile Defense,” Middle East Policy, Vol. XVII, No. 2, Summer 2010, p. 128.

3 Uzi Rubin, The Rocket Campaign against Israel during the 2006 Lebanon War, Begin-Sadat Center for Strategic Studies, 2007, p. 1.

4 Yoel Marcus, “Both Attacked and Condemned,” Haaretz, 21 November 2006.

5 Charles Levinson and Adam Entous, “Israel’s Iron Dome Defense Battled to Get Off Ground,” Wall Street Journal, 26 November 2012.

6 Lambeth, p. 94; Daniel Byman, A High Price: the Triumphs and Failures of Israeli Counterterrorism, Oxford University Press, 2011, p. 183.

Lebanon War, and Hezbollah responded by firing, over the course of 34 days, almost 4,000 rockets into norther Israel.

At the beginning of the campaign, IDF chief of staff Lieutenant General Dan Halutz proffered the opinion that “short-range rockets are not a decisive weapon.” But as Efraim Inbar of Bar-Ilan University later wrote, one-quarter of those weapons “hit urban areas and paralyzed the whole of northern Israel, its main port, refineries, and many other strategic installations. Over one million Israelis lived in bomb shelters and about 300,000 temporarily left their homes and sought refuge in the south.” 7 Physically, the bombardment left 53 dead, and 2,000 homes destroyed or severely damaged.8 By this point, rockets had done more than kill; they had left Israelis with tangible daily fears that caused widespread economic disruption.

Thus, in February 2007, Defense Minister Amir Peretz approved the Iron Dome project for full development. Peretz lived in Sderot, the southern Israeli town most heavily bombarded by Hamas, and wanted something done. While relatively few rockets were fired that year, firing stepped up in 2008, as the Gazans built more tunnels, and smuggled in more explosives and propellants from Egypt. A huge increase in rocket fire in the first half of the year was followed for most of the latter half by only a few dozen, after a ceasefire brokered by the Egyptian government took effect. But by December 2008, Gazan rockets were reaching as far as the south-central towns of Ashkelon and Beersheba. On 27 December 2008, the Israeli government launched Operation Cast Lead, a ground invasion of Gaza intended again to kill or capture the rocketeers and destroy their smuggling tunnels. This punitive incursion, which lasted through 19 January, was enough to stop two years of rocket fire in the south—but it was also expensive.9

A modest technical development

Meanwhile, development of the anti-missile system was continuing furiously. Early on, prime contractor Rafael and the Maf'at had together settled on missiles, rather than lasers or guns, as the preferred mechanism. Lasers were generally considered technologically immature, and chemical lasers, the most technologically mature type, would require constant recharge with hazardous chemicals. Quick-firing guns were more seriously considered, but were judged too short-ranged for protecting any but

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7 Efraim Inbar, “How Israel Bungled the Second Lebanon War,” Middle East Quarterly, Summer 2007; quoting Ofer Shelah and Yoav Limor, Shvuyim Bilvanon, Tel Aviv: Miskal, 2007, p. 160. Of course, General Halutz also thought that taking territory had become irrelevant.

8 Rubin, op. cit. p. 14.

9 Benjamin S. Lambeth, "Israel’s War in Gaza: A Paradigm of Effective Military Learning and Adaptation," International Security, vol. 37, no. 2, Fall 2012, p. 93.

point targets.10 Guns do have greater responsiveness in terminal defense, and thus could have a useful supporting role. As one of Iron Dome’s developers later noted, “the more time we have, the greater the precision… Gush Dan [the region of Tel Aviv] is easier for us than Sderot.”11 That is, missiles do not work quite so well against rockets with flight times under 30 seconds. Fortunately, anti-aircraft cannons like Raytheon's Centurion do: for immediate threats, the IDF could offset the most threatening flight paths from Gaza with a gatling gun every half-kilometer or so.12

Lasers and guns were also limited to serial engagements of individual rockets, but missiles could engage multiple inbound weapons in parallel.13 And for that matter, “contrary to common belief,” missiles had been calculated to be more cost-effective defenders of large areas than guns or lasers, as long as the enemy was firing less than about 4,000 missiles over the course of the war.14 That number was probably perilously short of Hezbollah’s actual capability, but as I will discuss later, such a calculation would assume that the IDF could not suppress fire from the north at all.

Building a team around veterans of the development of Rafael’s Python short-range air-to-air missile, the contractors and their customers began working what would become several years of six-day weeks.15 Rafael’s Advanced Defense Systems division brought aboard subcontractors Elta Systems (a subsidiary of Israel Aerospace Industries) to build Iron Dome’s radar system, Comtec Communications for the command radio link, and mPrest Systems for the battle management control.16 The team was born of a military-entrepreneurial spirit. The firm mPrest had been founded only in 2003, and even by 2012 had only 120 staff; its CEO, Natan Barak, was himself a naval captain (colonel) in the reserves and the former commander of the Israeli Navy’s software unit.17 In 2010, Rafael bought a fifty percent stake.18

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10 Lazar Berman, "Israel’s Iron Dome: Why America Is Investing Hundreds of Millions of Dollars," National Security Outlook no. 2, American Enterprise Institute, September 2012.

11 Inbal Orpaz, “How does the Iron Dome work?” Haaretz, 19 November 2012.

12 Ian Siperco, “Shield of David: The Promise of Israeli National Missile Defense,” Middle East Policy, Vol. XVII, No. 2, Summer 2010, p. 134.

13 Avi Weinreb, “Defense of Populated Areas Against Ultra-Short-Range Ballistic Rockets: Guns? Lasers? Missiles?” Proceedings of the Institute for Electrical and Electronic Engineers in Israel, 2008, p. 374.

14 Ibid., p. 377.

15 Yaakov Katz, “Security and Defense: Iron Dome’s Chutzpah Factor,” Jerusalem Post, 26 April 2012.

16 Orpaz, op. cit.

17 Orpaz, op. cit. Barak’s LinkedIn profile describes his entire naval career as a succession of positions in C4I. See http://www.linkedin.com/profile/view?id=3736389.

18 David Shamah, “Secrets of the Iron Dome, Revealed,” The Times of Israel, 28 December 2012.

Facing a potentially high volume of incoming rockets, the designers of the system settled on an economical architecture for the defenses. The missile batteries would be equipped with a new Tamir interceptor missile, a derivative of the Python, which had been in development and then production since 1978. The Tamir would carry a relatively inexpensive active radar seeker, with a short detection range but a high degree of discrimination. Economy was pursued at the component level: the electric motors driving the fins were supposedly sourced from a toy manufacturer.19

Upon launch, the ground-based detection-and-tracking radar would feed the command-and-control system a missile trajectory designed to intercept the incoming rocket as high in altitude as possible. This would widely disperse fragments from the rocket and the missile over a wide area, and slow them as they tumbled through the air, before they hit the ground. Initially, two missiles would be fired at each incoming rocket, to increase the likelihood of a successful interception. If the first were observed to detonate the target, the second would be directed by a ground-based command link to self-destruct.20 Later, a single interceptor missile would generally prove sufficient. However, if an incoming rocket were observed on a trajectory carrying it outside a populated area, the command system would completely hold fire—and thus save the cost of a nearly $100,000 round. But when called upon grouped into batteries of three launchers with 20 Tamirs each, the Dome could fire repeatedly without reloading.

Born in battle, born in sin

Hamas resumed firing rockets in earnest in February 2009. Tests of the Iron Dome in the Negev Desert in March 2009 showed a 95 percent kill rate.21 While few weapons work as well in combat as they seem to work in testing, such a high rate was encouraging. With further adjustments, the system was declared operational in June 2010, 22 but the Air Force “stubbornly” refused to activate the system for months.23 Iron Dome’s first successful interception came on 7 April 2011, with the destruction of a

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19 Yossi Horowitz, head of business development and marketing for Rafael Advanced Defense Systems, in the Financial Times, 31 March 2013. The idea is not wildly novel. Boeing’s Joint Direct Attack Munition (JDAM) bombs similarly have contained parts made by a supplier of lawnmower parts. See James Hasik, Arms and Innovation: Entrepreneurship and Alliances in the Twenty-First-Century Defense Industry, University of Chicago Press, 2008, p. 64.

20 Yaakov Lappin, “Defense Ministry Tests 'Upgraded' Iron Dome,” Jerusalem Post, 21 January 2013.

21 Lazar Berman, September 2012, p. 29; quoting Ur Heller, “Maarechet Habitachon: Arachnu Nisui Mutzlach Bimaarechet Kippat Barzel” [Defense Establishment: We had successful tests for ‘Iron Dome’ system], Nana 10, 27 March 2009.

22 Yaakov Katz, “Israel declares Iron Dome operational,” Jane's Defence Weekly, 6 July 2010.

23 Yossi Melman, “Iron Dome Anti-Rocket System Was Never Meant to Protect Israeli Towns,” Haaretz, 16 December 2010.

Grad rocket near Ashkelon.24 Against occasional firings throughout the rest of that year, the IDF claimed an interception rate of about 75 percent.25

Firing stepped up in October 2012, when Hamas put 183 rockets into Israel. Tiring of this potentially lethal harassment, Prime Minister Benjamin Netanyahu decided to target the opposing leadership. On 14 November 2012, the Israeli Air Force assassinated the commander of Hamas' military wing, Ahmed Jabari, with a missile strike on his car.26 Expecting return fire, the Israeli Air Defense Command immediately began preparations to make Iron Dome ready for sustained firing.27 Within days, larger and more powerful rockets were reaching as far as Gadera.28 By this point, though, the missileers and their supporting engineers had improved their accuracy, and were soon claiming that their interception rate had increased to as much as 90 percent.29 Public acclaim followed: Israeli civilians held barbecues for the missile crews besides their batteries, and the press gushed about the success.30

While the IDF is justifiably proud of this accomplishment, its success would not have come about but for the intervention of the Defense Ministry. Peretz felt strongly about the system, but he was opposed by several Air Force and Army generals, including Moshe Kaplinsky, the deputy chief of staff, who preferred to spend the money on more offensive systems.31 Indeed, in November 2010, as rockets fell but Iron Dome sat idle, Major General Gadi Eizenkot, commander of all Israeli forces in the north, asserted in a speech at Haifa University that the Dome was not even intended to protect civilians—just military bases. 32

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24 Anshel Pfeffer and Yanir Yagna, “Iron Dome successfully intercepts Gaza rocket for first time,” Haaretz, 7 April 2011.

25 Yaakov Katz and Yaakov Lappin, “Iron Dome ups its interception rate to over 90%,” Jerusalem Post, 10 March 2012.

26 Video is available at http://www.youtube.com/watch?feature=player_embedded&v=7PpwMnXcAwI. Conveniently, this considerable coup came just two months before a planned election in Israel. See Barak Ravid, “Ahmed Jabari is Netanyahu's Osama bin Laden,” Haaretz, 14 November 2012.

27 Orpaz, op. cit.

28 Yaakov Katz, “Islamic Jihad hits Gedera, schools remain closed,” Jerusalem Post, 13 March 2012

29 Katz and Lappin, op. cit.

30 Mitch Ginsburg, “Iron Dome: A True Game-Changer or Just a Feel-Good Tactical System?” The Times of Israel, 3 December 2012.

31 Lazar Berman, “Capturing Contemporary Innovation: Studying IDF Innovation against Hamas and Hizballah,” Journal of Strategic Studies, vol. 35, no. 1, 2012, p. 143; and Eleazar Berman, op. cit., pp. 28–29.

32 “Eizenkot: Iron Dome Meant to Protect IDF Bases, Not Citizens,” Jerusalem Post, 30 November 2010.

This story fits a well-known theory of how military innovation occurs, often termed the civil-military relations school of thought, which holds that change is mostly driven by senior civilian policy-makers, who rationally consider the strategic situation, and then direct the military how to respond.33 The military services and their institutional arrangements, however, do not always provide a smooth process for projects they consider “born in sin”.34 To spur action, maverick managers—in this case, Daniel Gold—are sometimes needed for breaking inconvenient rules. As Yossi Drucker, Rafael’s project manager for Iron Dome, put it “if you want to achieve something in a very short time... you have sometimes to bypass the bureaucracy.”35

A sociological impact to success

That bypass appears to have worked quite well. We first must acknowledge, however, that success had theretofore been uneven, as the two most notable preceding rocket-versus-missile campaigns had offered diametrically contrasting tactical records. The initially apparent success of the Raytheon’s MIM-104C Patriot 2 missiles in the 1991 Gulf War has been hotly contested, and remains at best in considerable doubt. The Patriots provided an important morale boost for the Israeli public, and may have dissuaded the cabinet from unhelpfully entering the war. But perhaps none of the 40 or so Scuds fired towards Israel, Bahrain, and Saudi Arabia were actually destroyed by the defenses. In contrast, during the 2003 Gulf War, Raytheon’s MIM-104D Patriot 2 GEM and Lockheed’s MIM-104F Patriot 3 missiles proved much more accurate, destroying at least eight (and possibly nine) of the nine Iraqi Al Samoud-2 and Ababil-100 rockets fired south.36 These engagements might seem to confirm the potential of defense, but the sample size was quite small. In 2012, though, Iron Dome appeared to achieve an 85 percent success rate over 421 engagements. The experiment may indeed be repeatable.

For political opponents of missile defense, this very success is calamitous. As Uzi Rubin, a retired brigadier general now with Bar Ilan University, put it almost ten years ago, opposition to missile defense amongst the “American intelligentsia” during the Cold War approached a “kind of religious zeal”.37 Phillip E. Coyle III, who once served as the Pentagon’s chief weapons tester, asserted that the Iron Dome could not possibly be as

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33 For the canonical exposition of this theory, see Barry Posen, The Sources of Military Doctrine: France, Britain, and Germany Between the World Wars, Cornell University Press, 1984.

34 Melman, op. cit.

35 Levinson and Entous, op. cit.

36 Report of the Defense Science Board Task Force on Patriot System Performance, Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics, January 2005.

37 Uzi Rubin, “Technological Possibilities,” in Missile Defence in a New Strategic Environment, Whitehall Paper 60, Jeremy Stocker and David Wiencek, eds., Royal United Services Institution, 2004.

capable as advertised, simply because “no military system is 90 percent effective.”38 Ted Postol, the MIT professor known for his trenchant criticism of the Patriot’s performance in 1991, and Mordechai Shefer, a former engineer at Rafael, claimed in an Israeli newspaper after the war that “in some cases, it seems as if the trajectories of Iron Dome missiles were preset.”39 And longtime Israeli missile defense opponent Reuven Pedazhur called the Dome a “scam” by the arms industry.40

Claims of conspiracy can sound a bit pathological. The difference in fatality rates between Hezbollah’s bombardment in 2006 and Hamas’ in 2012 arguably says more than fancy statistics and interpretations of film footage. For as one defense industry official argued in the Financial Times earlier this year, “if the success rate was only five to ten per cent, where did the other missiles go?” 41 Moreover, the validity of Postol and Shefer’s study must be seriously questioned, merely because depends so strongly on the principals’ interpretation of YouTube videos filmed with handheld cameras. Coyle bases his assertion on his experience as a weapons tester in laboratories and on ranges. But what if the performance in combat actually is that impressive? To the contrary, the technical success of Iron Dome suggests that acceptance of missile defense is at a socio-political inflection point, having shown that such systems can indeed work.

The political imperative of defense

Given the ambitions of the program, this tactical effectiveness could be called strategic effectiveness too. As Israeli newspaper editor Aluf Benn wrote, “by activating the Iron Dome system, Israel did to Hamas what Egypt did to the IDF in 1973: deployed a defensive weapon system in the defender's own territory neutralizing the enemy's long-distance firepower.”42 While that war did not end well tactically for the Egyptians, it sufficiently bloodied the Israelis to bring them to exchange, only a few years later, the whole of the Sinai for a simple peace treaty. The Egyptian air defenses were hardly perfect, and were eventually penetrated by the Israeli Air Force. But as the 1973 missile battle indicates about that of 2012, defenses need not be perfect to be useful, and victory need not be complete to be meaningful.

Of course, perfection in the defense is probably not even possible. The problem of allocating defensive missiles to offensive rockets is NP-complete, which means that sufficiently large and complex tactical problems cannot be solved by huge computing

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38 Quoted in William J. Broad, “Weapons Experts Raise Doubts About Israel’s Antimissile System,” New York Times, 20 March 2013.

39 Reuven Pedatzur, “How Many Rockets Has Iron Dome Really Intercepted?” Haaretz, 9 March 2013.

40 Ben Hartman, “Iron Dome Doesn’t Answer Threats,” Jerusalem Post, 9 May 2010.

41 Reed, op. cit.

42 Aluf Benn, "Gaza Conflict Turns into Battle of Missile vs. Missile," Haaretz, 21 November 2012.

power in finite time.43 If Hamas were better at rocket bombardment, this could be calamitous. But Hamas is not. The best it could induce was a strong visceral reaction: enough to embroil the Israelis in a cycle of retaliation that may have served the Islamists’ purposes in allowing them to cast themselves as defenders of Gaza, helping maintain their grip on power in the Strip.

It is also notable how the impact of that standoff firepower on Israel in 1973 was more psychological than physical. Whether regarding Egyptian S-75 Dvinas, Iraqi Scuds, or Gazan Qassams, Napoleon’s dictum relating the moral to the physical may be apt. 44 Even during the Scud attacks in 1991, the bulk of Israeli 'casualties' were substantially psychological. These did include two fatalities, one severely injury, and 231 less grave injuries from the blasts. But they also included 230 inappropriate auto-injections of atropine (no nerve gas was ever detected), 544 admissions to emergency rooms for “acute anxiety,” 40 assorted traumas suffered while rushing to shelters, seven inadvertent suffocations from plugged gas mask filters, and four or five fatalities from “intercurrent” heart attacks.45

Israelis have long since learned to be more sanguine about rocket attacks. But as Defense Minister Peretz knew, if General Eizenkot may have missed, their patience is bounded. Citizens of democracies tend to expect that someone is doing something to protect them in wartime. When they are not so rewarded for their taxes and loyalty, they may or may not show immediate anguish, but importantly for politicians, they will eventually likely vote. When Iron Dome finally arrived, it became “a hero and a comfort for the residents of the south,” who would finally sense that their security mattered, after years of facing Gazan rocket fire without active protection. 46

Dissuading the electorate from rejecting the government of the day is one thing, but dissuading Hamas from trying to kill Israelis may be entirely another. After all, Saddam Hussein also defied the “logic of deterrence” in launching his Scuds against Israel, “despite the near-certainty that Israel is nuclear-armed and is renowned for its

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43 Fredrik Johansson and Göran Falkman, “Real-time Allocation of Defensive Resources To Rockets, Artillery, and Mortars,” Institute for Electrical and Electronic Engineers’ 13th Conference on Information Fusion, 26–29 July 2010; quoting S.P. Lloyd and H.S. Witsenhausen, “Weapon Allocation is NP-Complete,” Proceedings of the 1986 Summer Conference on Simulation. In this context, NP stands for nondeterministic polynomial time.

44 Mark Stout, “Assessing Iron Dome: What Makes a Weapon System Effective?” Johns Hopkins University Center for Advanced Governmental Studies, 29 April 2013. See also Irving Janis, Air War and Psychological Stress: Psychological Studies of Bombing and Civilian Defense, R-212 (Santa Monica: RAND, 1951); Irving Janis, The Psychological Impact of Air Attack: A Survey and Analysis of Observation on Civilian Reactions During World War II, RM-93 (Santa Monica: RAND, 15 January 1949); and Milton Graham, “Psychological Effects of Bombing,” Air University Quarterly Review, Spring 1952, pp. 122–125.

45 Eric Karsenty et alia, “Medical Aspects of the Iraqi Missile Attacks on Israel,” Israel Journal of Medical Sciences, vol. 27 (1991), pp. 603–607.

46 Ginsburg, op. cit.

propensity to retaliate.”47 The Israelis notably did not retaliate, but if this shows that Hussein’s behavior was not so risky, it also calls into question the clean game-theoretic models of Cold War. Nash and Kahn and Wohlstetter were brilliant mathematicians, but they seemed to lack the historical sense needed to understand the idiosyncrasies of actual war.48

Consider that like Hussein, Hamas was horrifically irresponsible. As one of Iron Dome’s engineers told an American television broadcast, “the lives saved were not only those of Israeli citizens and soldiers, but of the Palestinians in Gaza who would have tended to suffer the most had there been an incursion.” 49 The inclination towards audacious military solutions may fit the “aggressive, brash” Israeli national personality,50 but they have not proven universally suitable. In this messy strategic interaction, some defensive backup would be essential. Thus, as Lazar Berman of the American Enterprise Institute wrote, Iron Dome may represent “a conceptual shift in Israel’s security strategy, as Israeli leaders move from their traditional offensive-minded posture and begin investing seriously in defensive technologies.”51

The recurring question of cost

This balance between offense and defense points to a separate and long-standing claim of cost-ineffectiveness. As Keith Payne wrote immediately after the 1991 campaign, “those who claim missile defense to be ‘technically infeasible’ may be correct under a very narrow and specific condition: if the exclusive goal of the defense is to protect the population comprehensively, and the threat involves many thousands of nuclear warheads. In those circumstances, if even a fraction of an opponent’s warheads penetrate the defense and strike cities, the resulting level of casualties could be so high as to make the defense near meaningless.”52

Qassams and Katyushas and the like are naturally not the nuclear-tipped missiles of NATO and the old Warsaw Pact, but Hamas and Hezbollah’s avowed strategy against Israel actually seems less discriminate. As Notra Trulock once wrote, there is “no evidence to indicate Soviet interest in what Americans call countervalue targeting—

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47 Payne, op. cit., p. 144.

48 I thank Frank Gavin of the University of Texas for this observation.

49 Ari, an Israeli engineer from the Iron Dome project, quoted in Paul Alster, “Behind the Iron Dome: Key Engineer Tells How Israeli Defense System Saved Lives,” Fox News, 2 December 2012.

50 Lazar Berman, September 2012, p. 2.

51 Ibid., p. 1.

52 Keith B. Payne, The Debate About Missile Defense, Including Lessons From The Gulf War, Westview Press, 1991, p. 141.

attacking population centers.”53 In the Second World War, Allied firebombing of German and Japanese cities destroyed production capacity, and killed factory workers as a collateral benefit, but did not aim specifically to reduce the population. While their planning appears inscrutable, the random nature of Hamas and Hezbollah’s rocket firings seem geared towards simple murder and mayhem, in the hopes that sufficient pain will induce the Israeli government to offer concessions.

If indiscriminate, the strategy is also fanciful, for much more intense bombardments do not clearly achieve much lesser political aims.54 Here it is worth repeating the finding of the official United States Strategic Bombing Survey after the Second World War: “area attacks against German cities could not have been responsible for more than a very small part of the fall which actually had occurred in German production” by the end of the war—much less a surrender or domestic insurrection.55 It is thus highly questionable whether the leadership of either Hezbollah or Hamas actually believes its rhetoric. Fortunately, this leaves Israel with a lesser problem. The Jewish State need not hunt down and kill every implacable anti-Semite in Gaza and Lebanon. Rather, it must serially dissuade two violent political hierarchies lurking just beyond its borders from spreading destruction as a distraction from their own serial failures of governance.

Dissuasion, in this context, may be a matter of imposing unacceptable costs on the enemy. This question of cost is then not a clean calculation. To begin, as General Gold himself put it, “a Kevlar vest costs hundreds of times the price of a bullet,” so the issue cannot simply be reduced to which missile or rocket costs more.56 The tactical context of the strategic exchange is very important. The Israelis and their enemies will continue to shoot at one another, and the defensive technologies—from body armor to armored vehicles to interceptor missiles—are meant to resist the shots of those who are not shot first. Here, there is reason to believe that Israel can afford the exchange.

The economics of the rocket-and-missile war

On the one hand, as Harry Truman's stereotyped economist would say, the numbers seem challenging. By press reports, the Defense Ministry spent (based on a wide range of reports) perhaps $800 million on development, production, and deployment over eight years. Each interceptor missile appears to cost somewhere between $50,000 and

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53 Payne, p. 143, quoting Notra Trulock, “Soviet Perspectives on Limited Nuclear Warfare,” in Fred Hoffman, Albert Wohlstetter and David Yost, eds., Swords and Shields, Lexington Books, 1987, p. 64 (see also pp. 76–79).

54 See, for example, Daniel L. Byman and Matthew C. Waxman, “Kosovo and the Great Air Power Debate,” International Security, vol. 24, no. 4, Spring 2000.

55 USSBS, Area Studies Division Report No. 31, p. 18; quoted in Alan S. Milward, War, Economy, and Society, 1939–1945, University of California Press, 1977, p. 304.

56 Daniel Gold, in Berman, 2012, op. cit., quoting Alon Ben-David, “Biladi: Hashigur Harishon shel Maarechet Kipat Barzel” [Biladi: The First Launch of Iron Dome], Nana 10, March 17, 2008.

$100,000; the Israelis shot about 500 of those in two weeks of fighting, for perhaps another $75 million in consumables to replace. Like many things Israeli, a large chunk of that money ($275 million) will have come from the United States, but analytically, the investment was considerable.

Much less is known about the Qassams and similar rockets, but Der Spiegel’s visit to an underground rocket factory in 2008 elicited an estimate of $800 in raw materials per round.57 The Gazans alone shot through 2012 just under 10,000 rounds, so their economy invested something through less than $8 million in fertilizer and steel in its rocket campaign. But if these numbers appear hugely in the Islamists’ favor, consider three more issues.

First, just roughly guessing at the raw materials cost is totally to exclude the assembly, transportation, tunnel digging, and everything else needed to set up and employ firing batteries. All that is included in the estimate of the cost of the Israeli defenses, so the such a comparison would be lopsided. Second, in terms of technical performance, the Qassams are are so inaccurate that only about one-third even get close to populated areas. This means that the Israelis can hold their fire against the ones going wide. Indeed they do—the IDF only shot at 500 or so rounds, intercepting 421, for that success rate of nearly 85 percent. That implies that the Israelis did not bother with something around 1000 of the incoming weapons.

Third, even if the Israelis were paying for all of this from domestic resources, they could afford it. Israel is a wealthy, and Gaza is dirt poor. The aforementioned $875 million constitutes less than 0.4 percent of a single year's gross domestic product (GDP). Scaled to a country the size of the United States, a similar commitment would constitute a $54 billion program. While that is a great deal of money, it will not sink the treasury. For the Gazans, however, that seemingly paltry $8 million—and just in raw materials—is actually about 0.5 percent of a single year's GDP. So the Gazans are making a bigger commitment of their resources to shooting the rockets than the Israelis are making of theirs to shoot them down. Add the assembly, deployment, tunnel-digging, and other activities, and the relative commitment is much larger.

A shifting balance of defensive and offensive power

In comparison, consider the threat from land mines and improvised explosive devices (IEDs). Perhaps the preceding accounting is too specific to the Arab-Israeli conflict, the economics of ballistic missile defense actually are as bad as those of countering IEDs, and no technological breakthrough looms in either case. The United States government

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57 Ulrike Putz, “Graveyard Shift for Islamic Jihad: A Visit to a Gaza Rocket Factory,” Der Spiegel, 29 January 2008.

will still continue to spend money on both objectives for some time.58 The game is on, so the time for abject complaining has ended. As the American congressman Daniel Flood chided Defense Secretary Robert McNamara some fifty years ago over his opposition to missile defenses, one might think that finally “we had broken through this problem in this country, of wanting things to be perfect before we sent them to the troops”—whether with MRAPs or the Iron Dome.59

This repeatable, relative success with Iron Dome then portends badly for Third World opponents of industrial states. For over time, rockets have been the only way that a relatively disorganized country like Syria or Iran has been able to project airpower reliably. That is the big attraction of these one-use ballistic weapons, which otherwise are themselves not economical—a fact that was known as long ago as the V-2 campaign of 1945. A political movement like Hamas or Hezbollah, with much lesser resources, cannot achieve as much. Even if Gazan or Lebanese opponents could aim their rockets with great accuracy, weapons leaking through that ten percent miss-rate might be mopped up with just a few more missiles, or bursts of cannon fire. The record of the Dome actually opens the possibility of meaningful prevention.

But as defensive action will not prove hermetic, offensive action must also be employed to stop, suppress, and ultimately deter future attacks. Showing a willingness to absorb even missiles easily repelled, without response, might just induce Hamas to continue shooting. But if some active response is ultimately necessary, rocket defenses provide breathing room for a considered, rather than emotional, reaction.60 As two economists observed from their admittedly abstract models of missile defense ten years ago, simply “by reducing the damages caused by surprise attacks, defense weapons can decrease the need to launch preemptive strikes, and improve the sustainability of peace.” So long as the motivation to attack is preemption, and not predation, cooler heads can prevail.61

On the other hand, offensive measures to suppress rocketry once it starts will likely continue to be problematic, but probably necessary. If the Coalition’s missiles probably destroyed no Scuds in the air in the 1991 campaign, its aircraft and commandos almost

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58 Byron Callan, “Field Notes: Missile Defense & More,” Capital Alpha Partners, 12 March 2013; and an observation by Paul von Hippel of the University of Texas.

59 Flood was complaining to McNamara about the latter’s desire to cancel procurement of the Nike Zeus missile system, at a congressional hearing in 1961. Quoted in Ernest J. Yanarella, The Missile Defense Controversy: Strategy, Technology, and Politics: 1955–1972, University Press of Kentucky, 1977, p. 70.

60 Siperco, op. cit., p. 136.

61 Sylvain Chassang and Gerard Padró i Miquel, “Defensive Weapons and Defensive Alliances,” American Economic Review, Vol. 99, No. 2, May 2009, pp. 282.

certainly destroyed no Scuds on the ground.62 The campaign was similar in its effort and relative lack of success to Operation Crossbow, the Anglo-American aerial campaign against V-1 and V-2 missile launchers from 1943 through 1945.63 Whether in wooded northern France or the open Iraqi desert, missile launchers have actually proven very hard to find. With much smaller offensive weapons, the problem is considerably more acute. In the 2008, some of Hezbollah’s rockets “had been dug in and camouflaged so effectively that IDF soldiers literally walked across the top of the fake stone used to conceal them without detection of what lay beneath.”64 Yet it is important to remember that defensive measures have never induced Hamas, Hezbollah, or even the Baathists to stop firing. While the cycles of violence are regrettable, a threat of further offensive action has been necessary to break or suppress them, if just for a time.

Israel as development and testing laboratory for the Pentagon

Thus the military response must be balanced. This is why several countries which sense threats from nearby rockets, including South Korea, India, Singapore and Poland, have considered buying their own Iron Domes from Rafael.65 In the short-term, battle-testing has provided the company real marketing muscle; in the longer-term, it may be leading Israel to become a military-industrial development laboratory for the Pentagon.

To a certain extent, this has been true for some time. The terms of the military assistance funding provided each year by the United States government require that American dollars be spent on American-built weapons. That is understandable, but it is also constraining in Israel, a state with disturbingly few friends around the world. Until recently, Israeli military-industrial strategy was observed to source large-scale systems overseas, but to produce munitions and electronic systems domestically. With the exception of the ill-fated Lavi fighter program in the 1980s, the largest integral systems built in Israel have been armored vehicles. Until recently, almost all Israeli armored

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62 Thomas A. Keaney, “Surveying Gulf War Airpower,” Joint Forces Quarterly, Autumn 1993, pp. 29–30. Barry Watts notes that this official finding of the Gulf War Air Power Survey remains disputed. General Wayne Downing, who commanded US Special Operations Forces (SOF) in the war insisted in Newsweek over a decade later, “I know that SOF took out six to eight Scuds” (“The Tip of the Spear,” 25 November 2002). See Barry D. Watts, Long-Range Strike: Imperatives, Urgency and Options, Center for Strategic and Budgetary Assessments, 2005, p. 52.

63 See Mark E. Kipphut, Crossbow and Gulf War Counter-Scud Efforts: Lessons from History, thesis, US Air War College, 1996.

64 Russell W. Glenn, All Glory Is Fleeting: Insights from the Second Lebanon War, MG-708-1, RAND, 2012, p. 6. Glenn quotes the presentation “Northern Command Lessons Learned,” by Colonel Boaz Cohen, director of operations in July and August 2006 for IDF Northern Command, given during the IDF–U.S. Joint Forces Command seminar, Tel Aviv, 21 March 2007; and Andrew Exum’s Hizballah at War: A Military Assessment, The Washington Institute for Near East Policy, Policy Focus 63, December 2006, p. 4.

65 Reed, op. cit. For my thoughts on why the North Korean rocket problem is much more challenging, see Kevin Baron, “Why Doesn't Seoul Have Iron Dome?” Foreign Policy, 9 April 2013.

vehicles have been designed, built, and serviced entirely domestically. The Namer armored vehicle program has provided a recent exception to that practical rule, as some units are now being assembled in Ohio by General Dynamics, simply so that military assistance funds can be used. But Israel craves autarky, for it worries reasonably about political isolation. Missiles are wartime expendables, and with domestic production, embargoes are meaningless.66

And so, the later stages of the development of the Iron Dome have been partly funded with American money. The marketing rights for the United States have been acquired by Raytheon, the leading American missiles firm. If the company can make the case, Iron Dome may now be produced in the US for fielding with the US Army. Until now, Israeli weapons in US inventories have been rare: the Popeye missile and the Pioneer drone have been notable exceptions.

For a future of declining budgets, the aforementioned Lazar Berman has enthusiastically endorsed an “Iron Dome model—financially supporting a new system developed by an allied country after it proves itself” as a means “to maintain American access to cutting-edge defense innovations.” 67 But why turn specifically to Israel for cooperative development? It is well known that the Israeli software and arms industry produce novel products of remarkable quality. More pointedly, while the United States may have money enough for development, Israel fights enough that it is sometimes the “canary in the mine” for new threats.68 If the United States does manage to avoid another prolonged war for some time, but Israel does not, the latter can become a skunk works and proving ground for the First World’s weaponry.

This would depart somewhat from historical pattern. Even considering the massively global Joint Strike Fighter (JSF) program, the United States’ most common sovereign partners in armaments development are NATO allies. The history of these projects, however, has been checkered at best. Michael De Vore of the Massachusetts Institute of Technology has argued that the problems in international development programs have substantially followed a three-phase history (see the chart below) with overlapping phases of different styles of armaments cooperation.69

In the early days of the alliance (1953–1962), NATO countries launched a series of common aircraft programs meant to fill well-defined NATO Basic Military

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66 For these insights, I thank Jeffery J. Roncka of Renaissance Strategic Advisors.

67 Lazar Berman, September 2012, p. 1.

68 Eleazar Berman, “Meeting the Hybrid Threat: the Israeli Defense Force's Innovations Against Hybrid Enemies, 2000–2009,” unpublished thesis, Georgetown University, April 2010. p. 4.

69 Marc R. De Vore, “The Arms Collaboration Dilemma: Between Principal-Agent Dynamics and Collective Action Problems,” Security Studies, vol. 20, no. 4, 2011. De Vore’s study focused on “the governance of European collaborative fixed-wing military aircraft projects conducted since the 1950s.” The validity of the findings may not be difficult to extrapolate to guided missile projects today.

Requirements (NBMRs). Individual firms from around Western Europe would bid, winners would be selected by NATO’s Advisory Group for Aeronautical Development(AGARD), and individual participating states could then purchase the aircraft. The focus of the governance of these developmental programs was generally on the familiar issues of principal-agent dynamics. These are present in any development-for-hire, whether the customer is a governmental or commercial entity. The acute problem, though, was the possibility of ex post defection. For example, after AGARD selected the G.91 jet as the Lightweight Strike and Reconnaissance (LWSR) Aircraft (NBMR-1), the French, Britons, and Americans realized that an Italian firm had won. Francs, sterling, and dollars would be flowing to Italy to equip their air forces with Fiats. In the end, only the West Germans and the Italians bought the planes.

Governance of NATO's International Armaments Collaborations70

Period of Time

Focus of Governance Structures

Interstate Cooperation

Selection of Contractors

Duplication of Industrial Processes

First Generation (1953–1962)

Principal-Agent Dynamics

Problematic (massive defections)

Efficient (competitive)

Negligible

Second Generation (1958–1969)

Interstate Collaboration Problems

Moderate (bilateral deals with few defections)

Less efficient (uncompetitive selections)

Moderate (in final assembly)

Third Generation (1968–present)

Collective Action Problems

High (many partners, and almost no defections)

Inefficient (sometimes least competitive firms selected)

High

In a second phase of cooperation (1958–1969), the focus of governance logically shifted to these problems of interstate collaboration. Tighter Anglo-French and Franco-German binational arrangements produced long-serving aircraft such as the Transall transport, the Jaguar fighter-bomber, and the Alpha Jet trainer. The acute problem in these projects, however, was cost control: each of the three aircraft cost more than of any of its size and capabilities should have, simply because each country insisted on building whole aircraft in its own factories. Sourcing of components, however, remained a relatively efficient process, as international allocations of work shares only needed to cross a single border. Duplication of effort was thus was generally limited to final assembly.

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70 Table 5 in De Vore, op. cit., p. 659.

In yet a third phase (1968–present), the focus of governance has rested on the problems of collective action. Escalating expectations of what aircraft should do has led to large increases in development costs, demanding multinational development for all but the largest countries. The products developed notably included the Tornado and Typhoon high-performance fighter-bombers, from the Panavia and Eurofighter consortia. The degree of interstate cooperation has been quite high, and in the larger programs, there has been very little defection—even to date in the profoundly troubled JSF program. The selection of contractors, however, has left much to be desired. The juste retour demanded by every participant meant that work shares were truly allocated. This is how, as De Vore puts it, “the Eurofighter became the first aircraft in history to have its two wings produced by different companies in different states.”71

From this history, De Vore summarizes international armaments cooperation as “both problematic and inefficient,” 72 repeating defense economist Keith Hartley’s notable finding that cooperative aircraft development programs cost at least as much as national ones, but take longer to bring about.73 But following his logic, I assert that the current bilateral American-Israeli cooperation to develop further the Iron Dome may combine the best of his first two approaches. The focus of the governance structure remains on classic principal-agent dynamics, but these are confined mostly to Israel. The solid bilateral relationship between the US and Israel, however, further suppresses the likelihood of defection. This is particularly true on the Israeli side, for the smaller state clearly relies quite strongly on the larger for security assistance, and the United States can bank on that. If the informal alliance lacks formal structures of NATO’s secretariat, or the particular cultural closeness of the Anglo-American special relationship, it will almost certainly be politically enduring.

Business practices in the American and Israeli arms industries may also differ more significantly than those between American and European firms, but the experience of long-standing cooperation within security assistance programs mitigates that tension. With a relatively large selection of qualified firms on both sides, contractors can more often be selected on the basis of actual capability, and not simply allocated by work share requirements. The competitiveness is no less than the small Israeli industry allows, but that is better than in most European countries. Duplication may still be a concern, as in the Namer program, but this should still be limited to final assembly and testing.

In this way, bilateral armaments deals may resemble bilateral trade deals: less efficient than global regimes, but sometimes as good as politics will allow. For Israel as a whole,

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71 De Vore cites Hugh Harkins, Eurofighter 2000: Europe’s Fighter for the New Millennium, Aerofax, 1997, pp. 29–40.

72 Ibid., p. 626.

73 Ibid., 629, quoting Keith Hartley, NATO Arms Co-operation: A Study in Economics and Politics, George Allen and Unwin, 1983.

vis-à-vis its essential American ally, this may be a very sensible strategic move. Within the Israeli Kriegswirtschaft, this model may strike the proper balance between autarky and efficiency. One should then ask what Israeli industry can do to capitalize on this pattern. Foremost, ask not for permission. Rafael did not need to leverage an American presence or early American funding to develop a strategically important system. Bypassing the bureaucracy is much more possible in a bilateral deal where one partner lives under the threat of hostile action. Flattening the hierarchy may lead to more decision-making at lower levels, but also clearly direction from the top. Top managers can get “closer to the businesses,” speeding communication and improving day-to-day governance.74

Conclusion

The portfolio of air and missile defense projects for the US armed forces remains "very expensive," and potential enemies have clear options for developing relatively inexpensive threats. But failing to proceed is not an option. For as accomplished Cold Warrior Henry Kissinger wrote, far back in the aftermath of the 1991 Scud War, “no responsible leader can henceforth deliberately leave his civilian population vulnerable.”75 As the imbalance in the costs of offensive and defensive technologies remains manageable, constraints on funding are merely prompting a shift towards relatively affordable incremental improvements.76

So what are those options? For the United States, the experience of the Iron Dome project suggests a recurring opportunity to invest systematically in defenses calibrated to the latest evolving threats. Spending money and signing one-off agreements alone do not naturally create an industrial strategy. The structures and incentives of particular programs and overall portfolios matter greatly.77 If Israel is indeed the “start-up nation,” the United States might consider treating its arms industry as a venture capitalist treats a late-stage investment opportunity: worthy of more money when the particular combination of management, technology, opportunities and threats are compelling.78

For Israel, fifteen Iron Dome batteries, at $50 million each, are planned now to protect the whole of the country.79 Five have been assembled already, but with further missile

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74 Julie Wulf, “The Flattened Firm: Not as Advertised,” Working Paper 12-087, Harvard Business School, 9 April 2012, p. 2. The work, admittedly, was based largely on interviews with CEOs.

75 Henry Kissinger, “A Sea-Change in U.S.-Soviet Relations,” Washington Post, 2 April 1991, p. A21.

76 “Army To Focus On More Cost-Effective Air And Missile Defense Solutions,” Inside Defense, 12 March 2013

77 For this observation, I thank Steve Grundman of the Atlantic Council of the United States.

78 Dan Senor and Saul Singer, Start-up Nation: The Story of Israel's Economic Miracle, Twelve, 2011.

79 Jenny M. Sharp, U.S. Foreign Aid to Israel, US Congressional Research Service, 12 March 2012, p. 11.

production and engineering support, the additional cost will be nearly $1 billion.80 The the Dome also has a useful secondary capacity against aircraft, and Hezbollah has been experimenting with armed drones for some time.81 Given the economic disruption caused by more than a decade of rocket attacks, this billion could be a sound investment.

Yet it bears repeating that even such comprehensive coverage would not be hermetic. In January 2013, the Israeli Air Force sent several Iron Dome batteries to the north of Israel, including one to cover Haifa, for fear that Hezbollah or the Syrian Army might fire rockets south as a morale-raising diversion from their poor performance in the Syrian Civil War.82 Still, in May 2013, the Israeli Air Force struck a shipment of Iranian Fateh-110s to Hezbollah proceeding west of Damascus towards the Lebanese border. Much faster and longer-ranged than any rockets fired up to that point from Lebanon, the Fateh-110 would likely blow past the limited Iron Dome deployment in the north. Even as sophisticated a weapon as the Arrow 3 could not guarantee a leak-proof defense.83 Defensive measures will continue to be a complement to offensive ones.

Will this dynamic continue to be important to the Israeli security, and available to American investment? Absolutely. Violence by irredentist Arabs has stretched throughout the 65 years of Israeli history, and progress towards a comprehensive settlement has been grindingly slow, in the most optimistic characterization. Over these years, to paraphrase Bismarck, the Middle East has looked not to Israel’s “liberalism but to its power”—whatever either may have been at any time. As the proximity of Hamas and Hezbollah’s rockets have made clear, the borders established for Israel—whether by the United Nations or its own military prowess—simply “are not favorable for the healthy life of the state.” This leaves “blood and iron” to decide the issues of its security—either the blood of every Israeli, effectively on the front line every day, or an Iron Dome of superior military technology.84

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80 Amos Harel, “Israel to Invest $1 Billion in Iron Dome Missile Defense System,” Haaretz, 9 May 2011.

81 Arie Egozi, “Israel's Iron Dome Gains Anti-Aircraft Role,” Flight Global, 28 September 2011.

82 Yaakov Lappin, “IDF Deploys Iron Domes in North amid Syria Worries,” Jerusalem Post, 27 January 2013.

83 Noah Shachtman, “Why Israel’s Interceptors Can Stop Syrian Missiles—And Why It Attacked Anyway,” Wired, 7 May 2013.

84 Quotes from Chancellor Otto von Bismarck’s ‘Blood and Iron’ speech to the Prussian Reichstag’s Finance Committee in 1862; in Lothar Gall, ed., Bismarck: Die grossen Reden (Berlin: Ullstein, 1981), p. 62, translated by Bill Patch, Grinnell College.