South Korea threatens to cancel all defense deals with Israel

Haaretz, Israel ^ | 06.10.11 | Amos Harel

[sukhoi-30mki]

South Korea threatens to cancel all defense deals with Israel

South Korea threat comes in response to fear that Israel Air Force has decided to purchase a new training plane from rival Italy.

By Amos Harel

The purchase of the Israel Air Force's new training plane is causing serious diplomatic tension between Israel and South Korea: Fearing that Israel has already decided on a rival plane made in Italy, the Koreans are now threatening in return to cancel all their deals for purchasing Israeli defense systems.

In recent years, the South Koreans have purchased an average of $280 million a year in such defense products.

The decision on the IAF's new trainer is supposed to be made within a few months, toward the end of this year or early in 2012. The deal includes over 20 planes and is worth $1 billion spread over a few years. The air force is considering two planes, the Italian M346 trainer and the South Korean T-50 jet. The force held test flights for both planes earlier this year.

The decision is to be based on criteria set by the IAF, but not exclusively: It seems the final decision will also be influenced significantly by Israel's relations with both countries.

Here the Italians have a major advantage: Italian Prime Minister Silvio Berlusconi is a staunch supporter of Israel and his relations with Prime Minister Benjamin Netanyahu are very close. In light of Israel's growing diplomatic isolation, the government sees great importance in preserving Israel's close relationship with Italy.

That is exactly what is worrying the South Koreans. Seoul fears that the competition for the new plane, which Israel has presented as a down-to-t

[sukhoi-30mki]

[econjack]

Just more evidence that the market works. To get Israel's business back, South Korea has to “sweeten” the deal. In this case, it's the threat of reducing future purchases of Israeli products. People forget that the allocation of resources in free markets doesn't always mean just the actual cash-outlay costs. Non-cash considerations often enter the deal, but they are still part of the market process. Frequently, gov’t try to regulate these non-market processes (e.g., kickbacks, bribes, etc.), but in many parts of the world, it's considered part of the process of making a deal. Indeed, I'm sure the US has lost many contracts because Congress and other bureaucrats try to legislate morality. High moral principles in international trade is admirable, as long as you realize it comes at a cost.

[decimon]

I’m surprised this much became public.

[Eric in the Ozarks]

The “five forces of industry.”

[blam]

The billion dollars is US taxpayers money that we donate to Israel yearly.

No big thing...a billion here, a billion there. It's just your money. Who cares.

[gogogodzilla]

This is par for the couse regarding South Korea. If Israel does buy the Italian trainer... expect South Korea to support the Palestinians out of spite. That, and the Korean people will start up some amazingly anti-Semitic cr@p.

Just look at their behavior regarding America and Americans as a guide.

http://www.youtube.com/watch?v=NOCW6qHfKBw&feature=related

[SunkenCiv]

Thanks sukhoi-30mki.

Fearing that Israel has already decided on a rival plane made in Italy, the Koreans are now threatening in return to cancel all their deals for purchasing Israeli defense systems. In recent years, the South Koreans have purchased an average of $280 million a year in such defense products.

[rmlew]

The billion dollars is US taxpayers money that we donate to Israel yearly. No big thing...a billion here, a billion there. It's just your money. Who cares.

We arm Israel and its enemies. I'm all for ending aid to every nation in the region. What about you?

And if you want Israel to get less aid, shouldn't you approve of its arms sales?

[blam]

"We arm Israel and its enemies. I'm all for ending aid to every nation in the region. What about you? "

I go with Yehuda's reply in post #9. That works for me too.