Submarine scandal resurfaces to menace Netanyahu

Two and a half weeks before the general elections, Prime Minister Benjamin Netanyahu has found himself entangled once again in the submarine scandal he'd thought had sunk forever.

al-monitor Israeli Prime Minister Benjamin Netanyahu (R) walks on the Rahav, the fifth submarine in the fleet, after it arrived in Haifa, Jan. 12, 2016. Photo by REUTERS/Baz Ratner.
Ben Caspit

Ben Caspit


Topics covered

scandal, corruption, submarine, blue and white party, israeli elections, israeli politics, benjamin netanyahu

Mar 22, 2019

Three weeks before the April 9 elections, crunch time for the prime minister, a disaster struck Benjamin Netanyahu: The so-called “submarine affair,” considered by many the most serious corruption case in the country’s security history, resurfaced at the worst possible time. If there was one issue that Netanyahu tried hard to keep out of the public debate in his run for a fifth term, it was the suspected corruption involving Israel’s purchase of submarines from Germany. Now, it's all people are talking about. The result was a rare drop for Netanyahu in the polls, with some showing his rival Blue and White Party once again pulling ahead of the Likud by as many as five Knesset seats.

Although many of Netanyahu’s close associates and relatives are up to their necks in this scandal, Netanyahu himself had emerged relatively unscathed so far. At the start of the police probe into the case, Attorney General Avichai Mandelblit ruled that Netanyahu was not a suspect. The police did not question Netanyahu under caution and eventually cleared him. Yet in Israel, nothing is final. Surprising developments have brought the scandal to the fore once again and the prosecution is reportedly considering re-opening the submarine case, or at least part of it.

An investigation would focus on Netanyahu’s holdings in steel conglomerates controlled by his wealthy cousin, American-Israeli executive Nathan Milikowsky. It seems that one of his other companies supplied steel to ThyssenKrupp, the German shipbuilder at the center of the submarine affair. It's the last thing Netanyahu needs at this point in his stormy re-election campaign as he faces three former military chiefs well versed in Israel’s defense needs. With the latest revelations, Netanyahu lost control of the campaign agenda, swept up by a wave of unsettling reports.

In response, Netanyahu deployed two strategic weapons. The first was an affair involving the cell phone of his chief rival, Blue and White leader Lt. Gen. (res.) Benny Gantz, supposedly hacked by Iran about six months ago. Netanyahu went live to demand that Gantz reveal what was on his phone and what sensitive information Iran has on him. But the diversion may have backfired. It reminded Israelis of Netanyahu’s panicked dash to a television studio in 1993 to admit he had been unfaithful to his wife and complain he was being blackmailed over the affair. At the time, Netanyahu feared that a compromising videotape about his liaison would be published.

His second strategic weapon is the president of the United States. At the height of the submarine uproar, Donald Trump tweeted on March 21, “After 52 years it is time for the United States to fully recognize Israel’s Sovereignty over the Golan Heights.” It was a generous and unexpected gift of historic proportions to Israel, mainly Netanyahu. Both the president and Secretary of State Mike Pompeo, who visited Israel this week, deny US intervention in Israeli politics. Not a single Israeli buys it, and all attribute the achievement to Netanyahu’s tight relationship with the White House. Trump is a gift that keeps on giving. Netanyahu will arrive to Washington March 25 to address the annual AIPAC convention and meet with Trump. The White House will accord him a superhero’s welcome. Trump will embrace him, endorse him, host him like a king and lavish more presents on him. The Israeli government is now focusing its efforts on getting Trump to lift the US court-imposed restrictions on American spy Jonathan Pollard and allow Netanyahu to take him back to Israel when he leaves.

But Netanyahu might find it hard to pull off such a stunt. Former senior officials have now revealed that Netanyahu personally gave German Chancellor Angela Merkel the OK to sell Egypt the same kind of state-of-the-art subs it was selling Israel. Netanyahu has denied giving his approval to Merkel behind the back of the Israeli defense establishment. However, Lt. Gen. (res.) Gabi Ashkenazi, number four on Blue and White's Knesset slate, said in response to this revelation that Netanyahu had damaged Israel’s strategic advantage over its Red Sea neighbors.

Despite Israel’s peace treaty with Egypt, defense experts are greatly troubled by Egypt possessing the sophisticated ThyssenKrupp subs, which the Germans would not have sold to Egypt without Israeli approval. Now it turns out that none other than Netanyahu had given Germany the nod, and his rivals link it to his cousin, lawyer David Shimron, being one of the middlemen in the deal.

At the same time, ThyssenKrupp’s former Israel agent, Mickey Ganor, who turned state’s evidence in the case, recanted his testimony March 19, setting off a maelstrom. The prosecution is considering revoking the deal with Ganor, making it easier for the attorney general to order the case re-opened. Although it is hard to link Netanyahu directly to the case, he might end up paying an electoral price for the prevailing disgust and concerns over the latest developments, as suggested by this week’s polls.

The prosecution is now focusing on the latest revelations about Netanyahu’s various deals and holdings in two steel companies, SeaDrift and GrafTech. Prosecutors are looking into Netanyahu’s reporting to tax authorities, to the state comptroller and the Knesset, and they may seek information from US tax authorities. They are also examining Netanyahu’s 2010 sale of SeaDrift shares for $4.3 million at a time when the company was performing poorly, shares he bought three years earlier for $600,000. Also under review is the link between ThyssenKrupp and GrafTech.

The entire affair stinks to high heaven. No one knows how it will play out, whether an official probe will be launched and what it might turn up. But Israelis go to the polls in about two weeks, and no one on earth can mask the stench — except, perhaps, Trump.

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