JCPOA IMPLICATIONS AND EFFECTS ON OUR FOREIGN MILITARY SALES PROGRAM

• Published in: Public contract law journal Vol. 46; no. 4; pp. 873 - 894
• Main Author: Bachar, Ariel
• Format: Journal Article
• Language: English
• Published: Chicago American Bar Association Section of Public Contract Law 22.06.2017; American Bar Association
• Subjects: Arab Americans; Archives & records; Armed forces; Arms transfers; Contractors; Contracts; Defense contracts; Defense industry; Displaced persons; Finance; Foreign aid; Foreign military assistance; Human rights; Jewish people; Laws, regulations and rules; Legislation; Management; Military aid; Military sales; Politics; Sanctions; Self defense; War crimes; World War II; Iran; United States > US; Israel
• ISSN: 0033-3441; 2162-8181

893 I. INTRODUCTION Despite its small size, Israel withstands the variety of threats it faces in the volatile Middle East region.Since the creation of the Jewish state in 1948, Israel has been involved with a near constant number of wars, armed conflicts, and skirmishes with its Arab enemies.1 Today, Israel faces threats from those enemies as well as from members of its own population who oppose the existence of a Jewish state.2 To combat these threats, Israel often looks for help from the United States-generally considered Israel's strongest ally.3 Some argue Israel might not exist in its current form if not for its longstanding relationship with the United States.4 Since World War II, Israel is "the largest cumulative recipient of U.S. foreign assistance,"-the majority being military aid.5 The origins of the majority of Israel's military equipment traces back to the U.S. Foreign Military Sales (FMS) program.6 Under the FMS program, Israel can obtain U.S. military equipment as long as it uses the goods, among other ends, for "legitimate self-defense" purposes.7 The two nations maintained a strong bilateral relationship for decades, with the United States providing Israel with over $127.4 billion of assistance to date.8 The United States recently made plans to appropriate a record $38 billion in foreign assistance to Israel over the next decade.9 However, current political events revealed problems caused by the United States' relationship with Israel."61 The United States conducts such transactions in accordance with its FMS program, which some consider to be a crucial part of international affairs.62 The AECA authorizes the FMS program.63 It permits the United States government, through the Department of Defense (DoD), to act as a direct seller of defense articles and services to eligible foreign governments.64 Sales through the program build relationships with foreign countries, benefitting the United States.65 Additionally, sales increase the technological capabilities of foreign nations, helping the United States achieve certain foreign policy objectives.66 FMS transactions are made on a case-by-case basis in accordance with both foreign policy and national security objectives.67 Approved participants wishing to purchase defense articles or services must file a letter of request (LOR) with the DoD.68 Then, the letter becomes subject to various levels of review, including whether: (1) "the prospective purchaser is eligible to make a purchase under the FMS program," (2) the proposed sale is in the United States' national interest, (3) the sale will meet a valid military requirement, and (4) whether the sale will adversely impact the resources of the U.S. forces.69 After the foreign purchaser signs the agreement and satisfies its financial obligations, the DoD takes the necessary actions required to fulfill the agreement.70 This typically requires the DoD to enter into contracts with private contractors to obtain the goods or services.71 Typical procurement statutes and regulations, specifically the FAR, DFARS, and the CICA, govern these procurements.72 The AECA also permits foreign customers to obtain defense articles and services from U.S. companies directly, rather than through the DoD.73 For example, Israel purchased over $18 million dollars' worth of "guided missile systems, complete" from the Boeing Company and over $6 million dollars' worth of "guns, over 30 MM up to 75 MM," from General Dynamics in fiscal year 2011.74 These types of transactions are known as direct commercial sales (DCS).75 Typically, in a DCS transaction, the foreign purchaser deals directly with the industry as the two sides negotiate the majority of the contract elements without the involvement of the U.S. government.76 These transactions can be more advantageous than FMS transactions because they are not subject to the same stringent procurement procedures, such as the FAR.77 The FMS process requires the development, review, and acceptance of a letter of offer and acceptance as well as a government-to-government agreement concerning the terms, conditions, and obligations of the transaction.78 Meanwhile, a DCS transaction only requires the foreign nation and private company negotiate the contract.79 The U.S. government subsequently approves the DCS sale-with congressional approval required for items worth over $14 million dollars.80 Regardless of whether a foreign country chooses to acquire U.S. defense equipment through FMS or DCS, the AECA contains provisions regarding their usage.81 Section four of the AECA states that "[d]efense articles and defense services shall be sold or leased . . . to friendly countries solely for internal security, [or] for legitimate self-defense.[...]U.S. contractors would no longer exist in limbo on this issue.The mandatory embargo-a rigid punishment-can lead to foreign retaliation and the loss of lucrative business relationships.[...]it is unlikely that the United States will ever find that a substantial violation occurred.198 However, by simply eliminating the mandatory embargo, the United States would lose an important deterrent against aggressive acts and violations of international law.199 Thus, the United States could choose to modify the punishment from a mandatory embargo to a temporary suspension.200 The limited duration of a temporary suspension might minimize economic damage to U.S. interests because the United States would only temporarily lose out on important relationships.