The Israel Lobby Celebrates the Stewart Nozette Espionage in New York

By Grant Smith

Anti War, December 27, 2009

The Israel Lobby Celebrates Espionage in New York

The recent sting operation against former NASA scientist Stewart Nozette involved an undercover FBI employee posing as Mossad agent.  Meeting in the posh Mayflower hotel in Washington, the agent set up clandestine payments in exchange for highly classified information.  Nozette began delivering requested classified national defense information believing it to be destined for Israel while confidentially assuring the FBI agent that he thought he was already spying for Israel.  This allegedly occurred under Nozette’s prior “consulting” contract with Israel Aerospace Industries, a major military contractor.   Although the US has traditionally ignored, forgiven, or quashed investigations into Israeli espionage, the cost to America’s national security and economy may now have pushed law enforcement agencies toward a tipping point.  Ironically, this very week, the Israel lobby is celebrating in New York the biggest clandestine operation ever conducted against US industries and workers. 

Israel Aerospace Industries was once called Israel Aircraft Industries (IAI), a company launched by the legendary flight engineer and entrepreneur Adolph “Al” Schwimmer.  Schwimmer was a key man in the vast underground Haganah smuggling (PDF) effort across the US trafficking in surplus WWII arms, supplies and veteran manpower for war in Palestine. He purchased heavily discounted surplus US military aircraft from the War Assets Administration but violated laws prohibiting their export use in armed conflict by creating a fake Panamanian shell corporation and flying the transport wing to Palestine to battle for the creation of Israel in 1948.  None of the key American financial backers of the effort went to jail, though a handful of small operators such as Nathan Liff did eventually appear in criminal court.  They received lenient sentences pleading they were only giving guns to “young Jewish boys who went to the door of Hitler’s ovens to bring Holocaust survivors to a Jewish homeland.” Schwimmer, a convicted felon who served no prison time, left the US to become managing director of IAI with the backing of David Ben-Gurion and Shimon Peres.

IAI contracting with the Israeli Air Force boomed beginning in the 1950s as did widespread Israeli espionage against US military and industrial targets for vital aerospace know-how and proprietary weapons designs.  A formal decision to expunge Schwimmer’s smuggling past didn’t arrive until the year 2000 when his friends in the US successfully lobbied Bill Clinton for a presidential pardon.  Schwimmer was unrepentant, explaining to the Forward that pardons require he “fill out all sorts of papers asking for forgiveness, telling the Justice Department you’re sorry, you did wrong, and you regret it, and you won’t do it again.  I didn’t feel that way, and I still don’t.  I didn’t feel I had done anything wrong, so I never applied.” Schwimmer is far from alone in exonerating himself for profitable crimes against America committed in the name of Israel, as a quiet celebration of a major but unknown Israeli covert operation takes place in New York City.

In the spring of 1984 the American Israel Public Affairs Committee (AIPAC) and American Israel Chamber of Commerce were in the midst of a pitched battle against American corporations, industry organizations, and worker’s groups.  At stake was an Israel lobby bid to open up the vast US market to unrestricted Israeli exports, the first of a series of so-called “free trade” agreements (more accurately described as intergovernmental managed trade deals).  76 major US interest groups from Monsanto and Dow to the AFL-CIO fought a small group of 23 Israel lobby organizations, most with no obvious economic stakes, that pushed President Reagan to sign America’s first formal bilateral trade deal in the midst of economic calamity in Israel.

Covert lobbying assistance for this minority soon arrived in the hands of Israeli Minister of Economics Dan Halpern.  According to a recently released, redacted FBI interview transcript (PDF, restored by the author) Halpern mysteriously obtained a 300-page classified US Trade Representative report prepared by the International Trade Commission and secretly delivered it to AIPAC during a 1984 coordinating meeting.  Halpern later refused to divulge to the FBI how he obtained the secret report, stating it “would be impossible within the professional ethics of his diplomatic position” to identify the source.  The report contained the most sensitive trade secrets and market data of the American industries fighting hardest against the trade deal.  It is still considered so sensitive by the US Trade Representative that it remains classified to this day.

According to Dan Halpern’s 1986 FBI interview–which occurred only after he claimed diplomatic immunity from prosecution in coordination with the US State Department–the possession of the report by the Israeli government and AIPAC “caused no economic damage to any US business or interest–the entire issue seems to have received more attention than it deserved.” A quarter century later, Halpern’s analysis (echoed by AIPAC staff interviewed by the FBI) doesn’t hold up.

Besides unleashing an unrelenting Israeli effort to obtain US intellectual property and military secrets, the US-Israel deal is the single worst performing bilateral managed trade pact.  It has produced a cumulative $71 billion deficit to the US because it locks US products out of the Israeli market.  The US share of trade dropped from 27% in 1985 to 12% last year.  The US-Israel deal produces ongoing market access complaints from US industry groups as well as annual intellectual property violation censures by the US Trade Representative.  The clever practice of using an official government regulator to concentrate sensitive industry trade secrets in a single convenient location accessible to Israel has been replicated at the Israeli Ministry of Health, where copycat Israeli drug makers prey relentlessly on US pharmaceutical producer clinical dossiers that are mandatory for market access.  This fuels a generic Israeli pharmaceutical industry built on intellectual property regimes purposely out of sync with the developed world and a massive counterfeit drug industry.

Most Americans, if aware, might consider the 1984 trade document theft grounds for criminal prosecution.  But not members of the Israel lobby, which on December 3, 2009 are hosting Dan Halpern, now vice chairman of the Israel-American Chamber of Commerce, in New York.  Ironically Halpern will discuss “Government to Government” dialogue. Neither Halpern nor AIPAC have ever been held accountable for turning purloined businesses trade secrets compiled by the US Trade Representative and International Trade Commission against American industry and workers groups. Instead, AIPAC and its former officials now trumpet in brochures and presentations how the unfavorable US-Israel trade deal was the “wedge” that opened up Congress to multilateral managed trade deals such as NAFTA.

In this context it is difficult to believe that Stewart Nozette will ever face any serious consequences for his crudely depicted (PDF) profit-oriented effort to sell US military secrets to the highest bidder.   Like other scandals before it, accountability for Nozette could be quietly unwound up on the privileged higher end of our emerging two-tiered US justice system.   The machinery elevating that tier usually turns quietly, but former AIPAC executive director Neal Sher has now publicly greased the gears.

Sher claims to be “shocked by how little the [FBI] agents knew or understood about lobbying and the search for information” and urges that before Nozette is prosecuted “leaders of the Jewish community raise some hell, and not show the timidity which, unfortunately, characterized many responses to the AIPAC case involving Steve Rosen and Keith Weissman.”

But is Sher right about FBI investigatory deficiencies and the law enforcement effort against the former AIPAC employees?  In the Nozette sting law enforcement officials seemed to purposely avoid going after IAI or any Israeli.  There may have been good reasons for that.   Halpern successfully entangled the US State Department in the FBI’s criminal investigation when he claimed diplomatic immunity.  In the late 1960’s such immunity prevented the FBI from investigating suspected shipments of weapons grade uranium from Nuclear Material and Equipment Corporation (NUMEC) of Pennsylvania to Israel’s Dimona nuclear weapons facility.   

Owner Zalman Shapiro, a leader of a local Zionist Organization of America chapter, and NUMEC were both investigated by the CIA, FBI, and Congressional groups when 587 pounds of weapons grade uranium went missing after a formal NUMEC visit by Israeli spy Rafael Eitan.  The Israeli embassy threatened to put suspicious “food irradiators” shipping from NUMEC to Israel under protection of diplomatic immunity.  The State Department then told the FBI that potentially serious consequences would follow any breaches of diplomatic immunity.  FBI agents impotently monitoring El Al shipments of NUMEC’s sealed lead-lined containers out of Idlewild Airport were unable to make any inspections.  In 2009 by setting up a sting only against Nozette and not IAI, the FBI avoided the unhelpful involvement of the US State Department, which has a history of quashing accountability for Israeli espionage under the banner of potentially adverse impact on “sensitive diplomatic relations.” 

Nozette’s well documented motives may have also preempted his use of the “Ellis Doctrine” in court.  During pretrial maneuvers, the defense team for accused AIPAC staffers Rosen and Weissman won an unprecedented standard of proof from presiding Judge T.S. Ellis.   In a ruling made shortly before they dropped the case, prosecutors were ordered not to prove whether the two accused were trafficking classified information to the Israelis and friends in the establishment press, but whether they were in a “state of mind” in which they believed they were actually committing a crime. As written, the 1917 Espionage Act is silent on such matters.

The FBI transcripts reveal Nozette clearly was in such a state of mind.  The FBI has also kept the case out of Judge Ellis’s Eastern District of Virginia and even seen judges changed in the District of Columbia venue.  Contrary to former AIPAC director Sher’s exhortations, the Nozette case reveals exactly how much the FBI does know about AIPAC and Israel’s style of “lobbying and the search for information.”   A fair and open criminal trial may even begin to collapse the American justice system back down to a compact single tier for everyone.

http://original.antiwar.com/smith-grant/2009/12/02/the-israel-lobby-celebrates-espionage-in-new-york/