Historical Clues Indicate: Germany Secretly Funded Israel's Nuclear Program - Israel Security
Since December 1960, when the existence of a nuclear reactor in the Negev city of Dimona was no longer a secret, countless books and articles have been published regarding this sensitive project – which Israel, with impressive obstinacy, still clouds with ambiguity. The most important of these works, Avner Cohen's 1998 book, "Israel and the Bomb," laid the groundwork, upon which other important researchers – such as Seymour Hersh, Zaki Shalom and Adam Raz – based their extensive works. In 2024, investigative journalist Shany Haziza created an excellent documentary series, "The Atom and Me," which put a human face on the project.
Thousands of other books, academic articles and investigative reports have covered almost every facet of this subject. But two important questions still haven't been sufficiently investigated or properly answered: How much did the whole enterprise cost? And who paid for it?
Somewhat paradoxically, the answer to the latter question apparently is also the answer to the first. As will be shown here, the major funder of the nuclear project was, by all available accounts, the government of West Germany, by means of a secret loan: It emerges that every year between 1961 and 1973, the Bonn government transferred to Israel 140 to 160 million marks, adding up to almost 2 billion marks, the equivalent of about 5 billion euros today.
In 1989, an agreement was signed to repay the loan, which in practical terms turned it into a grant. In other words, Israel's nuclear project was largely paid for not by donations from Jewish philanthropists or by the Israeli taxpayer, but by the German taxpayer.
To understand how this situation arose, we must go back to 1957, a critical year with respect to the project, and one marking a peak in Israel-France relations. The French stood by Israel when it found itself under heavy international pressure to withdraw from the Sinai Peninsula, which it had conquered in its October 1956 war, and clearly showed their willingness to help. The Israelis, for their part, were immensely grateful.
In 1989, an agreement was signed which in practical terms turned the loan into a grant. In other words, Israel's nuclear project was largely paid for not by donations from Jewish philanthropists or by the Israeli taxpayer, but by the German taxpayer.
That friendship was manifested in multiple ways, not all of them overt. The most important – and most secret – was the signing of a series of agreements between the atomic energy commissions of the two countries for the purchase of a nuclear reactor from France.
Despite the excellent ties with Paris, Prime Minister David Ben-Gurion remained concerned. He had always been fearful of Arab unity that would annihilate the Zionist project and his aides often found him looking at a map of the region, wondering how tiny Israel could hold out against a hostile Arab world. His apprehensions were heightened when Egyptian ruler Gamal Abdel Nasser, carried by a wave of national pan-Arabism, became the charismatic leader of the Arab world after the Sinai war, threatening to destroy the "Zionist enemy." France could not provide a good enough answer to that existential threat. Ben-Gurion was aware of France's limitations as a power in stages of decline and was concerned about the instability of its governmental and a potential problem concerning its motivation for helping the Jewish state: the belief that Nasser was behind the uprising against France in Algeria. With this in mind, he started to look for "an umbrella for a rainy day."
The most suitable country for that role, from his point of view, despite the emotional baggage, was West Germany. At the time it was a rising power in Europe with no imperialist past involving a commitment to the Arab states, and there were reports that Nasser was detested there. Above all, many in Germany, headed by Chancellor Konrad Adenauer, felt an obligation toward Israel.
Security relations between the countries got off on a strong footing in the form of a long secret meeting held in Bonn on July 3, 1957, between the director general of the Defense Ministry, Shimon Peres, and Germany's defense minister, Franz Josef Strauss. Secrecy was essential for both sides: Ben-Gurion feared that relations with Germany after the Holocaust could trigger a coalition crisis in his government, while Germany was concerned that such ties would induce the Arab states to recognize East Germany and thereby destabilize Bonn's standing in the world.
But both countries also had an interest in tightening relations between them. For Germany, aid to the Jewish state above and beyond the 1952 Reparations Agreement was a moral obligation of the first order and a means for atoning for the crimes of World War II. For Israel, and specifically for Ben-Gurion, obtaining military aid from Germany would be of critical importance for the country's security.
There were some in Israel, such as Education Minister Zalman Aran from Ben-Gurion's ruling Mapai party, who thought that Israel should demand that the Germans amend their constitution to say that Bonn would come to Israel's aid if it were ever attacked. In practice that was a nonstarter, but establishing "special relations" was feasible.
The Peres-Strauss meeting injected substance into those initial relations. Peres laid out Ben-Gurion's view that German-Israeli relations could not be founded solely on financial commitments in the form of the Reparations Agreement. Strauss concurred and expressed readiness to help build bridges over the abyss between the two countries. Practically, he also took a positive view of Peres' request for Israel to purchase two submarines. Beyond this, due to the specter of a third world war, which would likely be fought mainly on German soil, the defense minister showed great interest in the experience the Israel Defense Forces had acquired in the Sinai war in combatting Soviet weapons systems.
The submarines were not of critical importance. In monetary terms, as Ben-Gurion noted in his diary, the cost of the two vessels together was less than the cost of one French-built Vautour warplane – and around this time Israel had signed a deal to purchase 12 of them. Submarines were indeed a low-priority for the IDF; for his part, the chief of staff, Moshe Dayan, asserted that a low price tag was a condition for purchasing them.
Consequently, it appears that the request to buy the submarines was intended to serve as a convenient opening gambit to promote relations between the two countries without arousing too much opposition in the army. The fact that there was a political motive for acquiring the two vessels became clear when the security contacts with Germany were revealed in the media and sparked a coalition crisis in Israel. In justifying his actions, Ben-Gurion told the Knesset that the submarines were a matter of supreme importance and were essential for the country's security.
The submarines were finally purchased in Britain with German funding, and bilateral security ties grew stronger. Although the IDF did not at the time receive significant hardware from the German arsenal per se, the country purchased $30 million worth of combat matériel from Israel. As the Germans were well aware, this constituted a substantial contribution toward the development of the Israeli arms industry.
Defense against a holocaust
The most significant stage in the budding relations was launched with the historic meeting between Ben-Gurion and Adenauer in the New York Waldorf Astoria on March 14, 1960. The encounter itself was public knowledge, but the essence of the agreements reached there was kept confidential for many years. The conversation between the two elderly leaders was, in fact, one of the formative events in the annals of the security history of Israel.
Oddly, but not unusually in historical terms, no official transcript of the talks exists. On the German side the recording secretary was Heinz Weber, chief interpreter of the German Foreign Ministry; for the Israelis it was Arye Manor, the economic attache at the embassy in Washington. During their meeting the two leaders both mentioned their assumption that U.S. intelligence operatives were listening in on their conversation, so it's clear that they were careful about what they said. It's reasonable to assume that certain things were clear to both of them, so there was no need spell them out.
In the first part of the conversation, Ben-Gurion emphasized his view that if there had been another four or five million Jews in Israel, "there would have been no security question." Those millions, he added, perished in the Holocaust, and therefore it was not only a human tragedy, but also "from a historical perspective, Hitler almost destroyed the [dream of the] Jewish state." This conception – that the Holocaust was not only a crime against the Jewish people but also a crime against Zionism – was not new. It had accompanied Ben-Gurion since he first heard of the mass murder of the Jews. As early as the end of 1942 he expressed the fear that "the destruction of European Jewry is the destruction of Zionism," since it would mean that there would be no people with whom to build the country.
Thus, after framing the Holocaust not only as a tragedy of the past but also as a means for understanding the fundamental problem of Israel's security in the present, he moved on to the next – and more practical – part of the meeting: the need for German compensation, which in the prime minister's view should take two forms.
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The first was financial: either German investment in Israeli industry in order to help create a million jobs, or a long-term loan of $40 million-$50 million a year for 10 years. According to the Israeli account of the meeting, Adenauer did not go into detail, but immediately responded that Germany would help, both for moral reasons and also because Israel was a "bastion of the West." The German version, however, stated that he agreed with his Israeli counterpart but said there was no need to talk about the whole issue three years in advance – implying that there was enough time to discuss it until 1963, when the Reparations Agreement would expire.
The second form of compensation centered around military aid: the submarines and the IDF's interest in other defense-related deals. Adenauer explained that he was aware of the subject and that whatever was done within that framework was acceptable to him. Indeed, in the wake of the New York talks, Operation Kolonien-Frankreich ("French Colonies"), or Frank/Kol for short, got underway.
According to German documentation, from 1962 until the media broke the story of the arms deal in early 1965, Germany transferred to the IDF combat matériel and financed the purchase of other arms from France and Britain, at a total value of 340 million marks. Research published by Israeli historian Roni Stauber in his 2022 book "Diplomacy in the Shadow of Memory: Past and Present in Israeli-West German Relations, 1953-1965" (in Hebrew), puts that figure at 500 million marks.
To this very day, contrary to accepted practice, the German bank that provided the loan has not published any reports concerning the purpose of said funding.
Although Germany's military-related support drew the most attention, its loan for what was termed "Negev development" was more important. Reports about the Dimona nuclear project were first publicized only nine months after the talks in New York, but it's likely that Adenauer had learned of it from the French and the Peres-Strauss conversations. Whether or not he actually grasped the significance of Israel's request, it was clear to him that the understandings that were reached had to be kept under wraps, above all for fear of how the Arab states would react. Accordingly, the matter was initially concealed from the German government, parliament and foreign ministry.
The code name Adenauer's bureau gave the aid plan was Aktion Geschäftsfreund – "Operation Business Friend." In practice, an annual loan of $50 million over a period of 10 years was agreed upon, at an interest rate of 3.6 percent per annum. Contrary to the German understanding that the agreement would supersede the Reparations Agreement and therefore would not come into effect until the last payment was to be made, in 1965, the Israelis demanded that the payment be moved up. Ultimately, the first loan from Bonn was provided in December 1961.
Creating the mechanism for transferring funds was no simple matter. The element of secrecy made it impossible to sign a formal agreement, as this would require the ratification of the German government and parliament. The financial apparatus that was put into place by Israel's representative in Germany, Felix Shinnar, and Adenauer's economic adviser, Hermann Abs, involved payment of what were referred to as "commercial loans," via a government-owned bank for development in Frankfurt. Specifically, to maintain confidentiality, the installments were termed "monetary transfers stemming from bilateral agreements with developing countries of unspecified identity." The arrangement was approved by Germany's economy and finance ministers, but the foreign minister was kept in the dark.
In May 1960 the implementation of the covert Ben-Gurion-Adenauer understandings became even more complicated. The prime minister's announcement in the Knesset on May 23 of the capture of Adolf Eichmann and the intention to try him in Jerusalem, raised fears in Germany that during the proceedings, the names of people who held high positions in the Nazi regime and continued to play equally important roles in the Adenauer government would come up.
The most prominent of these was lawyer Hans Globke, the chancellor's bureau chief, who had played a central role in formulating the Nuremberg Race Laws. His position in the West German government also made him privy to the security ties that were taking shape with Israel – indeed, he actually played a role in advancing them. Adenauer's economic adviser, Hermann Abs, who vigorously promoted Operation Business Friend, had been a leading banker in the Nazi period and had been arrested after the war.
The apprehension in Germany that people would see a connection between leading figures in the federal government and their roles in the past, brought about pressure to ensure that this topic would not become a central issue in the trial. As Ora Herman noted in her book, "The Furnace and the Reactor" (2017; in Hebrew), the main means of pressure that was brought to bear on Israel was the threat to delay the implementation of the secret understandings: Defense Minister Strauss stressed to Israeli officials that raising the names of high-ranking officials in Bonn, especially Globke's, would jeopardize the process.
Globke himself made it clear to the Israelis that the loan and the arms deals would be implemented only after the trial ended. For his part, Adenauer sent a personal envoy to Israel who, by various methods, apprised Ben-Gurion about the chancellor's wish that Globke's name not be mentioned.
At the same time, there were also positive signals: Four months before the start of the trial in April 1961, Ben-Gurion noted in his diary, following a conversation with Felix Shinnar, that "Globke – the closest person to Adenauer – is behaving all right," and also that "Abs is perfectly all right." A week before the proceedings began, Shinnar informed the premier that "the deal is certain" and that "all the arrangements have been made for us to receive the first 200 million marks this year."
The impact of the German pressure is unclear, though it had a certain effect. Ben-Gurion asked the prosecutor, Gideon Hausner, to avoid submitting documents that linked Globke to Eichmann. Hausner declined, but in practice Globke's name was barely mentioned in the trial. This was probably also because, in his interrogations in Israel, Eichmann denied having had any relationship with Globke.
Leadership of a different type
Ultimately, the foundation of bilateral relations emerging in 1957 was significantly reinforced at the Adenauer-Ben-Gurion meeting of March 1960, stood up well in the storm that loomed ahead, in the form of the Eichmann trial. The first payment to Israel was made in December 1961, not long before the verdict was handed down. Until 1965, according to German documents, 629.4 million marks were transferred – 82 million in 1961, 97.6 million in 1962, 150 million in 1963, 149.8 million in 1964, and 150 million in 1965.
In the wake of the eventual exposure of Operation Frank/Kol in the media and the crisis that occurred in relations between the two countries, Ludwig Erhard, who succeeded Adenauer as chancellor, maintained that the understandings of March 1960 were not binding, because they had not been discussed by the government or approved by parliament.
Accordingly, procedures relating to the monetary transfers were revised and discussed anew each year, although the sums remained largely the same. In 1966 and 1967, Israel received 160 million marks each year, and in the ensuring six years – until the end of the loan period, which was extended until 1973 – it received 140 million per year, of which 20 million were earmarked for specific purposes.
In the absence of Israeli documentation relating to the practical implementation of the German loan for "developing the Negev," it is impossible to assert unequivocally that Bonn underwrote the Dimona project. But even if part of the money was invested in other projects, it's clear that funds saved on those projects may actually have been used to pay for the nuclear reactor – which, as far as is known, was not financed from state coffers.
The cost of the Israeli nuclear enterprise has not been sufficiently clarified to this day. According to Shimon Peres, half the cost of the reactor and other elements of the complex, about $40 million, was raised in the form of donations from wealthy Jews. What he likely meant was that their contributions underwrote the cost of the deals struck with France. Even if we take this at face value, despite the fact that almost nothing is known about the identity of said donors, that was only the beginning of the project. The entire undertaking cost a great deal more.
Levi Eshkol, who replaced Ben-Gurion as premier and defense minister in June 1963, estimated in a closed meeting with party members in June 1964 that the cost of Israel's missile project, considered to be part of the Dimona enterprise, would be $200 million to $250 million in the coming three or four years.
Adenauer recognized a heavy, moral duty to atone for crimes perpetrated during the Holocaust. He was willing to go a long way to ensure the survival of the Jewish state, even to the point of bypassing his own government and parliament.
The amount of the loan that Ben-Gurion requested in March 1960 – a month after the French first launched a nuclear test, and when the cost of the French nuclear project was already known – apparently satisfied Israel's needs, as did its extension over a 10-year period. Moreover, unlike every other so-called development loan that Germany has provided to date, Israel was never required to declare how the funding would be allocated, and no discussions were held on the subject. Indeed, that was the understanding on the basis of which the funds were loaned.
Even when the Germans made the terms more difficult in the late 1960s, by insisting that 20 million marks of each transfer be earmarked for specific projects, the rest of the money covered the cost of a project about whose essence Israelis did not have to report. To this very day, contrary to accepted practice, the German bank that provided the loan has not published any reports concerning the purpose of said funding. There appears to be no good explanation for concealing the purposes of the German development loan other than the financing of the Dimona project.
The assessment that German funding helped to underwrite the Israeli nuclear project also rests on declarations by the two individuals who are most identified with it. Peres at one point noted that Ben-Gurion had drawn a clear association between the Eichmann trial, "a system of defense against a Holocaust, if it should come," and "the reactor was built at Dimona."
The prime minister himself was even more explicit. In a Knesset debate in 1966, he attacked his successor, Levi Eshkol, stating that in negotiations conducted with the German government in 1965, Israel had sought to cancel the conditions under which the loan would be invested in "developing the Negev," and had also agreed to reduce it by $10 million a year. As such, Ben-Gurion maintained, his successor had caused "grave damage to one of the supreme needs of the security and economic future of the State of Israel."
Ben-Gurion's claim about concessions made by Eshkol was unfounded, but his reference to a connection between the German loan and Israel's "supreme security needs" clearly shows the existence of the link to the Dimona project.
For their part, the Germans have maintained official silence about the purpose of the loan. However, Hans Ruhlea, a former senior official in Germany's Defense Ministry, left no room for doubt when he concluded two articles that dealt with the funding of the Dimona project with the same statement: "German financial aid for the development of Israel's nuclear weapons capabilities has given the Jewish state a unique kind of guarantee of survival, which brings honor to the originators of 'Operation Business Friend.'"
Finally to complete the picture, we must also recall the gesture by the German government to compensate Israel for its restrained response to the firing of Scud missiles in the Gulf War of 1991, and for the fact that German companies had been involved in manufacturing the missiles. The compensation could have come in various forms, but not surprisingly – and albeit also based on German economic considerations – it came then in the form of a decision by Chancellor Helmut Kohl to underwrite the manufacture of two Dolphin-class submarines at a cost of 880 million marks (about $1 billion euros in today's terms), and to cover half the cost of a third submarine. According to foreign reports, some of the submarines' torpedo tubes are large enough to facilitate the launch of cruise missiles with a nuclear warhead. If this is true, it can be said that Germany built for Israel the platforms that provide it with a second-strike capability.
On the assumption that all this information is correct, it is difficult to overstate Germany's contribution to Israel's security over the years. In contrast to the Jewish state's so-called special relations with the United States, based among other things on aid in the form of conventional weapons – Germany has apparently assumed responsibility for financing considerable part of the nuclear capability that is attributed to Israel.
In the critical years of the Negev-based enterprise, 1961-1967, Germany's loan and direct military aid covered at least 20 percent of Israel's annual security budget. It is hard to see how Israel could otherwise have shouldered the financial burden involved in executing such a costly project; indeed, without such funding, Israel would probably never have succeeded in carrying it out.
In the present era of populist leaders in this country and elsewhere, it's fitting to end this story with a good word about leadership of a different type. Ben-Gurion, whose chief concern was Israel's security, did not hesitate to push back against a hostile public that was unaware of the loan and to promote the concept of "the other Germany," aimed at legitimizing the unique ties between the two countries. In so doing, he also found the way to present the Holocaust to the Germans not only as the tragedy of the Jewish people, but also as the root of Israel's security problem for which a response was needed. And Adenauer was a leader who recognized a heavy, moral duty to atone, whether overtly or covertly, for crimes perpetrated during the Holocaust. He was willing to go a long way to ensure the survival of the Jewish state, even to the point of bypassing his own government and parliament.
For their part, the successors of these two leaders went on to abide strictly by everything that was agreed upon and have since steered clear of any leak that might expose how the Dimona project was financed.
Uri Bar-Joseph is a professor emeritus in the International Relations Department at the University of Haifa's School for Political Science.