Victoria quietly signed an agreement with Israel’s Ministry of Defence (IMOD) a year ago to collaborate on projects and foster trade relations, deepening the state’s ties with an increasingly controversial partner.
The state government says the Memorandum of Understanding (MoU) — a non-binding document signalling the intentions of both parties — aims to identify projects that can deliver advanced manufacturing capabilities and highly skilled jobs for Victoria.
The agreement is listed on the Australian government’s Foreign Arrangements Scheme register, as required by law, but the contents are not public.
However, there is no record of the MoU, signed in December 2022, on state government websites.
The Victorian government only confirmed the document to the ABC after repeated questioning, and said the MoU was not legally binding and that no projects had yet been undertaken.
“As Australia’s advanced manufacturing capital, we are always exploring economic and trade opportunities for our state — especially those that create local jobs,” a spokesperson for the government said.
Agreement would have been ‘uncontroversial’ before Gaza war: expert
Defence analyst Michael Shoebridge said it was “highly unusual” for a state government to sign an agreement with a foreign power’s defence ministry.
“I think it would have been entirely uncontroversial before the Israel-Hamas war. But now, of course, there’s live domestic debate about the war, and … most people are concerned about civilian casualties,” he said.
“I think it’s an example where the federal government would want to be quite careful about the kinds of relationships that state governments have.”
When asked about the deal on Wednesday, Victorian government minister Gabrielle Williams declined to discuss its contents in detail but noted it was signed before the recent Gaza conflict.
“I think it’s important to note the timing of the MoU and what’s happened since,” she said.
Israel is known for being a world leader in defence technology and sells it around the world for use in local industries.
Mr Shoebridge said he believed Israel would want to partner with Australian firms to manufacture military equipment in Australia, and export them to the Indo-Pacific region.
“I think the Victorian government, it’s just this jobs agenda that they have without much else in mind,” he said.
He said he did not believe Australia and Victoria would be providing weapons to Israel under the MoU, as Israel had superior defence technology.
No other state governments have partnerships with sovereign defence bodies listed on the Foreign Arrangements Scheme register, though several universities have research partnerships with other defence forces.
Australia’s commonwealth government signed a MoU on defence industry cooperation with Israel in October 2017.
IMOD told the ABC the agreement had been used to facilitate “business-to-business meetings” and the agreement aimed to foster bilateral trade between Victorian and Israeli defence sectors.
As of Tuesday, Israel’s war in Gaza had killed more than 25,000 Palestinians – up to 70 per cent of them women and children — according to local Hamas-run health authorities.
The war is in response to the October 7 attacks by Palestinian militant group Hamas, in which 1,200 Israelis were killed and 250 people were taken hostage. According to Israeli authorities, 136 of the hostages are still being held.
Human rights organisation says agreement raises alarms
Rawan Arraf, the executive director at the Australian Centre for International Justice, a not-for-profit legal centre that examines human rights violations, said the MoU was morally wrong.
She said even prior to the war in Gaza, Israel had supported the establishment of illegal settlements in the Palestinian territories and limited the freedom of Palestinian people.
“This is evidence of the ever-deepening relationship between the Victorian government and Israeli defence industry and the Ministry of Defence,” she said.
“[It’s] appalling, and they shouldn’t be doing it. They should end all agreements because it raises the risk of complicity in international crimes.
“Israel is accused of carrying out … crimes against humanity of apartheid and persecution.”
On a trip to Israel last week, Foreign Minister Penny Wong reiterated Australia’s call for a ceasefire in Gaza, saying people were facing a “dark humanitarian crisis” and civilians should be protected.
She also repeated Australia’s opposition to illegal Jewish settlements in the Palestinian territories, saying they were an impediment to peace.
Suppliers to Israeli defence forces have presence in Melbourne
Even before the agreement with IMOD, the Victorian Labor government had a strong relationship with Israeli defence companies.
Some of the main suppliers to the Israeli defence forces — Elbit Systems, Israel Aerospace Industries and Rafael Advanced Defence Systems — have established offices in Melbourne over the past 10 years, and are involved in producing goods for the Australian military.
In 2021, the Victorian government invested an undisclosed amount in the Australian arm of Elbit Systems, helping to establish the Centre of Excellence for Human-Machine Teaming and Artificial Intelligence in Port Melbourne.
The Victorian government said the centre has supported the Australian Defence Force and emergency services through the use of drones used to manage bushfires.
But Elbit is a controversial partner, alleged to have provided weapons to repressive regimes such as Myanmar.
Ethical investment groups believe it was still manufacturing cluster bombs, a weapon banned under international treaties, up until recently.
Elbit has denied that it makes cluster bombs.
Melbourne university RMIT was involved in a research partnership with the centre, but pulled out in the midst of criticism from human rights groups.
RMIT told the ABC its decision was not influenced by any external parties, and was by mutual agreement.
The government would not say how much money it invested in the centre, saying it was “commercial in confidence.”
Elbit Systems did not respond to questions from the ABC.
On a trip to Israel in March last year, then minister for industry Ben Carroll met with several defence companies to promote Victoria as a potential location.
He also met with state-owned company Israel Aerospace Industries, which set up its only office in the region in Melbourne in 2021.
He advised them that Victoria was keen to explore investment opportunities with the company, public documents show.
The Victorian government told the ABC discussions around potential future government investment were commercial in confidence, and it had not provided any funding to Israel Aerospace Industries.
Independent journalist Antony Loewenstein, a long-time critic of Israeli policies and author of the Walkley-winning book The Palestine Laboratory, said it was concerning Victoria appeared to be trying to get closer to the companies through the MoU.
“I’ve got no problem with the idea of finding better ways to manage a clearly growing bushfire problem. That’s not the issue,” he said.
“The issue is who you’re partnering with.”
Agreement can be tested ‘through the ballot box’
This is not the first time Victoria has come under scrutiny for signing an agreement with a foreign power.
In 2018 and 2019, the state signed the Belt and Road Initiative (BRI) agreements with China to promote economic collaboration, invoking the ire of the federal government.
It prompted the Commonwealth to pass new laws in 2020 giving it powers to review and cancel agreements Australian bodies have with foreign entities if they were not in the national interest, and to list them on a public register.
“I think in this case, [the IMOD MoU] probably is consistent with foreign policy direction, but I think that’s coincidence. I don’t think it’s because the Victorian government really thought this through,” Mr Shoebridge said.
“They’ve had an unfortunate tendency just to focus very narrowly on perceived economic interest and discount national security and foreign policy interests.”
The Victorian government received approval from the federal minister of foreign affairs to enter the MoU with Israel’s defence ministry.
John Fitzgerald, an emeritus professor at Swinburne University who published a book on state and territory relationships with China after the BRI scandal, said the register had served its purpose in this case.
“The whole point of the … legislation … was to bring these agreements to light so that the public would have an opportunity to discuss them, and to debate them,” he said.
“Does the public want this kind of agreement? And if they don’t want it, they can express that in public conversations and through the ballot box.”
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