By Dan Williams

TEL AVIV, March 16 (Reuters) - Spurred by a surge in Palestinian rocket salvoes and charges of arms industry protectionism, Israel is rethinking its rejection of deployable foreign defence technologies so a local system can be produced.

Defence Minister Ehud Barak has staked his reputation on Iron Dome, a device in the works at Israeli state weapons firm Rafael that would use missiles to shoot down the short-range rockets favoured by Palestinian militants in the Gaza Strip.

But Iron Dome will not be operational before 2010, a lag many Israelis consider insupportable given spiralling violence on the border with Gaza, the territory which Israel withdrew from three years ago and which Islamist Hamas seized last year. There are also ramifications for Israel's peace talks with Hamas's rival, Palestinian President Mahmoud Abbas. Barak would likely insist that any deal ceding the West Bank to Abbas be conditioned on deployment of a working anti-rocket apparatus.

Under pressure to find stop-gap solutions, Barak is reviewing two potential substitutes for Iron Dome whose import was previously ruled out by Israel, defence officials said.

One is Nautilus, a joint Israeli-American invention that uses lasers to blow up rockets and mortar bombs mid-flight. The other is Phalanx, an automated machinegun produced by U.S. firm Raytheon <RTN.N> whose heavy bullets shred incoming shells.

Senior Barak aide Pinchas Buchris flew to the U.S. state of New Mexico on Sunday to watch Nautilus -- now being upgraded under a new name, Skyguard -- in action. The mission is significant as Israeli experts long wrote off Nautilus's performance as inadequate.

"Even if Nautilus is capable of only a 50 percent shoot-down rate, but can be here within eight months and at a reasonable cost of $20 million or $30 million, we'll take it," the Yedioth Ahronot newspaper quoted Buchris as saying. A Defence Ministry delegation also visited Raytheon this month to inspect Phalanx, according to Israel's Haaretz daily.

EXPORT CONSIDERATIONS?

Haaretz security analyst Reuven Pedatzur suggested that the ministry's reluctance to consider alternatives to Iron Dome stemmed at least in part from desire for "an export deal with a foreign country" -- an allusion to the prospect of profits from developing an Israeli system that could later be sold abroad.

Defence Ministry spokesman Shlomo Dror denied that protectionism motivated Iron Dome's selection, saying its slated performance was deemed by a team of government and independent experts to be more reliable than that of Nautilus or Phalanx. There may be environmental considerations, too. According to Dror, Nautilus is cumbersome and uses chemicals that can be toxic. Phalanx would have to be stationed within towns targeted by Palestinian rocket crews and residents would likely be jarred by the cannons going off within earshot at little notice. But Dror allowed that "if we can sell this (Iron Dome), we can reduce the costs of its production and use".

Dror confirmed that Israel is looking anew at Phalanx and Nautilus, if only to assess their core technologies as potential complements for Iron Dome. "I think the future will be a combination of laser and missile systems," he said. No one in Israel denies that improvements will be needed given the limited geography of the Palestinian-Israeli conflict.

Short-range rockets from Gaza are often in the air for less than 10 seconds, an interception "window" that could prove too narrow for even the most advanced counter-measures.

A senior Israeli military source said the army may come under orders to create "buffer zones" in the Gaza frontier in order to compel Palestinian factions to launch from further inland, extending their rockets' flight time. (Editing by Sami Aboudi)

AlertNet news is provided by