Israel sells arms to Asia discretely, even secretly

''When we demonstrated our Galil assault rifle in the Philippines last year, '' said a man involved in Israeli arms sales, ''we brought over the rifle's designer. First he dropped it in a tank of water. Then he rubbed it in the dirt. Then he started firing it. The Filipinos were impressed.''

Then comes the punch line: ''But they didn't buy anything. Our stuff is the best in the world, but at the back of people's minds is one little word: oil.''

The man's counterpart in another part of Asia agrees. ''We're just not selling enough, unfortunately.''

Despite this modesty, the Israelis do not seem to be doing too badly. One person intimately concerned with Israeli military sales guessed that ''at least'' $100 million worth of weaponry was sold, mostly in Southeast Asia last year.

Much of the modesty is, in fact, discretion, as many Asian clients are sensitive to the Israeli connection.

Military expenditures consume almost 30 percent of Israel's annual gross national product. Last year's military budget mounted to about $7.34 billion. The $1 billion that it reportedly earns in foreign military sales every year helps reduce this enormous burden to their economy.

They are less willing to say exactly what they sell, at least in Asia. ''As soon as things are recognized as our products,'' said a salesman, ''we have trouble.''

Most officials involved in the business talk only about the most visible Israeli equipment in Asian armies. Among these are the Gabriel surface-to-surface missiles, which can be seen on Thai and Singaporean fast attack craft.

''Unfortunately - from a professional point of view - it was the French Exocets, not Gabriels, that sank HMS Sheffield in the Falklands war. That might damage our market a little.''

The Israelis have also sold the Shafrir air-to-air missile to at least Taiwan. This is seen as part of that country's effort to move away from total dependence on the United States.

Another visible Israeli weapon is the Uzi submachine gun, which seems to have been sold almost everywhere.

''When I went past the Thai King's palace recently,'' said one man involved in Israeli armaments here, ''I was pleased to see that his majesty's body guards were carrying them.''

Israel has also sold Thailand some small transport aircraft. More interesting , there are reliable reports that Israel has recently provided Thailand with a number of 155mm artillery pieces, and has trained Thais in their use.

''I can't comment on that,'' said an official involved in Israeli defense sales. ''That's not a visible item - you have to get pretty close before you can see where these guns come from.''

Much of the Israeli sales in Asia seem to revolve around artillery, mortars and the ammunition for these weapons. Most deals are made in near-secrecy.

People in the arms business here hint that the Israelis are able and very willing to disguise the origin of any weapons they provide. ''If they trust you - and if they are sure you're not going to allow their stuff to fall into Palestinian hands, they'll do anything for you'', said one source.''They are experts at putting markings from anywhere in the world on your purchases. Don't forget, they're one of the most multilingual countries in the world.''

There are other ways that Israeli weapons are distributed around the region. Singapore, for example, makes some Israeli items under license. One Southeast Asian arms dealer complains that the Singaporeans are re-exporting some of these weapons in contravention of the license terms. A representative of the Israeli point of view seemed less concerned.

''Frankly, sometimes we might be interested in other countries producing and selling our weapons to other countries,'' this gives Israeli weaponry more exposure, perhaps many extra customers, and avoids the political difficulties that so often accompany sales direct from Israel.''

Israeli officials also say that they are willing to share their technical expertise with friendly countries. They have done so in Singapore, where military advisers helped train and organise the armed forces between 1966-74.

The Philippines is one country that some Israelis feel they could help today. The country is fighting a war against communist insurgents and Muslim separatists. ''We have some experience in handling guerrillas,'' said one Israeli.

They would only assist, however, if a country made a formal request, the Israeli added. ''We wouldn't do that sort of thing under the table.''