TEL AVIV—Israel's Iron Dome rocket-defense system spent the past two weeks successfully blasting Hamas rockets out of the sky—many in dramatic nighttime explosions—helping to end the recent hostilities between Israel and Hamas in just seven days.
The battle to build Iron Dome, however, lasted years and provided fireworks of its own.
Before Wednesday's cease-fire, Iron Dome knocked down 421 rockets launched from Gaza and bound for Israeli cities, an 84% success rate, according to the Israeli military. The system limited Israeli casualties to six during the seven days of bombardment. As a result, there was markedly less political pressure on Israel's decision makers to invade Gaza.
"If it was not for Iron Dome, for sure you would have seen a more aggressive action in Gaza by air and ground," said an Israel general and member of Israel's joint chiefs of staff.
For Israel's primary foes Iran, Hezbollah and Hamas, their weapon of choice—rockets and missiles—could soon prove nearly obsolete. That could alter the strategic calculation for Israel and its enemies alike. Despite initial Pentagon misgivings, President Barack Obama has given $275 million to the project since 2010 with the aim of reducing the rocket threat and eventually bolstering chances of a peace deal by making Israel feel more secure to agree to territorial concessions.
For years, Pentagon experts dismissed Iron Dome as doomed to fail and urged Israel to instead try a cheaper U.S. approach. Iron Dome faced similar skepticism at home. But an Israeli mathematician-general, along with a labor-organizer-turned-defense-minister, pushed the project through, overcoming the opposition of some of Israel's most powerful military voices.
In 2004, then-Brig. Gen. Daniel Gold was named director of the Ministry of Defense's Research and Development department, responsible for overseeing the development of new weapons systems. Mr. Gold, who also has a Ph.D. in mathematics, took up the rocket challenge with a zealot's gusto, according to people involved in the project.
That August, he put out a call to defense companies for proposed antirocket systems. Few took notice within the defense establishment.
Israel's Hezbollah foes in Lebanon first turned to short-range rockets in the mid-1990s. The first Hamas-fired Palestinian rocket hit Israel in early 2001. The crude projectiles rarely hit their intended targets, yet over the years they rained down by the thousands—some 4,000 by 2008.
Almost no one in Israel's military brass believed rocket defense could work. Palestinian rockets from Gaza fly erratically and can hit Israeli communities within seconds. Most are just a few feet long and a few inches wide.
Gen. Gold and his team, deep in the bowels of the Defense Ministry in central Tel Aviv, reviewed the options. They considered lasers and giant shotguns. In March 2005, they agreed on a patched-together concept for the system that would become Iron Dome, drawing on technologies from three Israeli defense companies.
He called up Rafael Advanced Defense Systems Ltd., an Israeli weapons maker, and asked the company to head the project. A 2008 audit by the Israeli state comptroller, an independent government-oversight office, criticized this step, saying he bypassed required approvals from the military's general staff, the defense minister and the Israeli government.
That report didn't lead to formal charges of wrongdoing. But it fueled years of heated political criticism of the project and its backers—showing how close the highly controversial Iron Dome idea came to never happening at all.
Gen. Gold said in an interview that the auditor's report misrepresented some facts, declining to be more specific. He disputes any allegation that he broke rules, saying he simply sidestepped red tape.
"I just canceled all the unnecessary bureaucracy," Gen. Gold said. "I left only the most crucial bureaucracy needed for success."
At the time, according to Gen. Gold as well as to the auditor's report, he told Rafael's chairman of the problem that no one in the government had agreed to pay for the project. Rafael's chairman, Ilan Biran, confirms that account.
In an interview, Gen. Gold said he told Mr. Biran he could use $5 million to $6 million from his research budget to get the project started if Rafael would agree to match. Mr. Biran said in an interview that he agreed to take the risk after his engineers assured him they could pull off the feat.
It was no ordinary feat. The project's specs demanded a system that could continuously scan all of Gaza, detect a rocket the instant it was fired, no matter how big or small, pinpoint its likely strike location, and finally, if it was going to hit a city, blast it out of the sky with a missile. The system needed to do all that within about 15 seconds.
Gen. Gold also said the interceptor missiles would need to cost about one-tenth of what your average air-to-air missile costs, or else Israel's rocket-flinging foes would be able to bankrupt Israel. And instead of taking 10 years or more to develop, typical for new weapons systems, Iron Dome needed to deploy in half that.
In the summer of 2006, war broke out with Hezbollah in Lebanon. Over the 33 days, Hezbollah fired more than 4,200 rockets into northern Israel, killing 44 Israelis. Suddenly, stopping rockets was a government priority.
So in August 2006, Gen. Gold and his team briefed the man who was then Israel's minister of defense, Amir Peretz, on Iron Dome. Mr. Peretz had spent most of his career as a labor organizer. As a civilian with little military experience, he had been an unlikely choice as defense minister. He hails from Sderot, a southern Israeli town that borders Gaza and has borne the brunt of Palestinian rocket fire.
During his brief stint as Defense Minister from 2006 to 2007, Mr. Peretz was well known for a photograph during the Lebanon War of him reviewing the battlefield through binoculars with lens caps on. When he resigned as defense minister in 2007 over his handling of that war, his political career seemed doomed.
In the weeks following the Lebanon War, then-Prime Minister Ehud Olmert was briefed on Iron Dome for the first time. Nearly all the military advisers in the room slammed the project, Mr. Peretz recalled. Mr. Olmert refused to divert government funds for Iron Dome, according to Mr. Peretz.
Mr. Olmert didn't return calls seeking comment. In an interview with the Israeli newspaper Yediot Ahranot, Mr. Olmert praised Mr. Peretz's persistence in pushing Iron Dome.
Instead of scaling back the program, Gen. Gold upped the ante. In November 2006, he "directed Rafael to begin full-scale development of the Iron Dome project when Rafael had no order to do so," according to the Israeli comptroller's audit report. "The directive was not under his authority," the report concluded.
"I cannot say that the report is wrong," said Yossi Drucker, who headed the team at Rafael overseeing the system's development. "But if you want to achieve something in a very short time…you have sometimes to bypass the bureaucracy."
The gamble paid off. In early 2007, Mr. Peretz threw his full ministerial weight behind the project, committing another $10 million in Ministry of Defense funds to keep Iron Dome alive. The government's auditors later found he violated regulations by committing the funds without military or government approval for the project.
But if the government hoped to have enough Iron Dome batteries to provide meaningful protection against rockets, it would need more money than that. Israel's Defense Ministry approached the U.S. administration of President George W. Bush with a request for hundreds of millions of dollars for the system. The reception at the Pentagon was frosty, according to current and former U.S. defense officials.
Mary Beth Long, the assistant secretary of defense who oversaw the Iron Dome review process, sent a team of U.S. military engineers to Israel to meet with the developers. After the trip, in a meeting in her office, the team voiced skepticism about the technology, citing poor performance in initial testing, Ms. Long said in an interview.
Rafael's Mr. Drucker recalls an even harsher U.S. response. He said the U.S. team told them: "This is something that cannot be done."
Some U.S. military officials argued that Israel should instead consider using a version of the U.S.'s Vulcan Phalanx system, which the Army was deploying in Iraq to try to shoot down incoming rockets, current and former defense officials say. Gen. Gold's team had already considered and dismissed the Phalanx system.
By the end of 2007, Mr. Olmert and Mr. Peretz's successor as defense minister, Ehud Barak, had both come around to backing Iron Dome. That December, the government gave the project its first big cash infusion of roughly $200 million.
As it became clear that Israel was going to be spending hundreds of millions of dollars on rocket defense, the industry scrambled. Rafael's rivals lobbied for their proposals to be reconsidered.
Israel's government auditors began investigating the project and issued a report singling out Gen. Gold for launching a billion-dollar project without the necessary approvals. "Brig. Gen. Gold decided on the development of Iron Dome, determined the timetables and ordered predevelopment and full development before the relevant authorities had approved the project," the report said.
But Iron Dome was making lightning progress. An all-star team of engineers assembled from across Israeli defense companies worked around the clock. Pensioners were called out of retirement. The contest to design the warhead for the interceptor missile pitted a 25-year-old woman, fresh out of university, against a 30-year veteran of Rafael.
And in 2009, during the first field test, an Iron Dome prototype successfully intercepted an incoming rocket.
Iron Dome got a significant boost soon after President Obama came to office in 2009. Mr. Obama visited Sderot as a presidential candidate and told his aides to find a way to help boost Israel's defenses from the makeshift rockets, his aides said, although defense officials at the time still doubted Iron Dome was the way.
As president, Mr. Obama tapped Colin Kahl to run the Pentagon office overseeing U.S. military policy in the Middle East. Mr. Kahl found the Iron Dome request on his desk, decided to take another look and had what he later described as a light-bulb moment. "Ding, ding, ding. It just made sense," Mr. Kahl said.
In 2009, the peace process topped Mr. Obama's foreign-policy agenda. But the administration's call for a freeze in Jewish settlement growth badly strained ties with Israel's right-wing prime minister, Benjamin Netanyahu. Top Obama administration advisers saw supporting Iron Dome as a chance to shore up U.S.-Israel security relations and balance some of the political strains.
At the direction of a White House working group headed by then-National Security Council senior director Dan Shapiro (who today is the U.S. ambassador to Israel), the Pentagon sent a team of missile-defense experts to Israel in September 2009 to re-evaluate Iron Dome. The decision raised eyebrows in some Pentagon circles. Iron Dome was still seen as a rival to the Phalanx system, and previous assessment teams had deemed Iron Dome inferior.
In its final report, presented to the White House in October, the team declared Iron Dome a success, and in many respects, superior to Phalanx. Tests showed it was hitting 80% of the targets, up from the low teens in the earlier U.S. assessment. "They came in and basically said, 'This looks much more promising…than our system,' " said Dennis Ross, who at the time was one of Mr. Obama's top Middle East advisers.
That summer, Mr. Kahl's office drafted a policy paper recommending that the administration support the Israeli request for roughly $200 million in Iron Dome funding.
Mr. Ross said the threat posed by Iran was also part of the calculation to invest in Iron Dome. By showing how seriously the U.S. took Israel's security needs, the administration hoped Israel would "provide us the time and space to see if there was a diplomatic way out of the Iranian issue," Mr. Ross said.
The system went operational in March 2011. It shot down its first Palestinian rocket on April 7. Within three days it had shot down eight more rockets. But it wasn't until the recent Gaza flare-up that the system made its mark on the public consciousness.
Mr. Peretz went to a bar mitzvah earlier this week. When the onetime political pariah walked into the reception hall, 200 people rose to give him a spontaneous standing ovation, according to aides in his office. On the fourth day of the war, Gen. Gold, now retired, sat at a cafe in central Tel Aviv. Two women stopped and asked to have their photographs taken with him.
Write to Charles Levinson at Charles.Levinson@wsj.com and Adam Entous at Adam.Entous@wsj.com