In the following letter, the Rebbe addresses the oft-asked questions of whether Chabad chassidim serve in the army and why yeshivah students receive an exemption. The letter is dated 26 Iyar, 5740.
Mr.... North Hollywood, Cal. 91606
Greeting and Blessing:
…In answer to your questions and to begin with the question of why Lubavitch is not active in this or that project - apparently you are not fully informed about the Lubavitch activities, since some of the specific projects you mention in your letter have not only been included in Lubavitch work, but have been part and parcel of it for many years. However, you can rectify this lack of information through your Lubavitch contacts.
Let me cite some examples with reference to some of your questions. You ask why Lubavitch Chassidim do not serve in Tzahal. Obviously you are misinformed, for many do and many have attained high rank in the defense forces on active duty, and not only in the Chaplaincy, as you thought. As for those who serve in the Chaplaincy, clearly that is where they contribute most to Tzahal and the security of the country, since keeping the morale of the defense forces on the highest level is of primary importance. It would be a poor judgment on the part of Tzahal to press one who is qualified to be a Chaplain into service as a private, as it would be to force one who is qualified to be a colonel to serve as private instead.
While on this subject, let me mention a further point, though you do not refer to it explicitly, namely, the exemption of yeshivah students from military service. As you may know, this exemption was recognized and agreed to by the founder of Tzahal, the late D. Ben Gurion. It is based on the fact that a yeshivah student can accomplish more to the security of the country by continuing his Torah learning than by military duty. Anyone who is familiar with the Sedra Bechukosal and is not prejudiced can see this clearly.