U.S. sanctions against Israeli arms industry

6/12/2005

The United States has imposed a series of sanctions on the Israeli arms industry in recent months, Israeli officials and media reports said on Sunday, escalating tensions between the two allies over Israeli military sales to China.

According to the Israeli daily Haaretz the U.S. has halted cooperation on several projects, frozen delivery of sensitive equipment, and is even refusing to answer telephone calls from Israeli defence officials.

Furthermore, Washington has also frozen Israel out of the development of Lockheed Martin Corporation's F-35, a next-generation warplane being developed with several foreign participants.

The report states that the U.S. is demanding that Israel agrees to a host of concessions, including U.S. supervision over some arms sales, as a condition for repairing the relationship.

The Israel Defence Ministry issued a statement saying it is "holding quiet and specific talks with the United States with the goal of resolving the misunderstanding that has developed."

A senior Israeli defence official speaking on condition of anonymity confirmed that sanctions were in place, and described the situation as a "serious crisis."

U.S. officials could not immediately be reached for comment.

The dispute stems from the Israeli sale of unmanned drone aircraft technology to China. State-owned Israel Aircraft Industries sold Harpy drones to China in the early 1990s. Harpy parts were shipped to Israel last year for what American defence officials said was an upgrade.

Israel has denied the American contention, saying the Harpy units were undergoing routine maintenance with Israeli military officials saying work on the Harpy deal has been frozen.

The U.S. fears the Harpy technology could threaten Taiwan or endanger U.S. forces in case of war with China. In 2000, Washington "cancelled" a $2 billion Israeli sale of PHALCON reconnaissance planes to China. The botched deal caused ill will between Israel and China that was resolved only after Israel paid hundreds of millions of dollars in compensation.

The Haaretz reports that this time the United States has suspended cooperation on development of an advanced imaging system for Israeli forces, frozen collaboration on Hunter 2 unmanned attack aircraft, and suspended the delivery of parts of night-vision equipment to the Israeli army.

The report said the United States is demanding details on 60 recent Israeli security deals with China. It also wants Israel to re-evalauate its system for supervising arms deals, and wants to sign a joint understanding with Israel regulating future arms sales.

Israeli defence officials said Defence Minister Shaul Mofaz already has appointed a retired general, Herzl Bodinger, to negotiate a memorandum of understanding with the Americans.

The officials said the memo would force Israel to receive U.S. approval on arms exports to countries defined by the Americans as "sensitive."

The officials described the memorandum as a "humiliating step," but said Israel would have no choice but to sign the document.