U.S., Israel to sign arms memorandum

Israeli Defense Minister Shaul Mofaz is expected to travel to Washington in late July to sign a memorandum of understanding with the Pentagon which effectively gives America veto power over Israel's arms sales to selected countries.

The wording of the memorandum is being hammered out now by a delegation of the Defense Ministry headed by former air force commander Maj.-Gen. Herzl Bodinger.

According to Israel's ambassador to Washington, the memorandum would help enhance defense ties.

"Israel's willingness to sign the memorandum is not surrender; it's a great achievement," Ayalon said in an interview. "Such a memorandum would have prevented regrettable affairs, such as the Phalcon and the Harpy," Ayalon added, in reference to two weapon systems sold to China that the United States blocked.

Ayalon said the memorandum allowed for the upgrading of technological cooperation with the U.S.

"This settlement will tighten the partnership with the U.S., and in any case, our interests coincide," Ayalon was quoted as saying. "Close allies of the U.S., such as the UK and other NATO countries, have signed similar agreements."

While the agreement is likely to impose constraints on Israel's advanced industry, the Bush administration is expected to take a conciliatory tone, saying the United States objects not to competition with U.S. industry but to certain sales of strategic material.

It also might set precedent and designate Israel as a strategic partner of the United States, with the two sides considerate of each others' concerns. That could imply some restraints on U.S. arms sales to Arab countries.

According to defense sources, Israel will come out of the ordeal with a much-restricted maneuverability regarding arms sales to third parties.

But it will also allow the United States to lift the freeze of Israeli involvement in crucial projects like the F-35 Joint Strike Fighter.

It's not expected by Israel for the United States to compensate it for losing its Chinese arms market and any penalties that may need to be paid to Beijing will likely come from the Israeli taxpayer.

On Monday, China complained about outside interference in its relations with Israel after reports that Israel was calling off the arms deal under U.S. pressure.

A statement by China's foreign ministry said development of relations with Israel "will not harm the interests of any third party" and that "other countries should not make unreasonable remarks regarding this."

Maj.-Gen. Ze'ev Livneh, a former military attach in Washington, said the fact that senior Israeli defense officials have been almost blacklisted by the Pentagon was damaging.

"But I don't think the damage is very deep. I believe the strategic links are very deep and fundamental," Livneh told Army Radio. "That said, the relationship existing today is likely to harm the daily operations and perhaps the activities of the defense industries."

Washington has sought clarifications over the matter for months, with senior Pentagon officials singling out Defense Ministry Director General Amos Yaron in particular for misleading them over Israel's arms transfers to China.

According to reported leaks from the Defense Ministry, Yaron is expected to retire following the withdrawal from Gaza so it does not appear to be linked to any American demand.

Defense officials have refused to comment on the reports.

"We have to be sensitive to the American's strategic interests. Since they see the Chinese as a future strategic threat and a rising superpower, then we have to understand that," Livneh said. "Particularly when we are receiving some $3 billion in U.S. aid annually."