JERUSALEM -- Israel's Defense Ministry announced Thursday the last-minute cancellation of a $140 million contract with Turkey over fears that a sophisticated aerial surveillance system could end up in Iran's hands.
The Israeli electronic defense firms Elbit Systems and Israel Aerospace Industries had contracted three years ago to provide the multimillion-dollar surveillance system to Turkey, which has cooled relations with the Jewish state and has warmed to Iran — Israel's existential enemy.
All defense-related contracts are subject to Defense Ministry approval.
"Ties with Turkey are extremely important, but we have a security responsibility," a Defense Ministry official said in announcing the contract's cancellation.
The official cited the close ties between Turkey and Iran, and noted a statement by Turkish Prime Minister Recep Tayyip Erdogan three months ago that the two countries are "firm in their stand" against a common enemy — Kurdish rebels in northern Iraq.
The cancellation comes a week after Turkish Foreign Minister Ahmet Davutoglu told parliament in Ankara that Turkey's Middle East policies had "brought Israel to its knees" and had isolated the Jewish state.
The Israeli announcement made no reference to Mr. Davutoglu's remark; however, it appears relevant since Turkey's ties with Iran have long been known and the contract was signed three years ago.
Israel's once close defense and political relationship with Turkey began to unravel as the Turkish government sought to extend its influence in the Arab world during the past few years.
The relationship turned hostile after Israeli naval commandos killed nine Turkish militants last year on a flotilla attempting to break Israel's naval blockade of the Gaza Strip.
When Israel refused Turkish demands for an apology, Ankara reduced diplomatic relations to a minimum and cut most of its once-extensive defense ties, including regular joint training exercises of their air forces.
Elbit Systems and Israel Aerospace Industries, which had contracted to provide the surveillance system for Turkey's air force, will seek compensation from the Israeli government and may be the target of lawsuits from Turkey.
A statement issued by Elbit said the cancellation was due to political considerations.