- The Washington Times - Thursday, July 13, 2000

Israeli Prime Minister Ehud Barak, bowing to intense pressure from the Clinton administration and Congress, yesterday called off a $250 million contract to sell an airborne radar system to China.
The announcement came during Mr. Clinton's second day of summit discussions with Mr. Barak and PLO leader Yasser Arafat at Camp David.
Mr. Barak informed Chinese President Jiang Zemin by letter yesterday that Israel was currently unable to proceed with the Phalcon project, said Gadi Baltiansky, Mr. Barak's foreign policy spokesman.
China had given Israel a $250 million down payment for the first Phalcon aircraft, to be delivered in October 2001. China had an option to buy six more, which could have meant $2 billion in sales for Israel's largest defense company.
The decision was made with consideration of the need for a continued intimate relationship with the U.S. administration and the Congress, Mr. Baltiansky said.
Mr. Barak told Mr. Clinton of the decision Tuesday on the first day of the Middle East summit.
"We welcome the decision," White House spokesman Joe Lockhart said.
"We are pleased to see that they have taken our security concerns into account in making this decision."
Mr. Lockhart said he was unaware of any U.S. promise to compensate Israel for calling off the deal.
Rep. Sonny Callahan, Alabama Republican and chairman of the House Appropriations subcommittee on foreign operations, had threatened to withhold $250 million in aid to Israel if it sold the radar system to China.
"Israel made the right decision today to cancel the Phalcon sale to China," Mr. Callahan said.
"For the sake of U.S. national security interests and, in fact, the national security interests of all our allies such as Israel I am glad this matter has been resolved."
But Israel, which receives $2.8 billion in annual U.S. aid, made it clear in the letter to China it hopes someday to complete the sale.
Israel will continue to look for ways to fulfill the deal with the understanding of the United States, according to Mr. Baltiansky.
"Israel sees great value in fostering and cultivating a relationship with China, and will continue to work towards this end."
In November, Israel announced its intention to sell China the Airborne Warning and Control System, known as AWACS. The radar system, to be installed on a Russian transport plane, would enable China to conduct long-range radar surveillance and monitor Taiwan's air force communications.
"It's not in the [Asia] region's interests to make that technology available, and we are pleased the Israelis responded to our interests," another White House official said at Camp David.
President Clinton initially expressed concern that the project would involve U.S. technology. But administration officials later said the project could upset the military balance in Asia.
In April, Defense Secretary William S. Cohen met with Mr. Barak in Jerusalem and said he disapproved of the proposed sale.
"The United States does not support the sale of this kind of technology to … China because of the potential of changing the strategic balance in that region," Mr. Cohen told reporters at the time.
"With tensions running as high as they are in China and Taiwan, we see this as being counterproductive."
Israel's ambassador, David Ivry, told The Washington Times in April that Israel's relations with the United States are more important than the sale.
"We have now a problem with the United States over the interests of the United States," Mr. Ivry said during a luncheon with editors and reporters.
"U.S. interests are more important than anything.
"Israel's national security depends on our relationship with the United States. We have to take into account U.S. interests and concerns."
Mr. Jiang visited Israel in mid-April and predicted the sale would go forward
"About the aircraft, we spoke on that yesterday, and there will be a contract," Mr. Jiang told reporters.
Some Pentagon officials viewed the proposed sale with alarm. They feared China would use the radar system to threaten U.S. aircraft carriers and naval forces in the Pacific that would be called in to defend Taiwan in the event of an attack on the island by mainland forces.
U.S. intelligence first detected the outfitting of the Russian jet in Israel last October, raising concerns in the Clinton administration and in Congress.
Israel reportedly is concerned that canceling the contract could jeopardize potential deals with Turkey, India and South Korea.
Israel previously came under fire in 1990 when the CIA reported that it improperly transferred U.S. Patriot anti-missile technology to China.

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