- The Washington Times - Friday, July 14, 2000

BEIJING Chinese President Jiang Zemin criticized the United States Thursday for its role in pressuring Israel to cancel its sale of airborne warning and control aircraft to China, according to U.S. officials.

"It was certainly a concern to China that the sale was canceled," Defense Secretary William S. Cohen said when asked by a reporter about the canceled sale from Israel of a Phalcon airborne warning and control aircraft.

A U.S. official said later that Mr. Jiang expressed concern that the sale was canceled under pressure from the United States. "They made it clear they were not happy with it," the official said.

The issue was discussed during a 90-minute meeting between Mr. Cohen and Mr. Jiang inside the Communist Party's leadership compound known as Zhongnanhai, once the residence of Mao Tse-tung.

Meanwhile, Israel said Thursday it wanted the United States to compensate it for scrapping the sale of the $250 million radar system to China, and experts warned the cancellation could damage future Israeli arms sales.

A spokeswoman for Israel's defense ministry said Israel and the United States had not yet begun to talk about compensation, but she added: "It is clear that the cancellation of the deal causes Israel grave economic damage."

Former Israeli Defense Minister Moshe Arens said that canceling the deal had dealt a "severe blow" to Israel's credibility in the lucrative international arms market.

"The defense industry cannot exist without exporting some goods. This will affect its ability to make this deal and others because it raises questions in the mind of customers that Israel will cancel future deals," he said.

Israel informed the United States on Wednesday that it is calling off the sale of an airborne warning and control plane produced by Israeli Aircraft Industries known as Phalcon. The aircraft is being outfitted on a Russian-made Il-76 and was being worked on in Israel.

The United States opposed the sale because it would significantly increase China's ability to conduct long-range combat operations, against Taiwan or U.S. warships in the Pacific.

Congress had threatened to sharply curtail U.S. aid to Israel over the sale and discussion had been ongoing in Washington between U.S. and Israeli officials over the deal.

The Phalcon sale was to be part of a major push by the People's Liberation Army to develop better command, control and communications for its forces.

An Israeli diplomatic source said last month that the first of several Phalcon aircraft was to be delivered in October of 2001. The Israeli government was weighing carefully the aircraft sale and that the matter had been "under discussion." Israel did not view the sale as a threat to the United States, this source said.

However, U.S. military officials said the Phalcon would give China's military new capabilities to conduct long-range warfare.

The Chinese have been building an aerial-refueling capability and have purchased advanced warplanes from Russia.

Chinese Foreign Ministry spokesman Zhu Bangzao said China was upset at both Israel and the United States over the Phalcon decision.

"No other country has the right to interfere in the bilateral cooperation that China has with other countries," Mr. Zhu told reporters, referring to U.S. pressure on Israel to cancel the aircraft deal.

"Any agreement and understanding between states should be honored. This is the basic understanding of state-to-state relations," Mr. Zhu said in a reference to Israel.

After giving a speech to junior military officers at the National Defense University, Mr. Cohen spent Thursday in meetings with several high-ranking Chinese officials, including Central Military Commission Deputy Chairman Gen. Zhang Wannian, who officials said spent most of the meeting urging the defense secretary not to sell advanced arms to Taiwan.

Mr. Cohen also met with Chinese Vice Prime Minister Qian Qichen. Thursday night, he held a dinner in honor of Chinese Defense Minister Chi Haotian.

During the press conference, Mr. Cohen said his two days of talks were "constructive" and helped to improve communications between the U.S. and Chinese militaries.

Asked if the United States will sell advanced Aegis warships to Taiwan, Mr. Cohen indicated that the weapons sale is still under consideration.

"The needs for Taiwan will be made as we have been doing in the past … no decision has been made on the sale of the Aegis system to Taiwan," Mr. Cohen said, noting that he hopes there can "be a reduction in tensions" between China and Taiwan.

Mr. Cohen also said during his meeting with Mr. Jiang that he raised U.S. concerns about the transfer of missile technology to Pakistan and other rogue states. "Chinese officials have indicated that they are complying with their agreements that missiles are not being transferred to Pakistan," Mr. Cohen said.

"The question that has to be resolved, in terms of whether technology itself is being transferred, that's precisely the reason why these discussions have been under way," he said.

Mr. Cohen travels to Shanghai Friday for meetings with Chinese officials and will give a speech at the stock exchange. He then travels to Sydney, Australia, for the weekend.

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