Israel to Clear Future Arms Sales with US

From DefenseNews

Israel To Clear Future Arms Deals With U.S. After China Row

By AGENCE FRANCE-PRESSE, JERUSALEM

Israel was set June 27 to sign an agreement to clear future defense deals with Washington after a spat over an arms contract with China which could leave it with a multi-million dollar compensation bill.

Defense ministry spokeswoman Rachel Ashkenazi said negotiations “to reach an understanding with the United States are at an advanced stage” after Israel effectively apologized to Washington over a controversial drones deal.

The Haaretz newspaper said the agreement will mean Israel having to renege on the agreement to upgrade Harpy Killer drones it had sold to Beijing, leading to the likelihood that China will demand multi-million dollar compensation for the second time in five years.

Israel had to pay Beijing 350 million dollars in compensation after breaking an agreement in 2000 to supply Falcon airplanes with an AWACS radar system.

According to Haaretz, the memorandum of understanding will declare that the United States and Israel are “strategic partners” and will be considerate of the other’s concerns about the transfer of military technology to third countries.

Countries “arousing concern” will be specified separately.

The new accord will also stipulate that the United States cannot ban defense deals on commercial grounds after anger among the Israeli defense industry that business interests lay at the heart of the row over the drones deal with China.

Two senior Israeli delegations are expected to visit Washington this week to formulate the agreement with the Pentagon.

The final agreement is expected to be signed by Israeli Defense Minister Shaul Mofaz during a trip to Washington next month.

Israel’s ambassador to Washington, Danny Ayalon, told the paper that the agreement will “help prevent misunderstandings in the future.”

”The agreement will also help our defense industries to better penetrate the mammoth American market, which is much bigger than the Chinese market,” he added.

Israel’s ties with its usually staunch U.S. ally took a major hit from the row over the drones deal, with the Pentagon imposing some restrictions on arms sales and technology transfers to Israel.

Foreign Minister Silvan Shalom moved to defuse the row during a visit by U.S. Secretary of State Condoleezza Rice earlier this month, expressing “regret that these sales could have damaged the interests of the United States”.

Rice said she believed that “the Israelis now understand our concerns and I am certain as good partners can... we will come to strong resolutions that allow U.S. to proceed.”

Israel was particularly keen to resolve the dispute with Washington at a time when it is looking heavily to support from the Bush administration for the pullout from the Gaza Strip starting in August.

In a sign of Washington’s wariness of China’s growing military power, U.S. Defense Secretary Donald Rumsfeld warned earlier this month that China is spending much more on a major military buildup than officially acknowledged, putting at risk the military balance in the whole Asia Pacific region.

The United States has also been vigorously lobbying against moves by the European Union to lift the arms embargo it slapped on China after the June 1989 crackdown on pro-democracy students in Beijing.