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U.S. cracks down on Israel, U.S. firms over military links to China

Friday, January 3, 2003

WASHINGTON The United States has asked Israel to suspend all defense cooperation with China and is cracking down on U.S. companies that transfer military technology to Beijing.

U.S. officials said Washington has sought assurances that Israel would not discuss any defense deals with China while Washington considers an Israeli request for new military aid and technology, Middle East Newsline reported.

Earlier this week, the State Department accused the Boeing Co. and Hughes Electronics of illegally transferring intercontinental missile technology to China. The accusations concern information relayed by the two companies in the wake of two satellite boosters in 1995 and 1996. The two companies could be fined up to $60 million.

U.S. officials said the request came from both the Bush administration and Congress last month during talks on Israel's participation in the Joint Strike Fighter program as well as the strategic dialogue between the two countries.

The officials said the Bush administration wants Israel to maintain the suspension of military and security sales to China until the United States approves a new policy toward Beijing.

An Israeli delegation arrives next week to discuss an aid request of up to $14 billion in grants and loans. The package includes $4 billion for military aid.

"The United States has made very clear the strategic implications for U.S. security interests of Israel's defense trade and transfer of U.S.-made equipment and advanced defense technologies to China," State Department spokesman Richard Boucher said. "We've always talked in very specific terms with the Israelis. I think our concern applies to any advanced defense technologies that might be introduced in a region."

Officials said the U.S. request was meant to warn Israel in advance of any deal with China. They said an agreement on an Israeli defense sale to China is far from imminent.

Over the last six months, Washington quietly raised concerns that Israel has sought to renew arms sales to Beijing. U.S. officials pointed to several trips by Israeli defense officials and industry executives to China to discuss ways to resume their defense cooperation.

In 2001, Israel, under heavy U.S. pressure, formally cancelled the sale of up to four Phalcon airborne early-warning systems to China. The deal was estimated at $1 billion and Israel agreed to pay Beijing $350 million in compensation.

Officials said a classified section of a report to Congress last year raised concerns that Israel has sought to sell China a range of systems that could be used to upgrade Beijing's military capabilities. The officials said Israel was also believed to be discussing the sale or transfer of air-to-air missile and avionics technology to China.

Israel has agreed to suspend discussions on military sales to China, officials said. They said Israel's Defense Ministry has also agreed to ensure that private contractors do not violate the new ban.

The Israeli daily Haaretz reported on Thursday that the U.S. request also included the indefinite suspension of the sale of security equipment to China. The newspaper said the Defense Ministry has assessed that such a suspension would not lead to the cancellation of major contracts.

"Periodically, concrete issues arise that require more discussion between ourselves and China and between ourselves and the United States," Defense Ministry spokeswoman Rachel Niedek-Ashkenazi said.

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