http://www.hindustantimes.com/news/181_222859,0005.htm
Israeli Phalcon sale to India may be frozen under US pressure
Yehonathan Tommer (Indo-Asian News Service)
Jerusalem, March 28
A $1 billion deal for the sale of Israeli Phalcon spy planes to
India may be frozen because of American fears that they could
increase tensions with Pakistan in the subcontinent, an Israel Army
radio report said.
A US official approached the Israeli embassy in Washington with the
request to freeze the deal fearing the Phalcon sale would aggravate
instability between the two South Asian nuclear rivals, according
to the report Thursday by Galei Tzahal, or Israel Army Radio.
Foreign ministry sources in Jerusalem were unable to confirm the
report but said American displeasure with the proposed sale was
known for some time.
Washington apparently told Israel bluntly that a promised special
military grant of $1 billion was linked to the cancellation of the
Phalcon deal with India, said a report in the financial daily
Globes.
Negotiations between India and Israel Aircraft Industries,
manufacturer of the sophisticated airborne warning and control
system, have been progressing slowly since the Pentagon first
learned almost two years ago that India was keen on acquiring three
or four Phalcon systems.
India plans to mount the Phalcon radar and sensors on Russian-made
Il-76 aircraft. Israel has supplied a Green Pine radar, which forms
part of the Phalcon system, to India to bolster its air defence
network.
Commenting on Israel Army Radio, Yuval Steinitz, the Defence and
Foreign Relations Chairman in the Knesset or Israeli Parliament,
said the "US pressure is not legitimate" if was actually a form of
business competition.
"It is not wise to confront Washington, but we have to maintain our
interests," he said.
If Israel has to choose between angering Washington and
disappointing New Delhi, it is likely to accede to the American
request, given its close friendly ties and dependence on
Washington, said security experts here.
Sagging under a mammoth budgetary deficit due to its nearly
three-year-long military confrontation with the Palestinians and
with gloomy prospects for an early economic recovery, Israel is
likely to take the US threat seriously.
Moreover, the Phalcon includes American components and under a
production agreement, Israel must obtain US approval for sales to
third countries.
The US request is reminiscent of the Pentagon's opposition to an
earlier Israeli agreement to sell a Phalcon system to China in
August 2000.
Due to sharp tensions between China and Taiwan at the time, the US
vetoed the Israeli sale, sparking an angry reaction from
Beijing.
The US opposition to the deal was based on fears that China's
acquisition of the Phalcon would strengthen its strategic
capabilities in the event of a military confrontation in the
region.
The Pentagon's veto soured Israel's relations with China. Beijing,
which had already paid almost a third of the Phalcon deal worth
$250 million, froze major Israeli arms contracts. This was followed
by months of negotiations on compensation, with at least three
high-level
Israeli defence missions being sent to Beijing to placate the
offended Chinese.
Only recently, after tensions had long subsided, Israel received US
clearance to resume sales to China and frozen Israeli arms
contracts have gone through.
