Source: The Associated Press-NY-07-03-00 1217EDT

Barak Tries To Resolve Plane Dispute

By Mark Lavie, Associated Press Writer

JERUSALEM (AP)--Israeli Prime Minister Ehud Barak said Monday he doesn't want to hurt ties with the United States over Israel's planned sale of a spy plane to China--a comment that came amid growing indications the deal could be called off.

Israel is looking to solve the problem without creating an ``an obstacle in our relations with the United States,'' Barak said. He did not mention damage to relations with China if the deal is canceled. China is a major purchaser of Israeli arms.

Israel's planned sale of the plane, called PHALCON, has become a stumbling block between Israel and the United States in recent months.

The United States insists that Israel scrap the sale, pointing to tensions between China and Taiwan and expressing concern that China could use the plane to track American planes if hostilities erupt. In the U.S. Congress, representatives from both parties have threatened to cut American aid to Israel if the deal goes through. Israel receives $1.9 billion in annual defense aid from the United States.

But the Israelis say the U.S. government is trying to undermine Israeli competition for arms markets in Asia. They warn that if they have to cancel a signed contract with China, it would harm their future credibility in arms deals.

With the Israeli-Palestinian peace treaty talks in a critical phase, Barak depends on the Clinton administration's good will. The Israeli leader has been urging President Clinton to convene a trilateral summit with Palestinian leader Yasser Arafat in which the leaders would try to finalize a peace accord.

If such an agreement is reached, Israel would ask for billions of dollars in additional U.S. aid--something Congress would be unlikely to approve as long as the disagreement over the spy plane has not been resolved.

Israeli newspapers and others have begun raising the possibility of American compensation to Israel for calling off the spy plane deal. Last week, an Israeli Cabinet minister close to Barak said it was in Israel's interest to cancel the deal. And during last week's one-day visit by Secretary of State Madeleine Albright, both Barak and Foreign Minister David Levy referred to the plane deal and said Israel would take no steps that would harm American interests.

The PHALCON deal includes a Chinese option to buy up to four more of the spy planes, which are built on a Russian chassis with Israeli technology.

(Webmaster's Note: , if you believe that this is "Israeli technology," I have some Manhatten real estate I would like to sell you for real cheap. Keep in mind that this reporter, Mark Lavie... is a Jew)

Copyright 2000, The Associated Press. The information contained in the AP Online news report may not be published, broadcast or redistributed without the prior written authority of The Associated Press.

Source: The Associated Press-NY-07-04-00 1746EDT

Israel Might Sell PHALCON

JERUSALEM (AP)--Israel will propose selling an advanced airborne warning system to China through a third country in hopes of
reducing U.S. pressure to drop the sale, an Israeli TV channel reported Tuesday. Channel Two said Israel's ambassador to
Washington, David Ivri, and Deputy Defense Minister Ephraim Sneh would present the proposal to U.S. administration officials in
the coming days. The report, which cited unnamed Israeli defense officials, did not name a proposed third country.

Sneh's aide, Hillel Fertouk, denied the report. Israel has come under tough criticism in Congress for going ahead with the
$250 million sale of the PHALCON advanced warning system to China. Some members of Congress say the system presents
an immediate threat to Taiwan, and a potential threat to U.S. air forces who could conceivably be involved in defending Taiwan.

Israel has all but agreed to give up further PHALCON sales to China, but fears that scrapping this one--after the Chinese have
already paid $100 million toward the sale--would undercut its carefully cultivated reputation as a reliable arms dealer. Selling
the plane through a third party could allow Israel to lower the sale's profile in the United States, while saving face with the Chinese.

Congressional efforts last month to punish Israel for the sale by cutting its aid collapsed under pressure from the Clinton
administration. But the U.S. ambassador to Israel warned that the danger of damage to relations still existed.

In recent weeks, some Israeli officials have noted that U.S. sales to Saudi Arabia--technically at war with Israel, and
vulnerable to a takeover by militant anti-Western Islamic militants _ have included advanced radar systems and combat aircraft.

Copyright 2000, The Associated Press. The information contained in the AP Online news report may not be published,
broadcast or redistributed without the prior written authority of The Associated Press.