Since the early 1990s, Sino-Israeli , especially the military security dimension, have become a major irritant between the United States and Israel. Israel’s relations with the United States and China have been dominated by its desire to accommodate the competing demands of these two players. It unsuccessfully sought a middle path whereby its relations with a strategic ally (the United States) would not impede its newly found friendship with its strategic customer (China). In the summer of 2000, however, under intense American pressure, Israel was forced to cancel the sale of the Phalcon advanced airborne early-warning system to China. When it was forced to choose, Israel settled for maintaining close ties with Washington.

A modest attempt is made here to examine the relevance of the entire controversy for Israeli foreign policy and its long-term implications. It is also essential to examine a more pertinent question: could the controversy have been avoided?

The Troubled Triangle

Long before diplomatic relations were established in January 1992, Israel had been exporting arms to China.2 The use of military sales as a means of achieving foreign-policy objectives was neither new nor unprecedented. In the absence of significant political, diplomatic or economic tools, Israel had successfully used arms trade and other forms of security assistance to promote its interests in the Third World.3 Its relations with a number of countries have a strong defense/security component.4

China was no exception to this general rule, as Israel sought to promote its political interests through arms sales. It is widely recognized that the arms exports began around 1980 and played a significant role in the eventual Sino-Israeli normalization.5 The Chinese drive for defense modernization complemented Israel’s desire to subsidize its high-tech weapons program. Having failed in its political moves, it sought to mitigate the ideological rhetoric of China by providing valuable assistance in the defense and security arena.

Events surrounding the student demonstration in Tiananmen Square in June 1989 offered an additional incentive for Israel. The sanctions imposed by the United States and its Western allies almost froze Chinese access to critical and sensitive military and dual-use technologies. Israel, which sought to benefit from this situation, dismissed the Chinese action with a “rather perfunctory and low-level Foreign Ministry statement.”6 In the process, it emerged as China’s back door to western technology.

Israel’s ability to substitute for the United States was limited, but its ability to ignore the American-led boycott and its willingness to continue and intensify military-related ties enhanced its position in China. It, in fact, emerged as a reliable arms supplier.7 While the inauguration of the Madrid Conference in October 1991 accelerated the process of Sino-Israeli normalization, it is difficult to ignore the importance of pre-1992 military contacts in facilitating a greater appreciation of mutual needs and capabilities.

Under normal circumstances, the establishment of diplomatic relations should have formalized and intensified the arms trade. This, however, did not happen. It is within this context that one should locate the Phalcon controversy. With hindsight surrounding the aborted deal, it is possible to identify a number of mistakes committed by Israel. If the Jewish state is to avoid falling into similar situations in the future, it is essential to revisit the controversy even if one were tempted to treat this file as closed.

Periodic American Concerns

The Phalcon controversy should not be viewed in isolation. Since the early 1990s, the United States has been expressing its displeasure over Sino-Israeli military relations. Israel has been periodically accused of unauthorized and even illegal transfer of technology supplied or funded by the United States. In the past, such criticism came from interested parties and hence was of little consequence.8 Things, however, began to change for the worse with a new American view of China in the post-Cold War era.

In early 1992, Israel was accused of illegally transferring Patriot anti-missile technology to China.9 Unlike in the past, this suspicion was shared by the American political leadership, the mainstream media and people who were considered sympathetic toward Israel. The George H.W. Bush administration sent a 17-member inspection team to verify the allegation.

Though the team was unable to substantiate the allegation, the damage was substantial. A year later, CIA Director Robert Gates still underscored the “difference of view” between Israel and the United States over the Patriot controversy.10 Such accusations of Israeli impropriety have only intensified since then.11

Similarly, a number of pro-Israeli circles in the United States have periodically expressed apprehension over Sino-Israeli ties. Writing weeks after Sino-Israeli normalization, A.M. Rosenthal, a noted American columnist and a hard-line supporter of Israel, candidly warned: “Any arms sale to Communist China is contrary to Israel’s national interests and its status as a democratic country.”12 Likewise, in the midst of the Phalcon dispute, William Safire was equally candid: “Barak is faced with the stark choice between the interests of an ally and the interests of a customer. But no major Israeli leader, in government or opposition, has publicly raised an objection or launched a debate.”13

There is a significant body of opinion in the United States that adopts a negative view of China and sees it as a threat. If the United States was silent until 1999, American analysts did not hide their outrage over the proposed sale.14 As Ze’ev Schifflamented: “In fact, not one of Israel’s friends in America has come out with a statement justifying Israel’s position [over the Phalcon controversy].”15

Moreover, since 1990, a number of official reports have exhibited American concerns over Israel, and issues such as Sino-Israeli military ties and perceived Israeli “improprieties” vis-à-vis the United States have often been highlighted. The following list of American reports should have given sufficient indication that things were not normal:

•  Defense Industrial Security: Special Security Agreements Permit Foreign Owned U.S. Firms to Perform Classified Defense Contracts (March 21, 1990);

   •  National Security: Perspectives on Worldwide Threats and Implications for U.S. Forces, Report to the Chairman, Senate and House Committees on Armed Forces (April 1992);

  •  Economic Espionage: The Threat to U.S. Industry, Testimony before the Subcommittee on Economy and Commercial Law, Committee on Judiciary, House of Representatives (April 29, 1992);

• Military Sales to Israel and Egypt: DOD Needs Stronger Control over U.S.Financed Procurement, Report to the Chairman, Subcommittee on Foreign Operations, Export Financing and Related Programs, Committee on Appropriations, House of Representatives (July 1993);
• U.S.-Israel Arrow/ACES Program: Cost, Technical, Proliferation, and Management Concerns, Report to the Chairman, Committee on Appropriations (August 1993);
• Foreign Military Aid to Israel; Diversion of U.S. Funds and Circumventing of U.S. Program Restrictions, Testimony before Subcommittee on Oversight, Investigation, Committee on Energy and Commerce, House of Representatives (October 27, 1993);
• National Security: Impact of China’s Military Modernization in the Pacific Region, Report to Congressional Committees (June 1995);
• Defense Industrial Security: Weaknesses in U.S. Security Arrangements with Foreign-owned Defense Contractors, Report to the Congressional Requesters (February 1996);
• Economic Espionage; Information on Threat from U.S. Allies, Testimony before the Select Committee on Intelligence, U.S. Senate (February 28, 1996);
• China: U.S. and the European Union Arms Sales since 1989 Embargo, Testimony before the Joint Economic Committee (April 28, 1998);
• China: Military Imports from the United States and the European Union since 1989 Embargo, Report to the Chairman, Joint Economic Committee, U.S. Senate (June 1998);

         • U.S. National Security and Military/ Commercial Concerns with the People’s Republic of China, Report of the Select Committee (1999), (Cox Report).

Of these, Defense Industrial Security: Weaknesses in U.S. Security Arrangements with Foreign-Owned Defense Contractors was rather devastating for Israel. It lists economic espionage effects by the allies of the United States. According the report, one of its allies, merely identified as “Country A,”

. . . conducts the most aggressive espionage operation against the United States of any U.S. ally. Classified military information and sensitive military technologies are high-priority targets for the intelligence agencies of this country. Country A seeks this information for three reasons: (1) to help the technological development of its own defense-industrial base, (2) to sell or trade the information with other countries for economic reasons, and (3) to sell or trade the information with other countries to develop political alliance and alternative sources of arms.16

It was widely recognized that Israel was the country in question. On May 25, 1999, the U.S. House of Representatives released a declassified version of its investigation into China’s illegal acquisition of U.S. nuclear and military technology. The Report of the Select Committee on U.S. National Security and Military/Commercial Concerns with the People’s Republic of China (popularly known as the Cox Report after House Policy Committee Chairman Christopher Cox [R-CA]) identifies Israel as one of the suppliers of high-tech weapons to China. The report explicitly mentioned, “Israel has provided both weapons and technology to the PRC, most notably to assist the PRC in developing its F-10 fighter and airborne early warning aircraft.”17

These twelve reports, which were in the public domain long before the Phalcon controversy, should have alerted Israel and provided sufficient warning. Not only were these clear signals ignored, but until the very end, Israel continued to function in a business-as-usual fashion. The Cox Report, which accused China of illegally obtaining sensitive nuclear and missile technology and designs from the United States, did not result in any reevaluation of

Sino-Israeli military ties. Surprisingly, even the post-Phalcon debates in Israel were also silent on the Cox Report, thereby underscoring a strategic blindness toward post-Cold War American foreign policy.18

The Phalcon Controversy

The Phalcon is an airborne early warning system developed by a subsidiary of Israel Aircraft Industries (IAI). Under the Sino-Israeli agreement, this technology would be installed upon a Russian IL-76. China was to buy four, and perhaps as many as eight, Phalcons. The deal was estimated to earn Israel $1 billion.

It was argued that “[Prime Minister] Ehud Barak’s failure to listen to the warnings on this issue led to extensive damage to U.S.-Israel relations.”19 Months before the eventual cancellation, another commentator warned: “Israel must exercise caution in all matters related to selling arms to China and transferring military technology to it.”20

The problem is deep-rooted. Negotiations on the Phalcon appeared to have begun around 1994, when Yitzhak Rabin was prime minister. A formal agreement with China was signed in July 1996 by Prime Minister Benjamin Netanyahu. On a state visit to Moscow in March 1997, Netanyahu managed to convince the Russians to join the deal. In July 2000, Prime Minister Barak announced the cancellation of the deal, and a formal compensation package was concluded in March 2002 by Prime Minister Ariel Sharon. In short, since Rabin, all Israeli prime ministers were deeply involved in the deal. Each in his own unique way sought to promote the deal or was advised to promote it. Hence, all had a share in the fiasco.

According to Israeli accounts, from the very beginning the United States was kept in the picture. In the words of one leading Israeli Sinologist, “Washington was informed about the [Phalcon] deal as early as 1996, if not before, but kept quiet – until 25 October 1999, when the already modified Russian aircraft landed at Ben-Gurion Airport.”21 Citing security threats that the Phalcon could pose to American forces in the Pacific region, the United States suddenly reversed its earlier position and objected to the sale of the spy plane.

The deal soon became the root of U.S.-Israeli tensions.22 Following the Israeli refusal to comply with this request, Sonny Callahan (R-AL), the powerful chairman of the House Appropriations Subcommittee, announced his decision to block $250 million in annual foreign aid to Israel. This soon attracted widespread attention and support, even from traditionally pro-Israeli circles. The visit of a Congressional delegation and U.S. Defense Secretary William Cohen to Israel in early 2000 underscored the magnitude of the problems facing U.S.-Israeli relations.23 This, in turn, led to some unpleasant exchanges between Israeli and American leaders.24 Indeed, the Israeli decision to cancel the deal came just hours before Congress was to vote on the suspension of financial aid to Israel.25

After months of acrimony, on July 12, 2000, Barak announced the cancellation of the deal right in the middle of the intense Camp David negotiations with the Palestinians.26 The timing was seen in Israel as an attempt by Barak to “remove” the Phalcon issue, which had created so much tension.27

The anger and disappointment in Israel over American arm-twisting precluded a more dispassionate assessment of the whole controversy. Similarly, controversies surrounding the ill-fated and aborted Lavi combat aircraft were not properly understood.28 Some urged the government to exercise caution, while others looked for motives behind the American reversal.

The general arguments can be summarized as follows:

• The American demand was “unreasonable,” “one-sided” and “phony.”

• The Phalcon did not pose any serious security threat to the American forces stationed in the Asia-Pacific.

• The United States did not adopt a similar approach when it sold AWACS to Saudi Arabia in the 1980s.

• Phalcon sales would not in any way contribute to tensions in the Taiwan Straits. On the contrary, a strong and confident China would be less belligerent and more accommodating in the peaceful resolution of the dispute.

• The Clinton administration was trying to divert public criticisms over illegal campaign contributions from China by adopting a tougher position on the Phalcon.

• The issue would be resolved after the November 2000 elections once people who were against the deal, such as Secretary of Defense William Cohen, “are gone.”29

• There was a lack of personal chemistry between key figures in each country. 30

• The United States was motivated by the commercial rivalry over the lucrative Chinese defense market.

Moreover, in the past, Israel often sought to emphasize the non-American nature of its arms exports to China. It was not uncommon to hear statements such as “What is so American in the American technologies?”31 Such a rhetorical approach ignores certain critical realities: much of Israel’s military industry and its exports benefited from technology transfers or military assistance from the United States. Even if a particular technology is exclusively Israeli without any American input or assistance, the United States has extraordinary leverage vis-à-vis Israel.32 Its dependence upon Washington for annual military-cum-economic assistance curtails, impedes and at times eliminates Israel’s freedom. The manner in which the Phalcon cancellation was presented to and understood by the outside world indicates Israel’s strategic vulnerability vis-à-vis the United States.

Israeli response to the American dictates also exhibited a lack of understanding of American determination. Efforts were made to link Israeli cancellations to American compensation to Israel or the ongoing peace process.33 As one Israeli analyst aptly put it:

The narrow group of Israelis involved in negotiating this deal should have heeded the warning signs from the United States, but they did not. For this group, it appears that America’s strategic interests and concerns in China were not even on the map. If the confrontation deepens, this may turn out to be one of Israel’s gravest foreign-policy mistakes. 34

By looking for sinister motives behind the American accusation and justifications for its military ties with China, Israel overlooked the real issue: post-Cold War American concerns over the rising military might of China. It failed to comprehend post-Cold War American interests, especially in the Asia-Pacific region.

Post-Cold War Strategic Shift

The Phalcon controversy can be seen as an illustration of Israel’s strategic blindness regarding the ramifications of the disintegration of the Soviet Union and the consequent end of the Cold War. In certain ways, the new reality enhanced Israel’s security situation and considerably reduced the power and influence of its two notable adversaries, the Palestine Liberation Organization (PLO) and Syria. Since the mid-1970s, the Soviet bloc provided strong ideological support for the radicalization of the Palestinian question and in the process legitimized the arms struggle. The internationalization of the Palestinian cause was partly a result of the ideological support it enjoyed from the Soviet Union and its allies. In a similar vein, Soviet political and military support enabled Syria to sustain a radical posture vis-à-vis Israel. With the disappearance of the Soviet Union, both the PLO and Syria were deprived of a strategic patron and compelled to go to the Madrid Conference from a position of weakness.35

Israel recognized the importance of the disappearance of the Soviet Union in forcing President Hafiz al-Asad to abandon the military option and opt for the Washington-mediated peace efforts in the Middle East. It also appreciated the need to reorient its importance to the United States in the new world free from the Cold War. Having projected itself as a bulwark against Communist expansion in the region, Israel was forced to redefine its relevance. The American desire to seek the reorganization of the region and promote a U.S. brokered peace provided Israel ample space for maneuver. The onset of the Oslo process and active American involvement in the overall Middle East peace process offered an opportunity to Israel to synchronize its interests with those of the United States.

At the same time, however, Israel was unable to appreciate the larger shift that was taking place in the world. The end of the Cold War and resultant unipolar status brought about a radical shift in American policy toward a number of important countries and regions. The most significant modification involved China. With no Soviet Union to be contained, Beijing not only lost its relevance to American strategic calculations but also emerged as a potential threat to the new American hegemony. For the United States, China was no longer an ally to be cultivated in containing the Soviet Union but a future threat to contend with. This new equation had its impact upon U.S.-Israeli relations as well.

Israel’s relations with the United States are manifold and complex. Since its foundation, ensuring American support has been the cornerstone of Israel’s foreign policy. Even at the cost of being perceived by many as the client state, Israel has actively pursued a pro-U.S. policy in the Middle East. At one level, it enjoys considerable autonomy and unparalleled influence in Washington. At the same time, its diplomatic maneuvering is also circumscribed by the American factor. Its dependence upon the United States for political backing, economic assistance, military supplies and strategic support has limited Israel’s options. Thus, if in the past Israel pursued its arms exports to China (even after the Tiananmen developments), it was largely because of American indifference and perhaps even tacit compliance. One could even argue that Israel was assisting larger American interests vis-à-vis China.

Given the periodic U.S.-China tensions over the Taiwan Straits during the Cold War, Israel proved to be a useful conduit. The end of the Cold War changed this.

One can argue over and even challenge the validity and rationale behind the new American preoccupation with the Chinese threat. 36 Nevertheless, what is relevant for the Phalcon controversy was that Israel failed to appreciate the strategic shift that was taking place in American policy vis-à-vis China. As a result, Israel was unable or unwilling to correctly assess some of the negative signals emanating from Washington in the early 1990s over Sino-Israeli military ties. The most visible and immediate manifestation of new American concern was the manner in which Israel responded to the Patriot controversy. What should have been more troublesome for Israel was that such allegations of Israeli impropriety were frequently aired in the United States.

Rupture in Sino-Israeli Ties 

The Phalcon controversy was not the first occasion when military sales became a contentious issue in Sino-Israeli relations. Shortly after diplomatic relations were established between Israel and China, Israel Aircraft Industries sought to export 40 Kfir-C aircraft to Taiwan. Facing a severe financial crisis and potential job losses, the deal, estimated between $400 million and $1 billion, was seen as vital for the survival of Israel’s defense industries.37 The Defense Ministry, which actively promoted the deal, perhaps sought to emulate the examples of countries such as the United States and France, which maintain close ties with China even while promoting military sales to Taiwan. China’s arms exports to the Middle East, especially to Israel’s adversaries such as Syria, were also seen as a legitimizing factor.38

Interested in the financial aspect of the deal and its economic benefits, the Israeli arms-export lobby and its supporters exhibited a lack of understanding of the strategic ramifications of the proposed deal. China is extremely sensitive about Taiwan, especially regarding arms sales.

The proposed deal, which came to light just over a year after Sino-Israeli normalization, was both ill-conceived and ill-timed. Even though the Israeli Foreign Ministry eventually scuttled the deal, the Kfir controversy underscored the differences that exist within Israel’s security establishment.

Just before the Phalcon cancellation, Chinese President Jiang Zemin visited Israel in April 2000; the Phalcon deal figured prominently in the discussions.39 At least in public, Israel escaped Chinese wrath as Beijing condemned the United States for its “blatant” intervention in bilateral relations. In the words of its official spokesperson, “No other country has the right to interfere in bilateral relations between China and other countries.”40 But Israel was aware of the ramifications of the move for its painstakingly crafted relations with China. Its outgoing ambassador in Beijing, Orah Namir, felt the cancellation ran “counter to the extremely cordial ties established with China.”41 Shimon Peres personally visited China twice to express Israel’s regrets over the cancellation. As Barak’s envoy in August 2000, he went to China and expressed to his Chinese counterpart his “deepest regret for what has happened and [said] we should look for ways and means how to continue our cooperation in the future.”42 Again, in March 2002, he went to China, this time as the foreign minister of Ariel Sharon, and told his interlocutors that Israel had “caused some inconvenience to the Chinese people and leaders.”43

The post-cancellation phase was also not handled smoothly; both sides haggled over the extent of the compensation to be paid to China. Annoyed by the delays, China issued a mild warning to Israel in December 2001. In the words of its foreign-ministry spokesperson: “We hope the countries concerned can take responsibility and put forward solutions that the Chinese side is satisfied with, so as not to undermine relations between China and these certain countries.”44 On March 13, 2002, after months of wrangling, more than 20 months after Prime Minister Barak announced the cancellation, Israel agreed to pay $350 million in compensation to China – $160 million more than the advance paid by China.45

The delay was caused not just by differences between the two countries over the amount of compensation. Even though Barak had announced the cancellation of the deal in July 2000, a formal letter to this effect was sent to the Chinese in July 2001.46 There are indications that the Israeli government, now led by Ariel Sharon, was hoping that the new Bush administration, which had taken office in January 2001, would somehow endorse the Phalcon sale and that the Phalcon would “fly again.” 47

For over two decades, arms sales played an important role in the growth and consolidation of Sino-Israeli relations. Israel’s inability to fulfill its contractual obligations is bound to impede overall relations with China. Even though defense ties between the two countries appear to have been resumed, neither can afford to ignore the ghost of the Phalcon.48 One can argue that Israel will have to seek nonmilitary and non-security means to promote its foreign relations, not only with China but with other countries as well. Israel needs to establish a new modus vivendi with the United States before trying to export any major weapons system.

At another level, the controversy also underscored the perennial schism that exists between Israel’s security and foreign-policy establishments. As Gerald Steinberg observed following the Phalcon controversy, “Israel needs to realize that it is no longer a narrow regional actor, and [that] its actions have global repercussions that require careful planning by professionals. These decisions are too important to be left to the politicians and generals.”49 As happened in the Kfir controversy, the exclusion of the foreign-policy establishment in such sensitive decisions was not confined to the Phalcon deal alone.

Implications

• The end of the Cold War has curtailed Israel’s diplomatic space vis-à-vis the United States. Hence, American demands will have to be accommodated, even if they appear to be unfair, ill-founded, illogical and even overbearing.
• By settling for its strategic ally over the Phalcon controversy, Israel had formally recognized the American veto over its arms sales. This would affect all future Israeli arms deals with China, as well as with other countries that the United States disapproves of.
• This, in turn, undermines Israel’s erstwhile position as a reliable arms supplier.
• Even though there were past controversies between Israel and the United States (such as the Pollard affair), this is the first time the U.S.-Israeli differences affected Israel’s relations with a third country. Therefore, all potential buyers will have to take the American veto into account.
• For a long time Israel relied heavily on military-security ties to promote its foreign policy interests. This posture will be impeded by the loss of an independent arms-export policy.
• Without an independent arms-export policy, the tools available for Israel to promote its foreign-policy interests are limited. Israel will have to look for serious non-military means. This affects its relations not just with China but with many other countries as well.
• The controversy also weakens Israel’s ability to use its perceived influence in the United States to promote its interests in other countries, as diplomatic and political costs have to be considered. A broader decision-making structure would have prevented the crisis with the United States.50 For example, Israel would not be able to simultaneously forge strategic partnerships with countries that are intensely opposed to one another, such as, China and Taiwan, India and Pakistan, and Greece and Turkey.

1 This is a revised version of a paper presented at the Twentieth Annual Conference of the Association of Israel Studies in Jerusalem, June 14-16, 2004. The author is grateful to the Harry S. Truman Research Institute for the Advancement of Peace, Jerusalem, for its support in preparation of this article, and to Sreeradha for her incisive comments.

2 For a broader discussion on the bilateral relations, see Jonathan Goldstein, ed., China and Israel, 1948-1999: A Fifty Year Retrospective (Praeger, 1999).

3 Aaron S. Klieman, Israel’s Global Reach: Arms Sales as Diplomacy (Pergamon-Brassey’s, 1995). Such assistance included upgrading of weapons, military training, maintenance and assistance in setting up military units. In recent years, counterterrorism has emerged as another area of cooperation between Israel and a number of other countries that face similar threats.

4 Israel’s new-found relations with countries such as India and Turkey could be cited as the latest examples.

5 P.R. Kumaraswamy, “The Star and the Dragon: An Overview of Israeli-PRC Military Relations,” Issues and Studies (Taipei), Vol. 30, No. 4, April 1994, pp. 36-55; and “The Military Dimension of Israel-China Relations,” China Report (New Delhi), Vol. 31, No. 2, pp. 235-49.

6 Yitzhak Shichor, “China and the Middle East since Tiananmen,” Annals, No. 519, January 1992, p. 90. There were suggestions that the tanks used by the Chinese to crack down on the protesting students included “Israel-made 105 mm guns and laser range finders,” Israel Foreign Affairs (Sacramento, CA), August 1989, p. 5, and July 1990, p. 8.

7 Israel likewise maintained its contractual obligation vis-à-vis Argentina during the Falklands war.

8 Israel Foreign Affairs, a newsletter edited and published by Jane Hunter in the late-1980s and early 1990s, was replete with such accusations. Washington Report on Middle East Affairs also periodically carries similar accusations.

9 P.R. Kumaraswamy, “Israel, China and the United States: The Patriot Controversy,” Israel Affairs (London), Vol. 3, No. 2, Winter 1996, pp. 12-33.

10 Aviation Week and Space Technology, January 18, 1993, p. 20.

11 Among others, see Duncan Clarke, “Israel’s Economic Espionage in the United States,” Journal of Palestine Studies, Vol. 27, No. 4, Summer 1998, pp. 2035; and Duncan Clarke and Robert Johnson, “U.S. Dual-use Export to China, Chinese Behavior and the Israel Factor,” Asian Survey, Vol. 39, No. 2, March-April 1999, pp. 193-213.

12 A.M. Rosenthal, “The Hard Corps,” The New York Times, March 17, 1992.

13 William Safire, “Ally vs. Customer,” The New York Times, April 6, 2000.

14 Richard Fisher, “How American Friends Are Building China’s Military Power,” Backgrounder No. 1146 (Heritage Foundation), November 5, 1997; and Tim Kennedy, “Special Report: U.S. Military Technology Sold by Israel to China Upsets Asian Power Balance,” Washington Report on Middle East Affairs, January 1996, pp. 12, 96.

15 Ze’ev Schiff, “The Spy Plane Isn’t the Only Problem,” Ha’aretz (English edition, Tel Aviv), June 21, 2000. 16 U.S. General Accounting Office, Report to the Congressional Requesters on Defense Industrial Security: Weaknesses in U.S. Security Arrangements with Foreign-owned Defense Contractors, GAO/NSIAD-96-64, (Washington DC), pp. 22-23.

17 For the full text of the report, see http://www.access.gpo.gov/congress/house/hr105851-html/ ch1bod.html#anchor4159848.

18 For example, see Yitzhak Shichor, “Mountain Out of Molehills: Arms Transfers in Sino-Middle Eastern Relations,” MERIA Journal, Vol. 4, No. 3, Fall 2000, pp. 68-79.

19 Gerald Steinberg, “Sharon’s American Agenda,” The Jerusalem Post, March 19, 2001.

20 Shai Feldman, “China’s Security: Implications for Israel,” Strategic Assessment (Tel Aviv), Vol. 2, No. 4, February 2000, p. 20.

21 Shichor, “Mountain Out of Molehills.” According to another, the deal “was never formally approved but no objections were registered either.” Jonathan Adelman, “The Phalcon Sale to China: The Lessons for Israel,” Jerusalem Letter: Viewpoints, No. 473, March 1, 2002, p. 3.

22 Aluf Ben, “China Arms Deal Root of Israel-U.S. Dispute,” Ha’aretz, April 4, 2000. See also, The Washington Post, April 3, 2000.

23 Yitzhak Ben-Horin and Menahem Rahat, “Phalcon Crisis: Emergency Delegation from U.S. Congress to Israel in an Attempt to Cancel China Deal,” Ma’ariv, July 2, 2000, in FBIS-NES-2000-0704, July 2, 2000. Unless otherwise mentioned, all FBIS materials are taken from the electronic version. The author is extremely grateful to the library staff of the Harry S. Truman Research Institute for the Advancement of Peace, Jerusalem, for their invaluable help.

24 Gerald Steinberg, “A Sordid Affair,” The Jerusalem Post, June 23, 2000. See also The Washington Post, June 20, 2000.

25 The Jerusalem Post, July 14, 2000.

26 Amnon Barzilai, “The Phalcons Did Not Fly,” Ha’aretz, December 28, 2001.