U.S. and Israeli officials are holding talks in Washington aimed at resolving Bush administration concerns about Israeli arms exports, especially to China. An agreement is said to be near.
The two sides are having expert-level talks at the Pentagon amid reports that Israel will cancel a pending upgrade of drone aircraft it sold to China, which U.S. officials fear might upset the military balance in the Pacific region.
Israel sold China a fleet of 100 armed, Harpy drone aircraft in the 1990s with U.S. approval.
But U.S. officials have objected to a planned sale of new high-tech parts for the drones, on grounds it would give them a capability to attack ground anti-aircraft radars.
Taiwan is understood to have expressed its concern about the sale to U.S. officials.
The Washington Post reported Monday Israel has agreed in principle to cancel the deal, and to allow U.S. officials to review future weapons transactions to avoid a repeat of the dispute over the drones.
At a news briefing here, State Department Spokesman Sean McCormack confirmed that talks were under way but said there were still some issues to be resolved.
"Discussions on this matter are on-going," said Mr. McCormack. "The Department of Defense is the lead U.S. government agency on this matter, and of course the State Department is involved in those discussions. You've heard from the Secretary [of State] that we've registered our concerns on this matter, specifically with respect to our concerns of the buildup of Chinese military power in the Pacific and our role in defending the Pacific. So at this point this is still an on-going matter of discussion with the Israeli government."
Secretary of State Condoleezza Rice said at a news conference earlier this month that the United States and Israel have had some very difficult discussions about Israeli defense exports, and that she believed Israel understood the seriousness of the matter.
Israel's Ambassador to Washington, Daniel Ayalon, told reporters Monday the two sides have made great progress toward an agreement, and that its terms would be mindful of U.S. concerns.
Israel, which receives nearly $2 billion in U.S. military aid each year, has a flourishing arms export business. There have been U.S. concerns over the years that some systems it sells to third parties have included U.S. technology.
Five years ago Israel, under U.S. pressure, cancelled a sale to China of its Phalcon airborne early-warning radar system, a deal valued in excess of $1 billion.
The Phalcon system is similar to that carried aboard U.S. AWACS radar planes.
China earlier this week complained about outside interference in its dealings with Israel. Without mentioning the United States, the Chinese foreign ministry said development of its relations with Israel will not harm the interests of any third party.