THURMONT, Md. (AP) — Israeli Prime Minister Ehud Barak informed President Clinton at the Mideast summit that he was canceling a planned quarter-billion-dollar sale of an advanced airborne warning system to China.
Barak's spokesman, Gadi Baltiansky, said Barak had "expressed sorrow" in a letter to Chinese President Jiang Zemin that the sale had been scuttled.
"Israel is right now together with the United States in the midst of an effort to achieve historic decisions relating to her vital interests," Baltiansky said.
"We welcome the decision," White House spokesman Joe Lockhart said.
He said the administration had been concerned about the security implications of the sale. Ruling out modifications that might make a new deal possibly acceptable to the United States, Lockhart said the security concern would not go away.
Lockhart also said the United States would not compensate Israel for its financial setback.
The decision was taken against the "background of the need to have intimate relations with the United States" while the summit was going on, and in its aftermath, the Israeli spokesman said Wednesday.
While Baltiansky did not say explicitly that Israel had yielded to U.S. pressure, he said the step was taken against "the background of American objections" to the deal.
The deal represented a major effort by Israel to improve its relations with China and expand its diplomatic and business contacts worldwide, which is one reason it is engaged in trying to make peace with the Arabs.
But a judgment was reached that Israel's unique relationship with the United States had to take highest priority.
With the Clinton administration eager to stop the deal, there were reports last week Israel would modify arrangements by proceeding with the transaction through a third country.
But Baltiansky told The Associated Press the deal was off in all forms.
The United States had insisted that Israel scrap the sale of the plane, called PHALCON, pointing to tensions between China and Taiwan and expressing concern that China could use the plane to track American planes should hostilities erupt.
In Congress, representatives from both parties had threatened to cut U.S. aid to Israel if the deal went through.
Rep. Sonny Callahan, R-Ala., who had proposed cutting military aid to Israel by $250 million if the sale to China went through, said Wednesday that with the "very wise decision" to cancel the deal there was "now no need to do that."
Callahan, chairman of the House Appropriations panel on foreign operations, said his purpose in proposing the aid cut was "to send them a very strong message that this was a very serious concern" to many Americans.
The PHALCON deal had included an option for China to buy up to four more of the spy planes.
Referring to U.S. efforts to derail the deal, the Israeli official said: "We are aware of American concern on this issue."
He said "there is no link between this and the summit," turning aside any suggestion Israel had yielded on the radar in order to improve prospects for an agreement with the Palestinians.
However, he acknowledged a short time later that calling off the sale was an effort to strengthen chances for success at the summit.
Baltiansky did not rule out a possibly modified sale in the future.
"If circumstances change," he said, "we may consider it again." He did not elaborate.
The radar system and the modified Boeing 707 on which it is mounted are valued at an estimated $250 million.
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 anti-Western Islamic militants — have included advanced radar systems and combat aircraft.
The issue had touched off an unusually sharp exchange between Congress members and Israel's outspoken deputy defense minister, Ephraim Sneh, a former general who is close to Barak.