Israel built China an airborne radar. US pressure stopped the handover.

The Phalcon sale was not stopped at the drawing board. The first aircraft had already arrived in Israel for installation when the politics around the deal became more powerful than the contract.

The Arms Control Association reported that Israel halted a 1996 agreement to provide China with four Phalcon airborne early-warning systems. The aircraft supplied by Russia was destined for China but had gone to Israel to be outfitted with the radar. On 11 July 2000, Prime Minister Ehud Barak told President Bill Clinton that Israel would not complete the deal. Israel announced the decision publicly on 12 July.

The value needs care. The Arms Control Association called it an estimated $1 billion deal for four systems. A contemporaneous BBC account described a $250 million deal, and a U.S. congressional proposal referred to $250 million as the value of one system. Those figures are not interchangeable. The safer description is a four-system deal whose reported value varied by source and by whether the figure referred to the whole package or one system.

Washington’s opposition had been public for months. U.S. officials feared that the radar’s ability to track multiple air and surface targets at long range could change the military balance across the Taiwan Strait in China’s favour. That was an assessment attributed to U.S. government officials, not a measured prediction of what China would have achieved.

The pressure came through the relationship between Washington and Jerusalem. On 6 April, Senate Majority Leader Trent Lott and four other senior senators sent Barak a bipartisan letter warning that the sale could damage U.S.-Israeli relations. The senators pointed to a potential multibillion-dollar U.S. aid package then being discussed in connection with a possible peace agreement with Syria. Representative Sonny Callahan separately proposed withholding $250 million in Israeli aid unless the Pentagon certified that the sale did not threaten U.S. national security. He dropped the proposal after Israel informed him that it would stop the sale.

The reported value of that proposed aid hold is one reason the $250 million figure appears in later summaries. It was the value attached to one Phalcon system in the congressional proposal, not proof that the entire four-system contract was worth $250 million. The Arms Control Association also reported that Clinton had requested $2.82 billion in U.S. aid for Israel for the next fiscal year. The leverage was therefore financial and strategic, not a technical control over the Israeli installation process.

Israel described the decision as a response to the importance of its relationship with the United States. In its announcement, it said it was “together with the United States” during an effort connected to Israel’s vital interests. Israeli spokesman Gadi Baltiansky also said Israel would “continue to look for ways to implement the [Phalcon] deal” if circumstances changed. U.S. congressional and administration sources, along with an Israeli official cited by the Arms Control Association, treated the deal as over for the short and medium term. The two positions should remain separate. Israel announced that it would stop implementation, while one Israeli spokesman left open a future change in circumstances.