Jerusalem (CNSNews.com) - On the second day of the Middle East summit at Camp David, Maryland, Israel announced it had cancelled the planned sale of an advanced airborne radar warning system to China, paving the way for Israel to receive a US aid package. The announcement occurred, despite a full media blackout on details of the summit.
Israeli Prime Minister Ehud Barak notified President Clinton of his decision to cancel the PHALCON deal, which had created an unprecedented rift in relations between Israel and the US Congress. Congress had feared that the system could eventually be used to track US planes in the Far East if a conflict erupted between Beijing and Washington's ally Taiwan.
Barak's spokesman, Gadi Baltiansky, said Barak had "expressed his sorrow" in a letter to Chinese President Jiang Zemin that the deal had been cancelled.
"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.
The White House welcomed the decision, saying it had also been concerned about the security implications of the deal.
According to Baltiansky, the decision to cancel the $250 million deal was taken against the "background of the need to have intimate relations with the United States," both now during the summit and later. It was also made against "the background of American objections" to the sale of the PHALCON surveillance system, he said.
Israel's reluctance to scuttle the Chinese radar deal during the last few months angered several US Representatives from both parties and threatened to block US aid to Israel in the amount of the sale.
Israel could have netted another billion dollars through the sale of an additional four PHALCON surveillance systems to China.
White House spokesman Joe Lockhart, however, said Israel would not be compensated for the cancellation of the deal.
Analysts say Israel cancelled the deal now in order to clear the way for Congressional approval of billions of dollars in aid, which Israel will need to complete a deal with the Palestinian Authority.
The announcement represented a departure from the news blackout imposed on the Camp David summit so far, where Barak is sequestered for make-or-break talks with Clinton and PA Chairman Yasser Arafat aimed at achieving a settlement for Middle East peace.
All the phone lines have been cut going into and out of Camp David and the negotiators and their aids have agreed not to use cellular phones in order to avoid leaks to the press. The participants have also agreed not to read any newspapers during their stay at Camp David.
Reporters were told in a briefing Wednesday that some 40 people had been served beef tenderloin and filet of salmon in the Laurel Cabin at dinner Tuesday evening.
Lockhart said the parties are "working in a very serious way" but that they knew "this effort from the beginning will be a struggle."
Clinton met with each leader separately and then with both on Tuesday. After dinner, Clinton met again with Arafat and then with Barak Wednesday morning.
The country setting at Camp David, where Israel signed its first treaty ever with an Arab nation 22 years ago, Lockhart said, had created an informal atmosphere, but he said he did not want to downplay "the seriousness and the problems they face here."
Israel and the PA are trying to reach an agreement on deep issues of religious, cultural, and political significance for the two sides. Among the problems that have plagued them for 50 years, and which they have committed themselves to solving in the next eight days, are the status of Jerusalem, the right of return to Israel for millions of Palestinians and their offspring, final borders and the fate of Jewish settlements in disputed territory.