Congressional Panel Nixes Sanctions on Israel

By Julie Stahl | July 7, 2008 | 8:08 PM EDT

Jerusalem ( - A House foreign operations subcommittee Tuesday voted not to impose sanctions on Israel for its proposed sale of an airborne spy system to China - a vote Israel welcomed.

The planned sale has prompted one of the most serious wars of words between American and Israeli politicians in many years.

The subcommittee voted 9-6 against chairman Rep. Sonny Callahan's (R-Alabama) proposal to cut $250 million in military aid to Israel, the amount Israel is expected to receive for the sale of the advanced PHALCON radar system to Beijing.

Another proposal by Callahan to stop early disbursement of aid to Israel also was voted down. Israel receives nearly $3 billion in aid at the beginning of the U.S. fiscal year and deposits its in U.S. banks, earning some $80 million on the money.

However, the issue remains far from resolved. Democrats and Republicans joined together in warning Israel that punitive steps would be taken if Israel goes through with the transfer of the advanced system to China. The U.S. fears the sale could endanger Taiwan's security.

A Defense Ministry spokesman said that Israeli Prime Minister Ehud Barak welcomed the subcommittee's vote.

Earlier, Foreign Minister David Levy said that he believed the American reaction to the proposed sale was "out of proportion."

From the commotion, one could get the impression that Israel was working "behind America's back to hurt its national interests," Levy said in radio interview. "That's not the case,"

"We've had discussions. We intend to continue to hold intensive [talks] to reach a solution agreeable to both sides," he added.

Strained ties

The issue of the high-tech radar sale to China has ruffled the usually close relations between Israel and the U.S. during the past few months.

A war of words over the deal erupted last week when Deputy Defense Minister Ephraim Sneh suggested that Israel would cut $250 million in low-tech U.S. procurements if Israel's aid was slashed.

Sneh said that making those purchases from U.S. sources took work away from Israel's own low-income earners.

Israel spends most of the $1.9 billion in military aid (included in the $3 billion) in the U.S.

The chairman of the Senate Foreign Relations Committee, Jesse Helms, reacted harshly Monday to Sneh's comments, issuing a statement in which he suggested that Barak should fire Sneh.

Sneh would "do well to bear in mind that the American businesses he intends to punish pay the taxes that make possible the foreign aid that his country receives from the U.S. taxpayers," Helms said.

"Sneh's threat is an insult to all Americans, including this senator who has been a longtime friend of Israel," Helms said. "Frankly, I feel that Prime Minister Barak may want to dismiss Mr. Sneh."

Sneh responded in a radio interview on Tuesday by saying that what was "worrisome" was the "harsh, patronizing tone of an important senator like Jesse Helms."

Helms' letter, Sneh was quoted as saying, "significantly contradicts the friendly, constructive spirit in which Israel and the United States are trying to resolve the issue of the sale of the PHALCON to China."

The Clinton administration, which opposes cutting any aid to Israel, has been quietly trying to persuade Israel to abandon the sale.

Washington reviews the sale of Israeli military goods, which contain U.S. components but the conflict over the PHALCON deal recently prompted the Pentagon to pressure Israel to allow the U.S. to review all its defense related sales.

Israel, which says its defense industry survives on sales abroad, is resisting such constraints. Many view the PHALCON controversy as an attempt by the U.S. defense industry to curb its competition in Israel.