Israel bows to US over arms exports

The dispute with the United States centres on Israel's sale of Harpy attack drones and other advanced technology to China which the Pentagon fears could tilt the balance of power and make it difficult to defend Taiwan.

Agreeing to US demands, Israel will not return Harpy spare parts that China sent to their Israeli manufacturer for upgrading, Haaretz said.

Israel, the newspaper said, also accepted a US demand to implement the 34-nation Wassenaar Arrangement on export controls for conventional arms and dual-use goods and technologies.

Prime Minister Ariel Sharon and Defence Minister Shaul Mofaz made the decisions ahead of a visit this week to Washington by an Israeli delegation that will negotiate a memorandum of understanding on Israeli weapons exports, Haaretz reported.

Israeli officials were not immediately available to comment on the report.

Last week, Foreign Minister Silvan Shalom publicly apologised to Washington over arms exports to China, saying "things were done that were not acceptable to the Americans" and insisting Israel had not meant to harm US interests.

Meanwhile, New Zealand Prime Minister Helen Clark restored diplomatic relations with Israel yesterday immediately after accepting an official apology for the activities of two Israelis caught spying here 15 months ago.

In a brief letter dated June 26, Israeli Foreign Minister Silvan Shalom expressed regret about the activities of two alleged Mossad agents arrested in March 2004 and charged with trying to fraudulently obtain New Zealand passports.