Arie Egozi/TEL AVIV

ISRAELI financial institutions have agreed on a funding package enabling Israel Aircraft Industries (IAI) to proceed with the upgrade of Turkish air force McDonnell Douglas F-4 Phantoms. IAI is also negotiating a deal to upgrade Turkish Northrop F-5s.

The Phantom loan will be worked out between the Turkish authorities and Israeli banks. Israel's parliament has already approved a $410 million state guarantee for the $600 million contract.

IAI secured the contract in August 1995 to upgrade 54 F-4s to a standard similar to that of the Phantom 2000 in service with the Israeli air force. A framework agreement had been signed, but was put on hold while Israel sought to meet Turkish Government demands that finance for the programme and an assistance package be put together by Tel Aviv. The Turks have been seeking a two-year grace period on payments and for an arrangement allowing them to pay over seven years.

Meanwhile, IAI has been negotiating another deal to upgrade 34 F-5s as lead-in trainers for the Turkish air force's Lockheed Martin F-16s. The Turkish F-5 upgrade has a chequered history, having most recently been cancelled after a deal was agreed with Triton Systems of the USA. David Ivry, director-general of the Israeli defence ministry is expected in Turkey this week, and sources say that he is hoping to conclude the F-5 contract.

During the visit, the first to the country by a senior Israeli official since the recent change of government in Turkey, it is expected that an agreement will be signed enhancing co-operation between the Israeli defence industry and the Turkish defence ministry.

Source: Flight International