The Israeli defence industry's ability to export equipment is threatened by a US attempt to control Israel's sale of Elta Phalcon airborne early warning systems to China.

The US Government is demanding it be informed of any future plans to export Israeli-made defence equipment, say sources. At present, Tel Aviv need only inform Washington of any overseas sale when the equipment includes US manufactured systems.

"The new demand may be a death blow to the Israeli defence industry. I hope that the ministry of defence will reject the demand," a defence industry source says. The source adds that the demand is unreasonable, as Israel and US companies often compete in the same markets.

Israeli defence ministry sources say the issue will be discussed in the next few weeks with US officials.

Meanwhile Elta and parent company Israel Aircraft Industries continue to equip a Beriev A-50 (modified Ilyushin Il-76) with the Phalcon system. With China's three options, the Phalcon deal could be worth around $1 billion.

• Israel plans to test fire its Arrow 2 anti-tactical ballistic missile at a US test range to evaluate the weapon's ability against complex missile thr0eats. Although the Arrow 2 achieved initial operational status in March this year, Israel plans a series of tests to improve Arrow's performance against decoys and multiple warhead threats.

Later this year the missile will be tested against Rafael's Black Sparrow, an air-launched target based on the Popeye/AGM-142 Have Nap air-to-surface weapon.

Source: Flight International