Seven years ago, in the face of mounting costs, the United States withdrew from an elaborate project to help build an advanced combat aircraft for Israel. The idea was scrubbed--or so it seemed.
Now, to the consternation of U.S. officials, much of the American know-how and initial planning for the canceled "Lavi" fighter plane are about to be put to use in China.
U.S. government officials have recently concluded that China and Israel are collaborating to develop and produce an improved fighter for the Chinese air force. Comparable to an American F-16, the new plane will be based on the Lavi and will incorporate extensive technological innovations derived from that project, according to U.S. government experts on the Chinese military.
China and Israel already have finished work on a prototype, and production will probably start soon at a plant in the Sichuan province capital of Chengdu, U.S. officials said. The plane's deployment is seen as a major step in Beijing's effort to modernize its air force, and some observers believe it has negative implications for China's longstanding rival, Taiwan.
"This plane would fit in with a scenario for (conflict over) Taiwan 10 years from now," one U.S. government expert said. "And for someone to help the Chinese build a production line, a turnkey facility, for this aircraft is ominous."
The U.S. government's confirmation of Israel's role in developing the new Chinese plane could create tensions between Washington and the Jewish state. The joint work on the plane is the latest in a series of military projects in which Israel has helped China over the past 15 years.
Although China's impending production of the Lavi-style fighter has been closely monitored and discussed in the U.S. intelligence community in recent months, White House and State Department officials say there has been no official diplomatic protest to Israel about it.
Some Administration officials are said to believe the issue is of no great concern. While the plane represents a big step forward for China, they say, it is based on 1980s-era technology and will not be placed in service for several years.
Marvin Klemow, vice president for government affairs of Israeli Aircraft Industries International, the Washington subsidiary of Israel's state-owned export firm, denied that his company is transferring U.S. technology to China.
"IAI does not transfer any technology illegally. Any U.S. technology that requires a license (from the United States), we apply for that license," Klemow said. "And we have not applied for any license for any Lavi-associated technology for China."
Klemow would not say whether his company is providing China with other, non-American aircraft technology from the Lavi project. "We never confirm or deny who we do business with," he said.
An official at the Israeli Embassy in Washington also denied that Israel had passed on U.S. technology based on the Lavi.
For several years, there was speculation that China and Israel were working together on a new plane based on technology from the Lavi project.
But the first report that the plane is nearing production came in November in a British aviation publication, Flight International. U.S. officials confirmed that report in recent interviews.
"The plane is in the prototype stage. The prototype has been built," one U.S. official said. "It is a very capable aircraft. It uses extensive U.S. technology." The official said the combat fighter will be ready for flight-testing in about a year and will be in full service in China's air force about a decade from now.
The plane, which China intends to call the F-10 fighter, represents the latest in a prolonged effort by Beijing to obtain modern combat planes and to be able to manufacture them on its own soil.
Most of China's current combat planes are 1960s-era aircraft based on Soviet designs. In 1986, the Ronald Reagan Administration agreed to provide modern-day electronics, navigation and radar equipment for some of those Chinese planes in a $550-million project called Peace Pearl. The project was suspended when the George Bush Administration imposed sanctions on military sales to China after the 1989 Tian An Men Square crackdown. China, which became increasingly irritated by mounting costs associated with Peace Pearl, pulled out of the deal in 1990.
It was after Peace Pearl's cancellation that China turned to Israel, apparently aiming to obtain indirectly some of the American-style military technology it could not obtain from the United States itself. The principal U.S. defense firm in the aborted Peace Pearl project, Grumman Corp., was heavily involved in the Lavi project too, according to U.S. experts.
By producing the new plane, China's once-antiquated air force will take a quantum leap forward, U.S. officials said.
"Right now, China can't establish air superiority even over China itself. India has a better air force than China does," one U.S. official said. "But 10 years from now, China will be able to establish air superiority over all of China's territory, and also over the periphery of China, in places like Vietnam and the South China Sea."
China has made extensive territorial claims in the South China Sea, particularly in the Spratly Islands, many of which are claimed by other countries in the region, including Vietnam and Taiwan.
Two years ago, in the first big step toward modernization of its air force, China bought 26 Sukhoi-27 advanced jet fighters from Russia. U.S. experts said the Russian planes have a longer range than the F-10 China is about to build. But the F-10 will be faster and will have a greater ability to intercept enemy aircraft.
"A competent air force would need both of them, just like we have the F-16s and F-15s," one U.S. official said. "The SU-27 fits for a scenario involving the Spratlys. The F-10 would fit in better with a scenario for Taiwan 10 years from now."
Unlike the SU-27 deal, in which China simply purchased jet fighters made in Russia, the new project with Israel will give China the ability to manufacture its own advanced jet fighters.
According to Flight International, officials of Israel Aircraft Industries have helped guide the way for the Chinese air force to develop and produce the plane under a contract signed in 1992.
Over the past 15 years, China has established itself as the biggest customer for Israel's arms export industry. The first public demonstration of this cooperation came in a Chinese National Day parade in 1984 when foreign military attaches in Beijing were surprised to find Israeli guns, cannons and electronic equipment mounted on top of Chinese tanks.
U.S. laws forbid Israel to pass on to another country any military technology obtained directly from the United States. Any company that violates those laws can be suspended from doing military business in this country.
But it is often difficult to prove conclusively that U.S. technology has been re-exported, because a foreign government or company can claim that it has changed the U.S. technology or has produced something similar on its own.
In 1992, U.S. intelligence agencies reported that Israel might have transferred Patriot missile technology to China in violation of American laws. A State Department team found there was not enough evidence to support the charge, and a department spokesman said the case is closed.
At the same time, State Department Inspector General Sherman Funk reported that a leading recipient of American military technology, separately identified as Israel, had engaged in a "systematic and growing problem of unauthorized transfers" of U.S. technology to other countries.
A congressional staff member suggested recently that the U.S. government might have quietly accepted or encouraged Israel's decision to help build the Chinese plane--in effect using Israel as a proxy to supply China with military technology that the United States can't provide directly to Beijing.
"The question is, was there a conscious decision on the part of someone in Washington to let this happen?" he asked.
Other officials insist, however, that transfers of the Lavi technology to China are not something the United States wants or accepts.
Chen Guoqing, a spokesman for the Chinese Embassy in Washington, declined to comment on the production of the new aircraft.