A scandal has arisen out of the United States military establishment after Pentagon pressure on Israel Aerospace Industries (IAI) to withdraw from a massive aircraft tender for the Indian Air Force leaves competing American aerospace companies in prime position to win it.
On the table: a $12 billion Indian Ministry of Defense tender for 126 multi-role combat aircraft (MRCA) for the Indian Air Force.
In a bid to win the tender, IAI was offered a partnership with Sweden's Saab AB to jointly develop an advanced model of the JAS-39 Gripen jet fighter. Israel was to build the electronic systems for the craft, including communications, electronic warfare and radar systems.
The Pentagon contacted Israel's Ministry of Defense, ordering them to force IAI out of contention, citing concerns that Israel would integrate American technology into the fighter jets.
However, two of the remaining four bidders are American companies, leaving Israeli officials speculating that the actual reason for the demand was America's interest in winning the bid without having to compete by lowering prices, according to Israeli officials quoted in Israeli media
Lockheed Martin's F-16 and Boeing's F-18 Hornet are still in the running, as well as Russia's MiG-35 and the UK's BAE Eurofighter.
The United States has a history of intervening to thwart Israeli military contracts, to America's benefit. Last summer, Israel's defense establishment backed down from a $500 million Turkish tank tender in order not to compete with the Americans.
In 2006, the IAI lost a $2 billion South Korean Airborne Warning and Control System (AWACS) tender after the US imposed technological and commercial restrictions, which prevented Israel from meeting the terms of the tender.
In 2003, the US opposed a $1 billion AWACS contract between Israel and India, citing India's stance against the US war in Iraq. The US offered Israel $1 billion in US military goods to back down from the agreement. However, Israeli officials speculated that the US may have opposed the deal for commercial reasons.