Israel announced that it has reached an agreement with China on the canceled Phalcon spy plane sale. Jerusalem will pay China $350 million in damages for backing out of its agreement to supply Beijing with the advanced airborne early-warning system in July 2000. The settlement was significantly less than the $1.2 billion originally demanded by China.

Israel backed out of the deal at the \"last minute\" under intense U.S. pressure. The White House opposed the sale because of its interests in Taiwan.