The United States and Israel signed a broad new arms agreement yesterday, giving Israel more latitude to sell its weaponry here and elevating it to a trade status granted to only two other non-NATO allies.
The 10-year agreement, signed by Defense Secretary Frank C. Carlucci and Israeli Defense Minister Yitzhak Rabin at the Pentagon, strips some limitations on Israeli purchase of U.S. weapons and allows Israeli defense companies to compete equally with U.S. and NATO firms for U.S. defense contracts.
"It opens up the horizons a great deal," said Edward (Skip) Gnehm, deputy assistant secretary for international security affairs.
Signing of the memorandum of understanding gives Israel the same privileges that the United States shares with members of the North Atlantic Treaty Organization for cooperative ventures in researching and developing weapons.
Only Sweden and Australia have been allowed the same special defense relationship, according to Defense Department officials. The United States also is prepared to sign a similar agreement with Egypt, officials said.
Although Israel has had close defense ties with the United States, the new agreement will provide it greater economic opportunities for selling weapons and equipment to the U.S. armed forces.
The pact will eliminate reams of administrative paperwork required under the previous agreement signed in 1979 and renewed in 1981, according to defense officials.
Rabin and Carlucci also discussed a wide range of other issues, including use of U.S. foreign military-sales revenue to help pay $400 million in debts associated with Israel's cancellation of its Lavi fighter aircraft program and the potential purchase of 75 to 100 F16 fighters to fill the gap, according to Pentagon officials.
The Israeli government canceled the program to develop its own fighter craft under strong pressure from the United States, which contributes much of the money that would have been used to finance the plane. The United States plans to contribute $1.8 billion in military-sales aid to Israel in the next two fiscal years.
Defense Department officials said Israel is negotiating with the United States to use $400 million of that aid to help pay outstanding contracts on the Lavi program. U.S. officials said the payments probably would be spread over more than a year so the Lavi bills would not consume such a large percentage of Israel's annual aid package.
Gnehm said the two nations are expected to reach agreement this week on funding for a new antitactical ballistic-missile defense for Israel. He refused to say what share of the program would be financed with U.S. aid. Defense Department officials have said the United States offered to halve the costs if Israel would cover most of its share with U.S. military-sales aid.
Rabin also met yesterday with representatives of General Dynamics Corp., which produces the F16 fighter plane. Gnehm said the Pentagon has not discussed a price tag on the fighter purchase because Israeli officials have not decided what type of equipment should be included.
Later, Rabin met with Deputy Secretary of State John C. Whitehead, who urged him to use restraint and avoid use of live ammunition in seeking to curb demonstrations on the Israeli-occupied West Bank and Gaza Strip, a State Department official said.
The two territories are under the authority of the Israeli military, and responsibility for dealing with the demonstrations falls under Rabin.
Israeli troops shot and killed another Palestinian protester yesterday, and a second died of wounds received last week, the latest deaths in seven consecutive days of violence in the territories. In addition, 17 other Palestinians were wounded by Israeli gunfire yesterday.
Palestinian sources say 10 Palestinians have been killed and nearly 100 wounded, while Israeli authorities put the toll at six dead and 47 wounded.
State Department spokesman Phyllis E. Oakley said the administration views the continuing violence with "serious concern" and urged both sides to exercise restraint and avoid confrontation.
Assistant Secretary of State Richard W. Murphy told a congressional panel yesterday that the United States has no indications that the demonstrations were being organized either by Iran or the Palestine Liberation Organization and said they appear to be "spontaneous."
He said there was "a sense of hopelessness" among Palestinians because they saw "no door" leading to an end of the Israeli occupation.