Washington has virtually blocked a $500mn arms deal by barring Tel Aviv from selling its old F-16 Barak fighter jets to Croatia unless modifications to its electronics, apparently too good for the Balkan NATO ally, are dismantled.

Croatia has been forced to annul the purchase of the 12 used fighters, after Israel’s Defense Ministry acknowledged having run into “unforeseen problems” with the sale. “Unfortunately, we have not been able to realize the deal because of problems that could not have been expected and are not under the control of the countries,” director-general of the Defense Ministry, Udi Adam, said on Thursday in Zagreb.

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After striking the half-a-billion-dollar agreement with Croatia in March, Tel Aviv had been working with Washington to convince the Americans to agree to the third-party sale of US-made but decades-old aviation equipment. Eager to sell the planes, Israeli Prime Minister Benjamin Netanyahu reportedly even raised the issue with Secretary of State Mike Pompeo during their meeting in Brazil earlier this month.

Yet despite all efforts, the State Department blocked the transfer of arms to the Balkan NATO member. The US insisted that Israel must strip the jets of the upgrades it had made, including electronic and radar systems, before transferring the aircraft. Croatia refused to purchase the jets without the Israeli modifications, announcing Thursday that will annul the decision to procure the F-16 Barak combat aircraft, which were destined to replace its aging fleet of Soviet MiG-21 fighters.

“Israel failed to overcome the opposition of the United States to the sale of 12 planes to Croatia, and the $500 million deal will apparently be canceled,” the Croatian Defense Ministry said in a statement.

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