As the Middle East summit at Camp David entered its second day, Israel announced a concession to the United States which may increase its leverage on President Clinton, host of the talks.
The President began the day with a bilateral meeting with the Israeli Prime Minister, Mr Ehud Barak. It was then announced that Israel, under American pressure, had cancelled the sale to China of an advanced Phalcon radar system to be fitted to Russian-built aircraft.
The US Congress had expressed concern about the $250 million sale, which was agreed by Mr Barak's predecessor, Mr Benjamin Netanyahu, over a year ago. Congress was afraid that the deal could upset the military balance between China and Taiwan and had threatened to reduce military aid worth $250 million to Israel. Mr Barak's spokesman, Mr Gadi Baltiansky, told reporters covering the Camp David summit that the move could improve prospects for its success. He said that Israel was "in the midst of efforts to achieve historic decisions relating to vital interests" and needed to preserve its "intimate relations" with the US in order to do so.
The White House spokesman, Mr Joe Lockhart, welcomed the Israeli decision as it had been "an important issue to us".
Mr Lockhart stuck to his refusal to give any kind of "progress report" on how the talks are going. He said that the sense of informality was enhancing contacts between delegations who were using golf carts to get around between the chalets but he insisted that "they are working in a very serious way".
President Clinton had entertained the Israeli, Palestinian and American delegations to dinner on the first night and later had separate meetings with Mr Barak and Chairman Yasser Arafat.
Yesterday morning, the President walked his dog, Buddy, before beginning his new round of meetings. His daughter Chelsea has joined Mr Clinton at the presidential retreat where in 1978 the then Israeli and Egyptian leaders reached a peace settlement under President Jimmy Carter.
The Palestinian spokesman, Mr Nabil Amr, told reporters at the press centre at Thurmont, about 10 miles from Camp David, that Mr Arafat was "waiting for what the American side will propose at this decisive summit". He said that "the potential for bridging the gaps is still almost impossible so there should be initiatives and we are watching what the Americans will do".
Mr Amr ruled out concessions by the Palestinians on territory and East Jerusalem, which Israel has occupied since the 1967 war.
Another Palestinian spokesperson, Ms Hanan Ashrawi, who is not part of the official delegation, said on CNN that Israel's ignoring of the plight of Palestinian refugees was damaging the atmosphere for talks. "Shirking responsibility is not a good way to start the summit," she said.
On the same programme, the Israeli spokesperson, Ms Yuli Tamir, repeated Israel's refusal to divide sovereignty over Jerusalem. She insisted that "Jerusalem will never be divided".