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The U.S. administration has refused to rescind sanctions against Israel until the latter proves it has increased its monitoring of security-related exports, deepening the crisis between the two countries.

Defense Minister Shaul Mofaz, who was about to leave for Washington for talks on the matter, canceled the trip following the increased U.S. demands.

The crisis erupted over Israel's sale to China of replacement parts for Harpy attack drones.

The U.S. wants to see Knesset legislation enacted within 18 months tightening oversight of military exports, and is demanding a memorandum of understanding be signed. The U.S. also wants a written apology from Israel and Mofaz.

Opposition in Israel is mounting against the signing of such a memorandum. In any case, the agreement is not intended to end the crisis, but rather to stop it from gathering steam, by allowing for the gradual lifting of sanctions.

The sanctions were imposed as the result of a bill passed last month by the U.S. House of Representatives, which placed a five-year ban on the purchase of defense items from any country that sells arms to China.

Israel sold China the drones, which are said to attack and destroy enemy radar transmitters, in the mid-1990s. It says that it is now upgrading them as provided for in the sales agreement.

Israel believed the tension between the two countries was going to subside after Mofaz went to Washington to sign the understanding, in which Israel agreed to meet most of the U.S. demands. However, the harsher demands are an indirect way of rejecting a request by Mofaz to end the crisis and rescind the penalties, which could do serious harm to Israel's defense industries and air force.

After Israel raised a white flag and acquiesced to most of the demands, the U.S. made additional, harsher demands, and was said to have shown contempt for the Israeli delegation. The American delegation is headed by Lisa Bronson from the Pentagon, and also includes a representative from the State Department, the head of its Bureau for Political-Military Affairs, Acting Assistant Secretary Rose Likins, who is the principal link between the departments of state and defense. Likins had recently met with Mofaz in Israel.

The draft referendum points to a lack of understanding on the part of the U.S. of domestic political affairs in Israel. It is a strange agreement, by which Israel agrees to the continued sanctions the Americans are imposing.

The article in the agreement putting pressure on the Knesset to enact a law monitoring military exports is sure to arouse the ire of several of Israel's lawmakers.

The Americans are said to be angry at the media reports that appear every time the Israeli delegation has been about to leave for talks in the U.S. The Americans understand the talks to be Defense Ministry briefings, while in Israel they were reported as bringing about an end to the crisis over the Israel-China drone parts deal.