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WASHINGTON - The crisis between Israel and the United States over the sale of assault unmanned aerial vehicles (UAV) to China is deepening: The U.S. has been imposing harsh sanctions on Israel for a few months now, following the dispute between the two states over the sale of the drones.

The moves, which are damaging to Israel, involve undermining security deals and information exchanges on advanced weapons systems, and freezing shipments of military equipment required for operative activity.

The U.S. has made three demands of Israel in order to settle the crisis, involving supervision of defense industry exports and coordination with the United States.

The controversy erupted over a deal Israel made to sell its Harpy Killer UAVs to China. The U.S. claims that the deal was made behind its back and against its express wishes.

In 2000 Israel canceled the sale of Falcon airplanes to China following U.S. pressure.

The U.S.'s first demand is that Israel provide it with details of more than 60 deals it made with China in recent years, so that Washington could assess the damage caused to its security, if any.

Mofaz has appointed former Air Force commander Major General Herzl Bodinger to settle this issue with Washington.

The second demand is a close examination of the Israeli security equipment supervision system. Washington wants to know how "holes" are created in the system, how those who break regulations are punished and why the government is not directly involved in the supervision.

The third demand is the formulation of a memorandum of understanding (MOU) about arms sales. Sources in the U.S. administration say it will be possible to draft the MOU once the differences over the Israeli supervision are ironed out.

The controversy triggered a personal trust crisis between outgoing U.S. Undersecretary of Defense for Policy Douglas J. Feith and Defense Ministry Director General Amos Yaron. Recently, however, the dispute deepened and expanded into several security areas that could gravely damage Israel.

On Sunday, Israel Radio quoted Defense Ministry officials denying that Israel is awaiting personnel changes in the Pentagon in order to settle its dispute with the United States surrounding the sale of unmanned aerial drones to China.

Defense Ministry officials say Israel is holding a productive dialogue with the U.S. administration on the matter, adding that both sides have expressed a desire to come to an understanding on steps to improve supervision of Jerusalem's defense exports, Israel Radio reported.

The sanctions against Israel were approved by the highest ranking American officials. Secretary of Defense Donald H. Rumsfeld and Secretary of State Condoleezza Rice approved them about seven months ago, and they were imposed with the knowledge of Steve Hadley, national security adviser to President George W. Bush.

This is contrary to the Israeli assumption that the crisis would blow over with the departure of the officials with whom the argument had erupted. These include Deputy Secretary of Defense Paul Wolfowitz, who already left for the World Bank, Feith and Undersecretary of Defense for Technology, Security Policy and Counterproliferation Lisa Bronson. Feith and Bronson are soon to end their tenures in the defense department.

Israel has agreed to the Americans' demand that it change its supervision regulations on security exports. However, an Israeli delegation to Washington failed to settle differences on this in recent days.

The sanctions have been imposed on Israel's entire security industry, not merely on plants that made deals with China. One company that could be damaged, although it did not make arms deals with China, is Elbit. Elbit is contending with other companies in the U.S. to sell equipment for the advanced F-22 Raptor aircraft. So far it has competed successfully against a British company, but it is feared that if the crisis continues the Americans may prefer the latter.

The Americans have also suspended technological cooperation with the Israel Air Force on the future Joint Strike Fighter (JSF) aircraft. Air Force Commander Major General Eliezer Shakedi recently visited the U.S. and voiced his fears regarding the operative effects of the sanctions.

The U.S. has halted cooperation on a large advanced simulation system for the IDF's ground forces, dealing with the future battlefield, and stopped the information exchange on Hunter 2, the assault UAV Israel is developing with an American company.

The crisis has disrupted the contacts of senior Defense Ministry officials with their counterparts in the American Defense Ministry, who are not responding to telephone calls from Israel. A meeting of a strategic work team that convenes every six months was put off.

Yaron has recently written to Deputy Minister of Defense Gordon England, who replaced Wolfowitz, suggesting settling the crisis. But England replied only to Defense Minister Shaul Mofaz.

The U.S. is also holding up a shipment of night vision equipment. Some of the equipment disappeared from one of the shipments, and an Israeli probe indicates it was stolen before the goods left the U.S. Meanwhile, Washington has declared a freeze on all such equipment shipments to Israel, which could harm the IDF's operative activity.

Following the crisis, one can sense the repulsion toward Israel among lower- and middle-ranking officials in Washington. More and more of them are saying that it is not worth doing business with Israel.