WASHINGTON – America and Israel may be on the road to resolving long-standing differences over the Jewish state’s military-technology sales to China.

Yesterday Defense Secretary Rumsfeld and his Israeli counterpart, Shaul Mofaz, signed a joint agreement that would commit Jerusalem to intensive and regular consultations with Washington on sensitive military exports.

“The U.S. Department of Defense and the Israeli Ministry of Defense have signed an understanding that is designed to remedy problems of the past that seriously affected the technology security relationship between their defense establishments and which begins to restore confidence in the technology security area,” a Pentagon release said yesterday. “In the coming months additional steps will be taken to restore confidence fully.”

Some lobbyists privately told The New York Sun they expected those additional steps would include allowing Israel to participate fully in developing the Joint Strike Fighter and research into next-generation robotic and computer-controlled tanks. The Israelis were barred from participating in those projects last December after the Pentagon learned that Jerusalem was refitting Harpy unmanned drones for China, a country Pentagon analysts almost unanimously agree will be America’s next major military rival. The Harpy affair became public when the Israeli press reported that the then-undersecretary of defense, Douglas Feith, dressed down his counterparts for violating prior understandings between the two countries regarding military exports to China. The matter was reminiscent of a 2000 dust-up between Jerusalem and Washington over proposed Israeli sales to China of the radar plane known as the Phalcon.

Israel’s ambassador in Washington, Daniel Ayalon, said in a statement yesterday, “I appreciate the work of the teams over the months. This understanding heralds a new beginning of improved confidence and cooperation which is in the critical national interest of both countries.” His spokesman, David Siegel, called the consultative process laid out in the memorandum of understanding a “milestone” in the relationship between his country and America.

But a senior Pentagon official who took the lead on the negotiations was less enthusiastic. In an interview with Bloomberg News published yesterday, Lisa Bronson said, “This agreement does not completely restore the confidence.” She added, “It is an important and significant step down the road to increasing and rebuilding that confidence. We expect the rebuilding of that confidence to be an incremental process and in the coming months expect additional steps will be taken that step by step begin to restore the confidence.” In the same Bloomberg interview, Ms. Bronson said that some of those steps included changing Israel’s export control laws to accommodate its $5 billion-a-year defense industry.

Despite American uneasiness concerning Israeli military-technology trade with China, the Jewish state has continued joint research on the sensitive Arrow missile defense system. Yesterday’s press release called the relationship between the two countries a “strategic alliance” and committed the two countries to consultations over threats to both countries.