The war deals a severe blow to Israel Aircraft Industries: The Turkish government has canceled a deal to upgrade fighter jets worth USD 500 million because of the war in Lebanon.
The Israel Aircraft Industries fears that more deals could be canceled.
In 1997 Turkey signed an agreement with Israel for the upgrading of 54 Phantom aircraft at the cost of USD 1 billion.
The deal was concluded in 2003 and Turkey showed interest in upgrading another 50 Phantom jets for USD 500 million.
Turkey is weighing the purchase of new F-16 jets from the United States instead of upgrading its old fleet.
"They are old costumers, and the cancellation of the deal is a very bad sign," a senior military official said Monday.
The Israel Aircraft Industries refused to comment on the decision.
Turkey's interest in Israeli military products has long been considered as a "goldmine" in Israel.
"Turkey was conceived as a replacement for South Africa and Iran, who were big customers of Israeli weapons," he said.
Since the war in Lebanon opposition parties in Turkey have increased pressure on the government to cut military ties with Israel.