The Turkish government has rescinded Israel Aerospace Industries' (IAI) participation in a new bid to provide the Turkish military with spy satellites, Yedioth Ahronoth reported Monday.
According to reports in the Turkish media, the decision was made after Israel demandedTurkey refrains from activating the satellite over its borders.
"Should that prove to be the real reason Israel was written out of the bid, the incident may damage Israel-Turkey relations," a military source told Yedioth Ahronoth.
Israel Aerospace Industries won a Turkish spy satellite bid in 2000, but France based Alcatel Space Industries – which came in second the bid – appealed the results.
In an unprecedented move, the Turkish military decided to overturn the bid, awarding the contract to Alcatel; but the Turkish government decided to overturn the bid a second time, after the French government denounced what it called "the mass murder of Armenians in Turkey."
Once the bid was reopened, the IAI began renegotiating the $250 million satellite deal with the Turkish Defense Ministry; but Turkey's Defense Ministry's higher acquisitions division informed the IAI that only three European companies have made it to the final stages of the bid.
The IAI was not available for comment.