Concerns that competing with American-backed defense industries would endanger Israeli-US relations led the Ministry of Defense to back down from submitting a bid for a $400 million deal to develop and manufacture a new tank for the Turkish Armed Forces. According to sources in Israeli defense industries, Turkey informed the Israeli Defense Ministry of its interest in developing a new tank and asked if Israeli Military Industries would be interested in putting in a bid, which could have been for as much as $1 billion. The sources said that SIBAT - the Defense Ministry's Foreign Defense Assistance and Defense Export Organization - decided not to submit a bid so as not to compete with the Americans and endanger Israeli-US defense relations. Instead, the $400m. deal went to South Korean contractor Hyundai Rotem, which signed with Turkey last week in Ankara. The deal will include technology transfers worth $330 m. as well as the production of four prototypes for $70 m. Defense officials confirmed industry claims that Israel was concerned that if it submitted an offer it would upset the Pentagon and potentially upset relations between the two countries, similar to the way tensions flared in 2005 after Israel was accused by the US of upgrading Chinese aerial drones. In August 2005, the crisis was partially resolved after Israel and the US signed an understanding that effectively granted the US veto power over Israeli arms sales to selected countries which Washington felt compromised its national security - including China. Turkey is not one of those countries. "America is our number one customer, with over $1 billion in annual sales," one official explained. "If we would have competed in the Turkish tank deal there is a chance that we would have lost out on more significant contracts in the US." In response to the report, Defense Ministry Spokesman Shlomo Dror released a statement saying that the Defense Ministry does not discuss matters related to defense negotiations. Israeli Military Industries has nearly completed a $700 m. upgrade of Turkey's fleet of ageing Patton-series M60 tanks, a deal signed several years ago.