A source familiar with the matter told Reuters on Monday that the instruction came from French authorities after Israeli firms failed to comply with a direction from a French security agency to remove offensive or kinetic weapons from the stands.
France, a long-time Israeli ally, has gradually hardened its position on the government of Benjamin Netanyahu over its actions in Gaza and military interventions abroad.
Israel's defence ministry said it had categorically rejected the order to remove some weapons systems from displays, and that exhibition organisers responded by erecting a black wall that separated the Israeli industry pavilions from others.
"This outrageous and unprecedented decision reeks of policy-driven and commercial considerations," the ministry said in a statement.
IAI's president and CEO, Boaz Levy, said the black partition walls were reminiscent of "the dark days of when Jews were segmented from European society".
Talking to reporters outside the blacked-out Israeli defence stalls, U.S. Republican Governor Sarah Huckabee Sanders described the decision as "pretty absurd", while Republican Senator Katie Britt criticised it as "short-sighted".
Meshar Sasson, senior vice president at Elbit Systems, accused France of trying to stymie competition, pointing to a series of contracts that Elbit has won in Europe.
Rafael described the French move as "unprecedented, unjustified, and politically motivated".
The air show's organiser said in a statement that it was in talks to try to help "the various parties find a favourable outcome to the situation".
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