* Key lawmakers blast Obama's move to curtail consultations
* Dispute could harm countries such as Israel, senator says
* Arms sales are an important part of US foreign policy
* Overseas sales for U.S. arms makers large and growing
By Jim Wolf
WASHINGTON, April 18 (Reuters) - The Obama administration has trimmed the U.S. Congress' decades-long role in vetting billions of dollars in proposed arms sales in a move that will result in more congressional efforts to block deals, key lawmakers said in a letter made public Wednesday.
The newly disclosed tug-of-war between the lawmakers and the administration over the issue threatens to derail case-by-case consideration of arms deals, an increasingly prominent aspect of U.S. foreign policy.
Overseas sales account for a growing percentage, in some cases up to 25 percent or more, of annual revenue for U.S. arms makers squeezed by flattening sales to the Pentagon amid deficit-reduction efforts.
The dispute could have "severe implications" for U.S. national security and that of U.S. partners including Israel, warned Senator Richard Lugar, the top Republican on the Senate Foreign Relations Committee.
"Should Congress have doubts about a proposed sale to one of Israel's potential adversaries, legislators would have diminished leverage to get their questions answered or to block consideration of the deal if the president is determined to force it through," Lugar wrote in a guest column in the Washington Times newspaper on Wednesday.
At issue are steps implemented by the State Department to curtail an informal consultative process, in effect since the late 1970s, that routinely occurs prior to a formal notification to the Congress of a proposed arms sale.
The lawmakers' concerns were spelled out in an April 3 letter to Secretary of State Hillary Clinton.
The letter, made available to Reuters, was signed by Lugar; the Republican chairwoman of the House of Representatives' Foreign Affairs Committee, Rep. Ileana Ros-Lehtinen; and that panel's top Democrat, Representative Howard Berman.
Senate Foreign Relations Committee Chairman John Kerry, a Democrat, was alone among lawmakers with the most say over arms sales because of their committee leadership roles not to sign the letter to Clinton.
"I've promoted a good-faith discussion between Congress and the State Department to make this process a productive and timely means of exchanging information between the Executive Branch and Congress," he said in an emailed reply to Reuters.
"Going forward, we must retain a framework for consultations so that Congress' views and concerns are addressed."
Traditionally, the executive branch has held off on statutory notification of an arms sale until Congress' concerns have been addressed through consultations. Congress has 30 days to review a proposed deal after formal notification in the case of most non-NATO countries.
But within what they described as a new, arbitrary, compressed, timeline set by the administration for advance consultations, "the only recourse for us ... will be to formally introduce joint resolutions of disapproval on many more sales," the three lawmakers wrote to Clinton.
Congress has never successfully blocked a proposed arms sale through a joint resolution of disapproval. During back-and-forth with the executive branch, however, lawmakers have often affected the timing and makeup of arms packages, and may have dissuaded the president from making certain sales.
In the fall of 1990, after then-Iraqi President Saddam Hussein invaded Kuwait, for example, lawmakers persuaded the George H.W. Bush administration to more than halve a proposed arms package to Saudi Arabia, the nonpartisan Congressional Research Service said in a Feb. 1 report on the arms-sale process.
The State Department had no immediate on-the-record response to the lawmakers' letter nor to Lugar's stated concern about the potential impact of its new policy for Israel.
An administration official who asked not to be named said one reason for the revised policy was that, as he put it, Congress sometimes took too long to clear the way for formal notifications.
"The old process placed U.S. industry at a competitive disadvantage and prompted allies to question our reliability as a defense supplier and security supplier at a time when we are doing more joint development of defense technologies with our allies," the official said.
The United States is the world's largest arms exporter. In 2010, Washington signed $21.3 billion in worldwide arms transfer agreements, or 52.7 percent of the total, Richard Grimmett of the Congressional Research Service said in a Sept. 22, 2011, report on arms transfers.
U.S. military sales abroad include nearly 13,000 active "cases" involving about 225 countries with sales totaling $34.8 billion in 2011, according to Charles Taylor, a spokesman for the Pentagon's Defense Security Cooperation Agency, which executes the sales.
Among the companies with the largest share of U.S. foreign military sales are Lockheed Martin, Boeing, Northrop Grumman, BAE Systems, Raytheon and General Dynamics.
The Jewish Institute for National Security Affairs, a private group that describes itself as dedicated to strengthening Israel and other like-minded democracies, voiced concern over the revised State Department policy.
"Congress plays a vital role in vetting arms sales to foreign nations through appropriate concern for regional military balances, human rights, corruption abroad and, most importantly, experienced consideration of America's national security interests," Larry Greenfield, the group's executive director, said in an emailed reply.