Outgoing U.S. Secretary of Defense James Mattis reportedly denied a request from Israeli Prime Minister Benjamin Netanyahu to soften the U.S. conditions that were holding up a $500 million arms deal between Israel and Croatia over the sale of a dozen F-16 fighter jets, an Israeli official told Axios.

In order to approve the deal, the United States required that Israel uninstall Israeli systems included in the F-16s, which would return the planes to their initial state prior to Israeli upgrades, before sending them to Croatia. The Croatians said that they would nullify the agreement if they couldn’t receive the “upgraded” Israeli type of the F-16s.

“For reasons we don’t fully understand, the Americans hardened their conditions and, apparently, we misread their position on the deal,” the Israeli official told Axios. “Practically, the F-16 deal with Croatia is dead, and we don’t think it is possible to get an agreement that will reconcile the U.S. conditions and the Croatian demands in the tender.”

The official added that Israel will have “to apologize to Croatia for the deal falling apart and move on.”

The report added that Netanyahu contemplated contacting Marilyn Hewson, president and CEO of Lockheed Martin, which produces the F-16s, to request assistance in getting the agreement approved but decided there was no point, according to the official.

Netanyahu’s office, the Pentagon and State Department didn’t comment to Axios.  Additionally, it was reported that U.S. Secretary of State Mike Pompeo was supportive of the Israel-Croatia deal, but told Netanyahu earlier this month that Mattis blocked it.

The request from Netanyahu to Mattis was made a couple weeks prior to the his resignation. Deputy Secretary of Defense Patrick Shanahan becomes acting secretary in January.