In one of the biggest US arms exports since the end of the cold war, a small sheikdom in the Persian Gulf is expected to receive 80 fighter jets with more-advanced technology than in those flown by American pilots.

The deal between Lockheed Martin Corp. and the United Arab Emirates (UAE), which is expected to be final soon, comes as the US government has been loosening export controls to boost a defense industry hurt by a drop in military orders, analysts say.

The result of the new US attitude is that, in some cases, purchasing countries have greater leverage over American sellers - and they can now get advanced weapons that once were reserved for the closest US allies.

The concern is that friends can become foes, and secrets can be stolen.

In this latest deal, the UAE, an oil-rich ally from the Gulf War with a population of 2.3 million, would get F-16s that have a range, radar ability, targeting accuracy, and avionics capability that are superior to the US F-16s.

"We're losing control of technology, and we're giving foreign countries better stuff than our own kids have," says Lawrence Korb, a former assistant secretary of Defense who advocates reduced military spending.

The significance of this deal - and its importance to the US - was underscored by Vice President Al Gore's presence at a May ceremony announcing the preliminary sales agreement, which is thought to be worth $7 billion to $8 billion. More talks have been scheduled this month, according to a Pentagon source.

If completed, it would be the first transaction in which a foreign country would pay an American company to develop and receive significant new technology.

Military officials say they have never scrutinized an arms sale as closely as this one and that the upgraded F-16s, even if they fell into the wrong hands, would never be a threat to US fighter pilots. They argue that the financial compensation will be a major boost for Lockheed Martin and the US taxpayer at a time when defense spending is well off its cold war high.

"These international sales are largely sustaining our defense industry during a time when we're not buying [too many aircraft]," says a senior military official who asked for anonymity.

The UAE deal also has regional security implications. The military says doing business there will strengthen the US foothold in the Persian Gulf region, which includes Iran and Iraq.

"It will give us more access to airfields in the region," says the military official.

But according to Natalie Goldring, who heads a University of Maryland disarmament program, more arms mean more danger. "Stability is not ensured by arms races," she says. "History is pretty sure on this."

The loosening of export controls can be traced to a 1995 Clinton administration arms-transfer policy that sets as a sales criteria "the impact [on] US industry and the defense-industrial base. …