Baghdad ordered the F-16 Block 52 multi-role Fighting Falcon jets -- enough to equip the Iraqi air force's first two fighter squadrons -- in two 18-plane batches in 2011 at an estimated total cost of $7 billion.
Israel didn't publicly question the sales, part of an $85 billion rearmament plan for oil-rich Iraq, when they were announced.
It's not clear whether the administration of U.S. President Barack Obama, which has approved massive military sales to Iraq, will adjust its defense sales to Baghdad in light of Israeli concerns about growing Iranian influence in Iraq.
But for many years, U.S. policy on military sales to Saudi Arabia, Egypt and Jordan have taken into account the United States' pledge to Israel to maintain its technological superiority over its adversaries in the Middle East.
The Jerusalem Post reports that Israel's strategic planners are mostly concerned about the growing influence in Iraq of the elite Al-Quds Force of Iran's powerful Revolutionary Guards Corps.
Quoting a senior Israeli officer, the Post said the F-16s to be delivered to Iraq over the next 3-4 years "are of the same configuration" as F-16s Lockheed sold to the Israeli air force.
The Israeli air force, the most powerful in the Middle East, has 101 F-16I jets, known as Sufa, or Storm, and 25 Boeing F-15I Ra'am, or Thunder, aircraft.
These are the most advanced combat aircraft in Israel's inventory and form the air force's strategic strike spearhead. These would be the aircraft used in any pre-emptive Israeli attack on Iran's nuclear facilities.
However, U.S. officials have said that the Pentagon as ensured that Iraq's U.S.-trained armed forces, who are responsible for protecting the state from external threats, won't receive weapons systems that could challenge Israel.
The U.S. publication Defense Industry Daily reported in March that the jets Iraq will receive, known as F-16IQs, from Lockheed Martin's Fort Worth, Texas, assembly plant, will be" less capable" than those sold to the United Arab Emirates, a key U.S. ally in the Persian Gulf.
And those aircraft, as with Boeing F-15s that Saudi Arabia will receive under a $67 billion U.S. defense package, were denied certain systems and weapons to ensure they cannot pose a threat to Israel.
The exact configuration of the F-16s headed for Iraq isn't clear. But it is known that Washington hasn't included Joint Direct Attack Munitions built by the Boeing Co. in the package for Baghdad.
"The net effect seems cleverly calibrated to give Iraq an air defense force that can handle aging threats from Syria or Iran relatively well and perform strike missions within Iraq, without being a serious threat to more advanced air forces in the region," Defense Industry Daily observed.
"Regional memories among its Arab neighbors, as well as Israeli concerns, make that a smart starting point.
"Upgrades can always take place later and the F-16IQs have at least some of the equipment required to handle more advanced weapons," the Washington daily noted.
The Jerusalem Post reported that Israel's military is "carefully watching developments in Iraq," non-Arab Iran's western neighbor and historical foe.
"The possible developments there are not immediate but since the U.S. withdrawal from Iraq we don't know what will evolve there," the senior officer said.
Israel's concerns center on other Iraqi military systems, including armor,
but Baghdad's potential strike capabilities appear to be uppermost among them.
The Post noted that these surfaced in the Israeli military's multiyear procurement plan approved by the General Staff in late 2011 but which has yet to be implemented because of differences between the Defense Ministry and the Treasury over cuts in the 2012 and 2013 defense budgets.
"In the military's analysis for the region -- which serves as the foundation for the procurement plans -- Iraq once again appears as a potential threat to Israel, something it has not posed since the U.S. invasion of the country in 2003," the newspaper observed.
It remains to be seen whether Washington will amend its defense sales to Iraq in view of this.