The deal was later reduced in size to $236 million. U.S. military officials said much of the Serbian equipment was of poor quality or not appropriate to the needs of the Iraqi military.
One high-ranking Iraqi official told the Times the deal was a surprise.
"I heard about it out of the blue, that the minister of defense took a delegation to Serbia and came back and said that he had signed deals with the Serbian prime minister," the official said. "Why Serbia? Why not Ukraine? Why not Russia? We just don't know."
Defense Minister Abdul Qadir said Iraqi Prime Minister Nouri al-Maliki was aware of the negotiations with Serbia and informed of what was happening. The previous defense minister was ousted because of a dubious arms purchase and is now a fugitive, the newspaper said.