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January 31, 2003/Shevat 28 5763, Vol. 55, No. 23
Linkage urged on Israeli loan guarantees
MATTHEW E. BERGER
Jewish Telegraphic Agency
WASHINGTON - A Jewish organization is publicly urging the Bush administration to link Israel's request for loan guarantees to a freeze on Jewish settlements in the West Bank.
Americans for Peace Now is calling on the Bush administration to withhold the $8 billion in loan guarantees until there is a complete freeze on settlement growth and a pledge to dismantle settlements constructed since Oct. 1999.
The group is also calling for 20 percent of the loan guarantee funds to be set aside for housing for settlers who want to relocate to homes inside Israel proper.
The move is being criticized by other Jewish groups, with at least one calling it a "big mistake."
In the fall, Israel officially requested $8 billion to help offset the country's economic crisis and the looming threat of U.S. military action in Iraq.
The White House is expected to submit to Congress the request for $8 billion in loan guarantees and $4 billion in military aid, stretched out over three years.
The guarantees allow Israel to borrow money at a lower interest rate. There is no cost to the United States if Israel repays its loan. Israel maintains that it has never defaulted on a loan.
The request, which will also include additional aid for other Middle Eastern allies, such as Turkey and Jordan, is not expected to be sent until after any action in Iraq.
But the pitch for military aid and loan guarantees could encounter serious opposition in Congress.
Although congressional support for Israel is very strong, there are major budget constraints on the government, and approving a large aid package for Israel may prove difficult amid cuts in other programs.
The United States and Israel have been negotiating the conditions since October.
The White House has played down the loan guarantees until now, reportedly out of fear that it would be seen as a boost to Sharon and an interference in the Israeli elections.
Sources close to the talks say they have been cordial and productive, in contrast to the ones the United States held with Israel in 1991, between President Bush's father and then-Israeli Prime Minister Yitzhak Shamir.
An official familiar with the negotiations this year said that talks between the two countries this time around were based on the conditions set out in the 1992 loan.
Specifically, U.S. funds will not be allowed to be used over the "Green Line," Israel's pre-1967 border with the West Bank and Gaza Strip.
In addition, all funds Israel spends from its budget on settlements in the West Bank and Gaza will be deleted from the amount of the loan guarantee, helping to ensure that U.S. money does not aid Israel's expansion of the controversial settlements.
"From the White House view, it is a carrot and a stick to lessen settlement expenditures" by the Israeli government, the official said.
But these conditions are not enough for Americans for Peace Now, which is supporting the military aid but wants strings attached to the loan guarantees.
"Conditioning aid is nothing new," said APN's president and CEO, Debra DeLee.
"It's our way of showing Israel that the United States is very committed to relations between the two countries, that the United States wants to help Israel in its time of economic stress and that the United States wants Israel to alter its policies on the settlements."
DeLee said it was important to place conditions on the aid, rather than seek a change in Israel's settlement policy through diplomatic means, such as the road map for a Palestinian state that is currently being constructed by the United States, the United Nations, Russia and the European Union.
Some Jewish groups criticized the APN position.
"I think it's a big mistake," said Daniel Mariaschin, executive vice president of B'nai B'rith International.
"This kind of statement is not what Israel needs,'' he said, adding that it could undermine Israel's ability to use the settlements as a bargaining chip in negotiations.
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