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Israeli Cabinet Gives Its Approval to Terms for U.S. Loan Guarantees

Israel’s Cabinet gave formal approval Sunday to the terms of a U.S. government guarantee that will enable Israel to borrow $400 million from American banks to help build homes for Jewish immigrants from the Soviet Union.

The Cabinet’s assent may have temporarily warded off attacks on Foreign Minister David Levy from hard-line elements within the Likud-led Cabinet, which objected to the commitments he made in order to secure the U.S. guarantee.

It also set to rest doubts raised in Washington about whether Israel was backing away from those commitments, which Levy made before concluding a visit to the United States on Oct. 2.

Since Levy’s return, Likud hard-liners and Cabinet ministers further to the right had accused Levy of giving in to American pressure by agreeing to limit where immigrants could be settled.

Among those challenging Levy were Housing Minister Ariel Sharon of Likud, Science and Energy Minister Yuval Ne’eman of Tehiya, and Agriculture Minister Rafael Eitan of Tsomet.

They complained that Levy had pledged Soviet olim would not be settled in East Jerusalem and had promised to report to U.S. Secretary of State James Baker where immigrant housing was being built.

Both Levy and Prime Minister Yitzhak Shamir denied that. Shamir vigorously defended his foreign minister, whom he insisted had not veered from established government policies.

In letters last week to President Bush and Secretary Baker, Shamir and Levy maintained the Israeli pledge does not preclude the government from building and settling immigrants in East Jerusalem or even the administered territories.

NO PRIOR NOTICE ON SETTLEMENTS

All the agreement specified, Levy maintained, was that Israel not use U.S. funds to build in those areas. The Israeli foreign minister did promise, however, that he would furnish the U.S. government with information about Israel’s settlement activities.

Shamir, prodded by Sharon, insisted Sunday that this does not mean prior notification before a building or settlement project is begun.

Informed sources here and in Washington seem to have detected signals from the Bush administration late last week that it was seeking to ease tensions with Israel over the loan guarantee.

The Americans seem prepared to leave the dispute unresolved under the cloak of diplomatic ambiguity. That appeared evident at the briefing given Friday by State Department spokeswoman Margaret Tutwiler.

Levy’s letter to Baker the previous day “does not cancel or make null and void the original assurances,” she said.

Tutwiler said the assurances were given in Levy’s letter of Oct. 2, which said “use of the housing loan guarantees will be restricted to the geographic areas which were subject to the government of Israel’s administration prior to June 5, 1967.”

“Those assurances have been given, and we do not believe the letter received (Thursday) changes those assurances,” Tutwiler insisted.

(JTA correspondent David Friedman in Washington contributed to this report

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