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Bush Remark on Settlements Ignored, Pledge Against Loan Linkage Welcomed

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Israel has dismissed President Bush’s latest criticism of its settlement policy in the administered territories, but welcomed his assurance that U.S. loan guarantees Israel is seeking will not be linked to the settlement issue.

Bush repeated his view Monday that planting settlements on disputed land is “counterproductive” to the peace process he is trying to set in motion in the Middle East.

But he also said he would not put pressure on Israel to stop the settlement activity by withholding U.S. guarantees for some $10 billion in commercial loans Israel wants to finance the resettlement of Soviet and Ethiopian immigrants over the next five years.

The Prime Minister’s Office reacted officially only to the president’s criticism of the settlements, made during a news conference at his vacation home in Kennebunkport, Maine.

The statement said merely that the American view on the settlements is well known and represents nothing new. It restated the Israeli government’s view that settlements are not an obstacle to peace and that Israel has every right to settle Jews anywhere in the territories.

In fact, only hours after the president spoke, Housing Minister Ariel Sharon was dedicating a new neighborhood and Defense Minister Moshe Arens a new health clinic, both at Jewish settlements in the West Bank.

Privately, officials here were pleased with Bush’s statement that there will be no direct linkage between the settlement issue and the loan guarantees, which Israel is expected to request formally in September.

In recent weeks, administration officials have been hinting that Bush might withhold the guarantees because of Israel’s settlement policy.

Prime Minister Yitzhak Shamir was quoted as telling leaders of the Simon Wiesenthal Center here Tuesday, “I personally believe that President Bush clearly understands that there should be no linkage.”

According to Rabbi Marvin Hier, dean of the Los Angeles-based center, Shamir said too much attention is being paid to the settlements and not enough to why the Arabs do not hold direct negotiations with Israel.

Hier quoted Shamir as pointing out that “when you speak to each other, you can bring up any issue you want to.”

(JTA staff writer Aliza Marcus in New York contributed to this report.)

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