Israel Won’t Use U.S. Loan Money for Settlements, Shamir Promises

Prime Minister Yitzhak Shamir promised Thursday that money Israel borrows through U.S.-guaranteed loans will be earmarked exclusively for the absorption of immigrants, not building settlements in the administered territories.

Shamir’s remarks to leaders of the State of Israel Bonds Prime Minister’s Mission here were clearly intended to mollify the U.S. administration and American public opinion.

The Bush administration has been adamantly opposed to Israel’s settlement-building program, which it considers an obstacle to peace, and refuses to underwrite it, directly or indirectly.

Secretary of State James Baker called last week for a freeze of settlement-building in return for the loan guarantees.

Shamir fell short of making any such commitment. He said instead that Israel “must clarify to American public opinion clearly and strongly” that it is not seeking grants from the United States but merely guarantees, to help it negotiate commercial loans at reasonable rates.

These guarantees will not cost the American taxpayers one penny, he maintained.

He urged the Bonds leaders to continue to raise funds for aliyah. There are still many immigrants to absorb, he said, and absorption costs are very high.

Israel’s ambassador to Washington, Zalman Shoval, who discussed the loan guarantees with Baker on Jan. 24, is returning here next week to confer with Israeli officials on the matter.

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