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Baker Ends Visit to Israel with Loan Deal in the Works

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Secretary of State James Baker left here Tuesday with Israelis convinced they would soon get long-awaited guarantees from the United States for billions of dollars in loans needed for immigrant absorption.

Differences between the two countries remain, most notably over Prime Minister Yitzhak Rabin’s distinction between “security” and “political” settlements, which Baker does not accept.

But Israeli sources say Baker will nonetheless advise President Bush to grant the loan guarantees, with an announcement expected early next month during Rabin’s visit to Bush’s vacation home in Maine.

Baker summed up his visit as “very fruitful.” The new political situation presents an opportunity to create “a new momentum” in the peace process, he said.

The secretary of state maintained his upbeat tone after meeting in Amman for four hours with King Hussein of Jordan.

“There are opportunities now that should be taken advantage of and will be taken advantage of,” he said, according to reports from the Jordanian capital.

Foreign Minister Shimon Peres, who met a few times with Baker during his stay, likewise held out prospects for progress.

He told the Conference of Presidents of Major American Jewish Organizations in a telephone call to New York that the talks with Baker were “successful” and conducted in an atmosphere of “warmth and friendship.”

A MESSAGE FOR ASSAD OF SYRIA

Peres said that in discussions with Baker about the peace talks, “many of the misunderstandings related to the bilateral talks have been clarified, and substantive discussions were held on multilateral issues.”

He said that “the Palestinians are convinced that we mean business. I believe they’re ready to go ahead.”

Peres said he expected the issue of the Arab boycott against Israel to be raised by Baker on his visit to the Arab states.

After meeting with Hussein, Baker continued on to Syria, where he was scheduled to meet with Foreign Minister Farouk al-Sharaa. He will proceed to Egypt to meet with President Hosni Mubarak and then return to visit Syrian President Hafez Assad, whose mother died Tuesday morning.

When Baker meets Assad, he reportedly will present him with a message from Rabin designed to repair the damage caused by pre-election remarks that Palestinian autonomy is Israel’s top priority at the peace table, and that negotiations with the Syrians can go on the back burner.

Rabin reportedly asked Baker to assure Assad that Israel is open to compromise on the Golan Heights, though it will not retreat from all of it.

The condition for progress between Israel and Syria, Rabin reportedly said, is a for Assad to publicly declare his willingness to reach a peace accord with Israel.

In Amman, Hussein did not say whether he would give his assent to removing the boycott of companies that do business with Israel, or any other specific confidence-building measures.

Palestinians have protested that no confidence measures are called for unless Israel announces a total freeze on the construction of settlements in the administered territories.

But as Rabin reportedly explained to Baker on Monday, the Israeli halt on construction in the territories will not be total.

While Rabin has no plans to build new settlements, legal and practical considerations may preclude stopping some of the construction that is already under way.

And the prime minister said he is not willing to announce a settlement freeze in the areas he considers vital to Israel’s security: Greater Jerusalem, the Jordan Valley and the Golan Heights.

BUILDING IN JERUSALEM UNRESOLVED

According to one report, the U.S. administration is likely to propose that public funds spent to continue construction under way be deducted from the amount of the loan guarantees.

Israel had originally requested guarantees that would enable the country to take out $10 billion worth of loans at favorable rates to pay for the absorption of new immigrants.

But with the slowdown of immigration since the guarantees were first discussed a year ago, it is expected that the package will be redrawn.

Newspaper reports here say Bush will offer a package of $2 billion a year for two years, with subsequent amounts to depend on the pace of immigration.

Also unresolved is continued building activity in East Jerusalem. However, it was expected here that by the time Rabin and Bush meet, a compromise formula will have been found.

Before his departure from Israel, Baker met with Rafael Eitan, leader of the opposition Tsomet party, who presented “the other side of the picture” regarding the future of the territories.

The meeting was initiated by Eitan, but Baker was also reportedly eager to meet the man who won eight seats in the elections and is still considered a potential Labor coalition partner.

(Contributing to this report was JTA staff writer Larry Yudelson in New York.)

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