Ending months of delay and removing a source of increasing friction in U.S.-Israeli relations, the State Department on Wednesday released $400 million in long-promised loan guarantees to finance the construction in Israel of housing for immigrants from the Soviet Union.
The move was announced in a short statement issued by State Department spokeswoman Margaret Tutwiler. It said Secretary of State James Baker had telephoned Israeli Foreign Minister David Levy to inform him of the decision.
Baker told Levy that the guarantees would be released for the entire $400 million, which will allow Israel to seek the loans from commercial banks at favorable rates.
The announcement came a day after Vice President Dan Quayle told delegates to the National Jewish Community Relations Advisory Council plenum in Miami that the loans would be released “later on this week.”
The Israeli Embassy here had no immediate official comment, but an almost audible sign of relief could be heard. Embassy officials had been bombarded for months with a continuous list of questions from the Bush administration aimed at ensuring that none of the money would be used to house Soviet Jews in the West Bank or the Gaza Strip.
Only last week, Israeli Ambassador Zalman Shoval accused the administration of giving Israel “the runaround” through a series of almost endless technical questions. Shoval later apologized for his remarks, which the White House called “outrageous.”
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