Germany has rejected an Israeli proposal to establish a government-backed fund for investments in Israel, according to diplomatic sources here.
But after two days of intensive talks last week with Israeli Foreign Minister Shimon Peres and an economic delegation from Jerusalem, Bonn said it would support an agreement that would provide guarantees for German private investment in Israel.
The agreement had been negotiated in 1982 and was ready for signature, but the Germans backed down because of political and legal problems concerning the status of Jerusalem.
According to some observers, Israel’s military intervention in Lebanon, in the summer of 1982, may also have played a role in the German reversal.
The most tangible result of Peres’ visit here was a decision by Germany and Israel to double to $180 million a joint fund to finance scientific and technological research.
Most of the research is being done in Israel with the participation of scientists and scholars from both countries.
In several meetings here, notably with President Richard von Weizsacker and Chancellor Helmut Kohl, Peres outlined his vision of large-scale regional infrastructure projects financially backed by the Europeans, in particular Germany.
But the Germans apparently remained skeptical about their role in such projects and repeatedly pointed out that political differences in the region should be settled first.
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