Israel Wins U.S. Loan Guarantees, but Must Provide Settlement Data

Israeli Foreign Minister David Levy left the United States on Tuesday with an agreement in his pocket for $400 million in U.S. loan guarantees.

But the long-sought guarantees, which will be used to obtain loans for the construction of immigrant housing in Israel, do not appear to have come without major concessions by the Israeli government.

According to Israeli officials, the deal between the two countries includes an Israeli agreement to regularly provide information to the United States on housing plans for new immigrants, incentive systems that exist for Israelis who settle in various geographic locations, and “financial activities regarding settlements.”

Such information would permit the U.S. government to monitor the amount of money the Israeli government spends on settlement of its citizens in the administered territories.

Levy played down the stipulations in a briefing with Israeli reporters, saying there is a difference between a commitment to report to the U.S. government and an agreement to share information with Washington.

“Reports are something you give to a superior; information is something you exchange with an ally,” Levy said.

Israeli officials said that housing loan guarantees would be issued after Levy sends U.S. Secretary of State James Baker a letter outlining the basis of the agreement.

The letter is to state Israel’s agreement to share the information and say it is required because Baker is obligated to provide such information to various congressional committees.

The letter also will reaffirm assurances given previously by Prime Minister Yitzhak Shamir and Housing Minister Ariel Sharon that the Israeli government has no policy of directing Soviet immigrants to the territories, and that there are no incentives given by the Israeli government to Israelis settling there.

EAST JERUSALEM NOT DISCUSSED

One of the thorniest issues dividing the United States and Israel, whether the Israeli commitment not to direct Jews to the territories should apply to East Jerusalem, appears not to have been addressed directly.

“The issue was not discussed,” Eitan Ben-Tsur, assistant director-general of the Israeli Foreign Ministry, said when asked if the information-sharing is to include East Jerusalem.

But Israeli officials said the agreement on the loan guarantees is based on the usual dynamics of U.S. economic aid to Israel. A 1980 agreement states that aid to Israel is not to be used in “the geographic areas which were not subject to the government of Israel’s administration prior to June 5, 1967.”

Levy and other Israeli officials stressed that they did not give in to all U.S. demands. The most important of these was an American request to freeze all settlement activity in the administered territories.

“The government will not restrict or be an obstacle for the settlement of Jews anywhere,” the foreign minister said.

He also said that Israel had refused to give an exact accounting of all money spent beyond the 1967 Green Line, which some elements in the administration had been asking for.

Levy said he told the State Department officials that this request was impossible to meet because the Israeli government does not keep separate budgets for expenditures within and outside the Green Line.

The agreement announced Tuesday ends months of negotiations between the United States and Israel on the loan guarantees, which were approved by Congress last spring.

The Bush administration has held up the guarantees since then because of concern that the money would indirectly be used to expand Jewish settlements in the administered territories.

Last week, Israeli Finance Minister Yitzhak Moda’i discussed the matter in Washington with Deputy Secretary of State Lawrence Eagleburger. He said the differences would be hammered out a day later when Levy met with Baker.

But when the Israeli foreign minister and his American counterpart met at the United Nations on Sept. 26, they deadlocked over the issue. Their aides had been working since then on resolving differences between the two sides, and they finally reached an agreement Tuesday, prior to Levy’s departure.