Shamir Refuses to Halt Settlements As Condition for U.S. Loan Guarantees

Prime Minister Yitzhak Shamir vowed Monday that his government will not halt settlement-building in the West Bank and Gaza Strip in order to qualify for U.S. guarantees covering $10 billion in loans desperately needed to resettle immigrants from the former Soviet Union.

Although Israelis say the U.S. underwriting is essential if Israel is to borrow the requisite sums from commercial banks at affordable rates, Shamir told Jewish militants in the West Bank that settlement-building will go on, even if it means a collision with the Bush administration.

He spoke at the Gush Etzion settlement bloc south of Jerusalem after planting Tu B’Shevat saplings in nearby Betar.

“No power on earth” could bring Israel to stop Jewish settlements all over “Eretz Yisrael,” Shamir told an appreciative audience.

At the same time, Finance Minister Yitzhak Moda’i was delivering a similar message to government officials, though in more measured terms.

Moda’i emphasized there is “no connection, repeat: no connection” between the loan guarantees and settlements.

Settlements are the subject of a political dispute “with the present administration” in Washington, while the loan guarantees are a humanitarian matter, Moda’i stressed. He said Israel would not make concessions on settlements because that would lead inexorably to other concessions.

Moda’i said Israel’s formal request for the loan guarantees, to be submitted shortly, would predict unemployment rates of up to 16 percent and a drop in living standards if the loans are not forthcoming.

It is not clear whether Shamir and Moda’i were sending a message of defiance to Washington or merely attempting to reassure militant minority voter bloc of their ideological commitment.

Shamir, who faces early elections, could have been fence-mending among his settler constituents, who are furious that the government is engaged in peace talks with the Palestinians.

He assured them they have nothing to worry about from the bilateral talks, which have been taking place in Washington.

NO NEED TO ‘SACRIFICE’ PRINCIPLES

But whether he really intends to joust with the Bush administration and risk the loan guarantees remains to be seen. Large numbers of Israeli voters take the view that the successful integration of a million new immigrants in the next five years deserves priority over the demands of a relative handful of settler ideologues.

Shamir may still believe he can find a way to continue building settlements without losing the U.S. loan guarantees.

“The absorption of immigrants is the sacred duty of our people,” he told the settlers Monday in Betar, adding: “Our national duties are sacred at the same time, and I don’t think we shall have to sacrifice any of our principles.”

But reports from Washington tell a different story. According to sources there, the Bush administration is disinclined to accept compromises proposed by some members of Congress, such as deducting the amounts Israel spends annually in the territories from the amount of loans guaranteed.

The reports say President Bush will accept nothing less than a total freeze on new settlement-building before he recommends approval of the loans. More important, Bush believes he can carry Congress with him on this issue.

Shoshana Cardin, chairman of the Conference of Presidents of Major American Jewish Organizations, arrived here Monday for meetings with Shamir on the subject.

Having met with top White House and State Department officials last week, she is expected to convey the administration’s viewpoint, as well as the American Jewish community’s assessment of what is at stake for Israel.

In Washington, Israeli Ambassador Zalman Shoval has been discussing the terms of a loan guarantee package with State Department and National Security Council officials. But with the demise of the Israeli government imminent, those talks may very well be put on hold.