This cost George H.W. Bush the presidency in 1992
Date: 10/25/00 6:21:17 PM Pacific Daylight Time
From: (Samir Bustami)

January 27, 1992

US to Israel: Stop Building Settlements Or Lose Guarantees

George D. Moffett III, Staff writer of The Christian Science Monitor

Page: THE U.S., page 9

(WASHINGTON) THE United States has made its choice, in principle at
least. Now Israel will have to do the same.

Secretary of State James Baker III put Israel on notice Friday that it
will have to limit or stop construction of Jewish settlements in the
occupied West Bank and Gaza Strip if it wants the United States to
underwrite a multibillion-dollar loan.

Israel must now decide between two high priorities: The new settlements,
needed to anchor what Israelis say is their historic claim to the
territories; or up to $10 billion in loan guarantees, needed to absorb
hundreds of thousands of immigrants flooding in from the former Soviet

In a meeting here Friday with Israeli Ambassador Zalman Shoval, Mr.
Baker made it clear that Israel cannot have both.

As Israel contemplates its dilemma, the US will be contemplating its
own: how to link settlements and loan guarantees without jeopardizing
the Middle East peace process Baker has worked so hard to create.

If its exact conditions for granting all or part of the guarantees are
too lenient, Palestinians might quit the peace talks in protest. If its
conditions are too stringent, Israel might bolt. If Baker and President
Bush press Israel too hard, analysts add, they could bolster Prime
Minister Yitzhak Shamir's appeal as a man willing to stand up to
bullying from Washington.

"Bush has to avoid injecting himself into Israeli domestic politics,"
comments one Middle East expert, referring to the national election
campaign now under way in Israel. "If he is too tough he could give
Shamir ammunition" in his bid for reelection.

Humanitarian purposes cited

Israel says the loan guarantees are for purely humanitarian purposes, to
help Jews who risk persecution, or worse, by not emigrating from the
former Soviet republics.

Baker says the US wants to help but will do so only if the US has
assurances that the money will not be used even indirectly to expand
settlements, which he has called the major impediment to ending the
Arab-Israeli dispute. Even if Israel provides such assurances, finding
support for the full $10 billion will be difficult while anti-foreign
aid sentiment runs so high among recession-weary Americans.

Although estimates vary, Israel may have spent up to $1.5 billion last
year on Jewish housing and infrastructure in the territories, with major
new funding committed for 1992.

Although the money borrowed with the US guarantees - like the $3 billion
in annual US foreign aid Israel receives - would not be spent on
settlements, it would free other funds to be used for that purpose.
Opinion polls indicate that the settlements policy is opposed by a
majority of Israelis and American Jews but is supported by Israel's
small but politically powerful settler community and right-of-center

Appeal to right-wing voters

Most political observers were expecting that, in his campaign for
reelection, Mr. Shamir would run as the man who led Israel into the
peace process. In what many regard as a risky ploy, he has instead
jeopardized both the peace process and the loan guarantee by appealing
to right-wing voters.

"No force in the world will stop this construction" of settlements, a
defiant Shamir told Jewish settlers last week. His appeal produced
cheers in West Bank settlements but anger in the Bush administration.

The $10 billion sought by Israel is part of an estimated $40 billion
needed to absorb the new immigrants.
The US would not be giving Israel money but simply guaranteeing loans to
help it secure better credit terms in commercial markets.

Baker and Mr. Shoval are expected to meet again on the matter after
Baker returns from this week's
opening ceremonies in Moscow for the third, multilateral phase of the
Middle East peace process.