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News and views on Israel, Zionism and the war on terrorism.

February 04, 2003

A $12 Billion Question

Josh Hammer of Newsweek states that "Sharon wants a huge new aid package. Bush needs a viable Israeli-Palestinian peace process. Can they make a deal?
(...)THIS SUM WOULD be added to nearly $3 billion that Israel already receives each year, the biggest U.S. aid package provided to any country in the world. The Americans made no promises. But according to a senior government official involved in the talks, “The impression we got was a good one.”

That unprecedented request could give the White House a powerful lever. The administration has put the peace process on hold for months while concentrating on the buildup to war with Iraq. Meanwhile the Israeli-Palestinian conflict has continued, disrupting America’s ties with the Arab world and keeping the whole region precariously off balance. Washington intends to get the two sides talking again “on day one” after a war with Iraq, Deputy Defense Secretary Paul Wolfowitz said last month. He added that the administration will push Israel to accept at least a vague timetable for the establishment of a Palestinian state within five years and to “deal with” the Jewish settlements that are still springing up in the occupied territories. In return for the additional $12 billion grant-and-loan package, Washington could demand that Israel quickly freeze or even dismantle some of the West Bank and Gaza’s 145 settlements. But will the Bush administration have the nerve?

The United States has used aid to Israel as leverage in the past. In 1991 the Israeli government, led at the time by Yitzhak Shamir, requested $10 billion in commercial-loan guarantees to finance the absorption of hundreds of thousands of new immigrants. The then President George H.W. Bush and Secretary of State James Baker demanded a settlement freeze in return. When Shamir refused, the loan guarantees were withheld—one factor in Shamir’s defeat in elections the following year. Shamir’s successor, Yitzhak Rabin, declared a settlement freeze and received the loan guarantees, along with a 10-year grace period to pay back the money. (The first payment of several hundred million dollars comes due this year.) The new Israeli leader went on to authorize talks with the Palestine Liberation Organization that ended in the 1993 Oslo peace accords. [more]