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Last update - 16:08 15/01/2009
U.S. may cut $1b in loan guarantees to Israel over West Bank settlements
By Aluf Benn
Tags: West Bank, Israel News, U.S. 

The United States administration plans to cut about $1 billion from the balance of its loan guarantees to Israel because of its investments in the settlements. The balance currently stands at $4.6 billion.

Washington has not officially informed Jerusalem of the cut. The assumption is that the announcement, and the decision over the exact extent of the cut, will come only after Barack Obama is sworn in as president next Tuesday.

Israel has used about $4.4 billion of the $9 billion in loan guarantees extended by the U.S. in 2003 in the wake of the war in Iraq and to help shore up the Israeli economy. The guarantees have assumed greater importance recently in light of the global economic crisis and the Finance Ministry intention to use the guarantees to secure foreign loans to help pay for the expected government budget deficit.
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The loan guarantees arrangement specifies that the U.S. will reduce the guarantees by the amount the Israeli government spends on settlements in the West Bank. The U.S. embassy in Tel Aviv monitors that spending and the administration informs Jerusalem of the amount it is holding back from the guarantees.

In the past two years no such announcement was made, but in unofficial talks held recently U.S. officials indicated that the cut would be about $1 billion.

Prime Minister Ehud Olmert considered asking President George W. Bush to forgive all or part of the reduction, but no such request was made in the end, in part because Washington did not inform Jerusalem about a reduction in the guarantees.

The extent of the cut is subject to political influence. In the 1990s, under the previous guarantees arrangement, then prime minister Yitzhak Rabin succeeded in convincing Washington not to include the construction of the various bypass roads in the West Bank (allowing Jewish settlers to avoid Palestinian populations) as "investment in the settlements." He explained that although the roads lead to the settlements, they would also benefit the Palestinians. The administration of Bill Clinton, seeking to encourage Israel toward progress in the Oslo Accords process, accepted the request. In the end, $800 million to $900 million was cut from loan guarantees totaling $10 billion.

The assessment now is that the Obama administration will weigh the political situation carefully before deciding on a cut to the guarantees and may try to link it with Israeli measures beyond the Green Line.

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      1.   Whome you are kidding? 04:03  |  Dr. Joji Cherian 15/01/09
      2.   Is a US loan guarantee actually worth anything anymore? 04:09  |  Pablo B 15/01/09
      3.   Obama is going to stick it to Israel using Hillary as the hammer. 04:13  |  r 15/01/09
      4.   Good News 04:18  |  Guy From NYC 15/01/09
      5.   It`s a good start... 06:09  |  BBSNews 15/01/09
      6.   Too little too Late 06:15  |  american 15/01/09
      7.   Settlements are illegal. Period 06:18  |  Yaakov 15/01/09
      8.   r: How is that? 06:41  |  Richie 15/01/09
      9.   A useful alternative 08:07  |  Colin Wright 15/01/09
      10.   Build until the Arabs really want peace 08:16  |  Gilad 15/01/09
      11.   Dont waste trillions on enemies give billions to friends 08:49  |  Karl 15/01/09
      12.   good, its time to leave the west bank 10:29  |  q 15/01/09
      13.   Get the religious out of West Bank 10:44  |  Rex 15/01/09
      14.   Money for Israel 15:17  |  zeggae 15/01/09
      15.   The US might need loans from Israel 15:18  |  lady from USA 15/01/09
      16.   Transfer Israeli loan guarantees 15:31  |  Chris Linthwaite 15/01/09
      17.   Great Idea--If Israel Approves It 15:32  |  MaoSayTongue 15/01/09
      18.   To Zeggae # 14 17:17  |  Canadian 15/01/09
      19.   COME ON! ... 17:44  |  Phil 15/01/09
      20.   If Only It Would Be Reduced By Double 17:49  |  Yaakov Sullivan 15/01/09
      21.   BBS 18:26  |  Jane 15/01/09
      22.   #19 Phil 18:48  |  Jim 15/01/09
      23.   Well, here`s some good news... 19:02  |  Silvienne 15/01/09
      24.   a good start, now ... 19:05  |  John H 15/01/09
      25.   Soon USA is out of money itself... 19:06  |  Petter 15/01/09
      26.   The right move 19:22  |  Nathaniel 15/01/09
      27.   us money 19:22  |  anaon 15/01/09
      28.   This is only the beginning 20:14  |  Alesiter 15/01/09
      29.   The Thin Edge Of The Wedge? 22:37  |  chet 15/01/09
      30.   to lady from usa 23:11  |  jon 15/01/09
      31.   Most sensible peace move to come out of Washington for months 23:16  |  Ivar 15/01/09
      32.   What? Only $1? 23:20  |  John 15/01/09
      33.   Would the $1b go..... 03:48  |  Pepe 16/01/09
      34.   us may cut $1b loan guarantees 05:17  |  Margaret Walters 16/01/09
      35.   Who guarantees US loans finances IDF 05:34  |  Brian 16/01/09
      36.   ALL u.s. aid to israel should be STOPPED until...(3rd try!) 10:43  |  eric 16/01/09
      37.   People and helping 08:47  |  American 17/01/09
      38.   $1 b in loan gaurantees 17:11  |  Linda R. 20/01/09
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