U.S. cuts $289 million from Israeli aide as penalty

Special to World
Friday, November 28, 2003

The Bush administration has decided to deduct $289.5 million from $9 billion in loan guarantees for Israel to penalize its construction projects in the West Bank and Gaza Strip.

U.S. officials said the deductions were made under a law that mandated the deduction from the U.S. loan guarantees for Israeli construction in the West Bank and Gaza Strip. The officials said the amount deducted represents a range of settlement activity, including the construction of a security fence and barrier along the West Bank.

"This number include both, concerns about settlement activity and concerns about the route that was planned for the fence," State Department spokesman Richard Boucher said.

Officials said the amount deducted by the administration came in wake of discussions with Israeli government representatives regarding settlement activity in the West Bank and Gaza Strip. They said the focus of the talks was the security fence and barrier and the route planned for that project.

Boucher said Israel recommended a deduction of $289.5 million from the loan guarantees. He said the United States accepted that figure on the basis that the construction of the security fence along, rather than inside the West Bank, was a legitimate project.

"We've always said that we understood Israel's need to provide for its security and that the fence, if built along the Green Line, would be an appropriate security measure," Boucher said. "There are concerns about the route of the fence, which we have stated in policy terms, and which are now included as deductions here."

Officials said the deduction would force Israel to borrow at an interest rate of up to two percentage points higher than that which could have been obtained under the loan guarantees. They said this could mean an additional expense by Israel of about $5 million.

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