TEL AVIV ø The United States plans a review of Israel's economic
performance to determine whether another $3 billion in loan guarantees
should be issued to the Jewish state.
Envoys from the two countries will meet in Jerusalem on Monday under
the Joint Economic Development Group in an effort to review Israel's
spending policy, including that in the West Bank and Gaza Strip. The panel
was established to review Israel's economic plans and ensure that they met
terms of the loan guarantee agreement.
The U.S. delegation will be led by Undersecretary of State for Economic
Affairs Alan Larson, who will also visit Egypt, Jordan and the Palestinian
Authority. Officials said the U.S. delegation will urge Israel to reduce
spending in Israeli communities in the West Bank and Gaza Strip.
In 2003, the United States approved the first portion of the $9 billion
of loan guarantees. Israel used $1.6 billion to obtain loans at preferred
U.S. officials said the loan guarantees have been dependent on the
implementation of an economic recovery plan approved by Washington that
would encourage competition, accelerate privatization, and bring public
spending under control. Another condition stipulated the bolstering of
intellectual property rights protection.
U.S. ambassador to Israel, Dan Kurtzer, said Israel's economy has become
much healthier over the past year. He cited an improvement in Israel's
credit rating, the reduction of long-term interest rates and the doubling of
direct foreign investments.
"Some problems remain, especially Israel's high poverty and unemployment
rates, and a stubborn budget deficit," Kurtzer said on Feb. 10. "Deeper cuts
on spending in some sectors ø for example, settlement activity ø are
Kurtzer urged Israel to streamline and improve the tender process,
including increasing transparency and shortening the time for an award. He
said government tenders have been revised to favor Israeli companies