The $1 billion US military grant to Israel, as well as the $9 billion in loan guarantees, is conditional on implementing the economic plan, approved by the cabinet last night.
Minister of Finance Benjamin Netanyahu said early this week that US National Security Adviser Condoleezza Rice told him that she was very impressed by the plan. Rice added the loan guarantees depended on Israel implementing the economic plan.
Officials knowledgeable about the US-Israeli negotiations told “Globes” yesterday that the Americans left no room for doubt that they considered the loan guarantees and military grant to be a single package. If the loan guarantees are cancelled because Israel does not implement the economic plan, the grant would be cancelled as well, the sources said.
The fiscal year 2003 supplementary appropriations bill for financing the Iraq War and related costs that the Bush administration submitted to Congress includes both the military grant and the loan guarantees to Israel, but states that only the loan guarantees are conditional on implementing the economic plan.
The bill states: “The president will decide the procedures and conditions for granting the loan guarantees, and will take into account the budgetary and economic reforms being taken by Israel. If the president decides that these procedures and conditions have been violated, he may suspend or cancel altogether all the loan guarantees or the part of the guarantees that has not yet been granted.”
Another condition is that investments beyond the Green Line will be deducted from the loan guarantees.
The bill goes on to state that the president is authorized to give Israel the loan guarantees through the end of fiscal year 2005. The item detailing the military grant does not cite any conditions.
The sources said that the conditions on the entire aid package were anchored in oral understandings made in the negotiations between the two countries. Israel and the US have been in frequent talks over the aid package in recent days, including talks between Minister of Finance Benjamin Netanyahu and Ministry of Finance director general Ohad Marani with officials from the National Security Council and White House Budget Office.
It is believed that the US will not apply strong pressure on Israel, but the Bush administration insists that the loan guarantees be used as an instrument to strengthen Israel’s economy. The US is applying this policy not only vis-à-vis Israel, but also to other countries receiving aid. Most aid recipients are told to carry out political reforms, while others, like Israel, are told to implement economic reforms.
Published by Globes [online] - www.globes.co.il - on March 26, 2003