US loan guarantees extended to 2008

Israel will use $1 billion of the loan guarantees in 2005.

Within a few weeks, practical discussions will begin in Washington on Israel’s request for aid for disengagement. The schedule was agreed yesterday in the first meeting between the Israeli economic delegation visiting the US and a US interdepartmental team. The meeting took place in the White House.

Ministry of Finance director general Dr. Joseph Bachar heads the delegation, which also includes Israel Ambassador to the US Daniel Ayalon, Economic Minister to North America Ron Dermer, Bank of Israel director of research Dr. Karnit Flug, and other Ministry of Finance officials. Deputy National Security Advisor for International Economic Affairs Faryar Shiraz heads the US team.

”The plan is to inform the US about the economic consequences of the disengagement plan, and what its cost will be for the Israeli economy. We’re talking about much more than $1 billion,” an Israeli source said.

The Israelis raised the possibility that the cost of activities related to disengagement could swell the budget deficit to more than 3% of GDP. The Israeli delegation said that it would be better to reach agreement on an aid package before disengagement.

After the meeting, Israeli sources noted that although President George W. Bush’s public commitment is confined to development of the Negev and the Golan, US administration members are interpreting his remarks at a green light for aid to disengagement.

The Israeli delegation also met with a US team in the framework of biannual economic discussions between the two countries. Assistant Secretary of State for Economic and Business Affairs E. Anthony Wayne headed the US team, which also included Assistant Secretary of the Treasury for International Affairs Randal Keith Quarles.

At the meeting, mechanisms required by the US Congress’s decision to extend until 2008 the period during which Israel can use the US loan guarantees extended by the Bush administration were established. Israel has $3 billion left of the $9 billion in guarantees granted.

It was determined that Israel would be entitled to us the remaining sum in three $1 billion tranches. The first tranche will be used by the end of 2005, and the other $2 billion will be released in subsequent meetings.

Published by Globes [online] - www.globes.co.il - on April 20, 2005

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