US/ISRAEL: The White House told Israel yesterday it would deduct nearly $290 million from a multibillion-dollar package of loan guarantees in response to its controversial settlement activities in Palestinian areas, people familiar with the decision said.
Israel agreed on the final figure after months of talks between US national security adviser Condoleezza Rice and Dov Weisglass, Israeli Prime Minister Ariel Sharon's chief of staff, the sources said. Rice and Weisglass met at the White House yesterday.
It was unclear whether the first deduction totaling $289.5 million would, as expected, include a portion of the cost of construction of Israel's barrier through the West Bank.
President Bush has called the fence a problem and a potential obstacle to resolving the Israeli-Palestinian conflict.
Additional deductions could be made from future installments under the $9 billion package of US loan guarantees, the sources said. Bush administration and Israeli officials had no immediate comment.
The administration had all along planned to make deductions for settlement activities in Palestinian areas, but Israel and its supporters in Congress argued the barrier should not be counted.
It will not be the first time the United States has deducted the cost of settlement expansion. When Bush's father was president, similar deductions were made from $10 billion in loan guarantees granted to help Israel absorb a flood of immigrants from the former Soviet Union.
Meanwhile Israel formally protested to Russia yesterday over a Russian-drafted UN resolution that was seen by the Israeli government as an attempt to usurp Washington's leading role in a Middle East peace plan.
The UN Security Council last week voted unanimously to endorse the stalled Middle East "road map" that envisions a Palestinian state by 2005 in exchange for security for Israel.
Russian ambassador Gennady Tarasov was summoned to the Foreign Ministry in Jerusalem, where its director general, Yoav Biran, "expressed Israel's dissatisfaction and objections" over the Russian initiative, a ministry statement said. The US, the UN, Russia and the European Union sponsored the peace plan.