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U.S. Deducts $289.5m From Israeli Loan Guarantees

U.S. Deducts $289.5 Million From Israeli Loan Guarantees

Boucher cites concerns over settlement building and security fence route

State Department Spokesman Richard Boucher said the United States is deducting $289.5 million from its loan guarantees to Israel due to concerns over Israeli settlement building and its construction of a security fence.

"There are substantial amounts being spent on the route of the fence, as well as substantial amounts being spent on settlement activity. And the total that we feel is appropriate to deduct this year is $289.5 million," said Boucher, speaking at the November 26 State Department briefing in Washington.

Boucher said the calculation of the total amount was based upon Israeli budget figures. While he said the figure did not reflect the total cost of Israel's settlement building and fence construction, the deduction "reflects issues of concern to the United States, including settlement activities and the route of the security fence."

He explained that under U.S. law, the loan guarantees could only support Israeli activities "in geographic areas subject to Israeli administration before June 5, 1967," and that deductions could be withheld for activities "that the president determines are inconsistent with the objectives and the understandings reached between the U.S. and the government of Israel regarding the loan program."

Boucher said the United States understands Israel's need for security measures, and affirmed that if the fence were built along the June 5, 1967, lines, it "would be an appropriate security measure." He expressed, however, that "there are concerns about the route of the fence which we have stated in policy terms and which are now included as deductions here."

Following is an excerpt from the November 26 State Department briefing:

[U.S. Department of State
Daily Press Briefing
November 26, 2003]

QUESTION: Is there any breakdown upon how much of the deductions from the U.S. loan guarantees to Israel will correspond to the building of the barrier?

MR. BOUCHER: The breakdown -- I can't give you a breakdown -- how much is, you know, various aspects of settlement activity, how much is the various aspects of the route that the so-called fence is taking. But I could just tell you that the concerns that we took into account in reaching agreement with Israel and this number include both, concerns about settlement activity and concerns about the route that was planned for the fence.

QUESTION: Why can't you give us a breakdown?

MR. BOUCHER: I think the discussion really proceeded from Israeli budgetary figures, and their understanding of their own spending, and we discussed that with them. So if there is a breakdown to be given of how much they spend on these different projects or areas, it would have come from them.


QUESTION: Just to argue the point a little bit. The --

MR. BOUCHER: Go ahead.

QUESTION: These are U.S. loan guarantees, and the money is being deducted from what the U.S. provides. So I'm a little confused as to why the U.S. can't provide the breakdown.

MR. BOUCHER: The U.S. is providing you with the amount that the U.S. is deducting from the loan guarantees, $289.5 million U.S. That's the total. And the calculation to get to that total was based on Israeli budget figures. And I think the Israelis, themselves, put out the first announcement saying that this is the number that they had come up with in discussions with us.

QUESTION: So you know the about, you're just not going to say it, since you got it from their budgetary notes?

MR. BOUCHER: We went through the process with them, but they were the ones that, as I think they said in their statement, that suggested the -- the Israeli statement says that they suggested that the U.S. deduct the agreed sum of $289.5 million.

QUESTION: Are you afraid if you disclose the amount, and it's a small amount, that it will look as if you really aren't that troubled by the facts?

MR. BOUCHER: I'm not afraid. It's not a small amount, and we've given you the total from the U.S. side, which is the amount we're going to deduct from the loan guarantees -- happy to do all the math you want on the loan guarantees. But as far as the breakdown of this figure, I'll leave it to those who -- whose budget it is that these figures are derived from to explain how much they spend on fences and how much they spend on settlement activity.

QUESTION: Can you at least say that some of the calculations for the amount did come from fence expenditures?

MR. BOUCHER: Yeah, I think I said that.

QUESTION: Yeah. But you're --

MR. BOUCHER: It's costs of settlement activity and costs of some of the fence expenditures.

QUESTION: Are you prepared to say that a vast majority of it is settlement activity?

MR. BOUCHER: I -- that would go back to small amount. I am not going to use adjectives; small amount, vast majority are both incorrect. But if we try to use other adjectives, we're really just trying to come down to a number. There are substantial amounts being spent on the route of the fence, as well as substantial amounts being spent on settlement activity, and the total that we feel is appropriate to deduct this year is 289.5 million.

QUESTION: Did the Israelis specifically ask you not to break it down?

MR. BOUCHER: I just don't think it's for us to break down. It's the basis on which we had these discussions, but I leave it to the Israelis to explain their budget. That's the bottom line on this one.

QUESTION: Richard, maybe I missed your answer to this. But is this your assessment of the total value of Israeli work on both the fence and the settlement in the last year?

MR. BOUCHER: No, you didn't miss my answer to that because I hadn't been asked. But I think if you look at publicly available Israeli budgetary numbers, it's not the total cost of all activity. The way I've described it, saying that the deduction reflects issues of concern to the United States, including settlement activities and the route of the security fence.


MR. BOUCHER: So it's an assessment that's based on the amounts spent on those activities that should be deducted.

QUESTION: Well, I don't quite understand that. I mean, you think that all settlement activity is unhelpful and therefore inconsistent, presumably, with U.S. policies or objectives, so why would you not deduct the whole value?

MR. BOUCHER: You asked me if it was the whole value of all settlement activity plus the whole value of the fence, and it's obviously not because the fence cost a lot more than $289.5 million.

QUESTION: Yeah, exactly. Why is it not the whole value since you --

MR. BOUCHER: Because it's not. We've always said that we understood Israel's need to provide for its security and that the fence or the barrier, the wall, whatever we're going to call it today, the fence was, if built along the Green Line, would be an appropriate security measure.

QUESTION: But no parts of it are on the Green Line, as far as I am aware.

MR. BOUCHER: I think parts of it are, but --

QUESTION: So can we -- okay, can we just get this straight? So you have not included the part which are on the Green Line, but you've included everything else?

MR. BOUCHER: I'm not prepared to give you a breakdown. I haven't done that for the last 15 minutes. I'm not going to start now in another way.

The point is that there are concerns about the route of the fence, which we have stated in policy terms, and which are now included as deductions here.

QUESTION: We're not asking for a breakdown, (inaudible) wasn't asking you for -- is it correct that the deductions for the fence barrier, reflect only costs incurred for those portions of the fence barrier that you view as prejudicial to the peace process?

MR. BOUCHER: I can't -- we have a problem with adjectives today. I can't accept the adjective "only." The definition in law is that the loan guarantees are to be issued only to support activities in geographic areas subject to Israeli administration before June 5, 1967. Okay, that's the law that we're following, so that's one element -- and the legislation also states that there shall be deductions for activities. At the present, the terms are inconsistent with the objectives and the understandings reached between the U.S. and the Government of Israel regarding a loan program. So those are the two right here:

One is areas subject to Israeli administration before June 5, 1967. So any costs incurred in areas that were not subject to Israeli administration before June 5, 1967, would result in deductions.

And second of all, there would be deductions for activities that are not consistent with the objectives and understanding that we reached with Israel about this.

So it's for those two reasons. So there are costs associated with the route of the fence that are deducted here, and that's what I've said before.

QUESTION: Okay, that's the deal for the fence. But to deal with the settlements part of this, are there any -- is there any settlement activity which is consistent with U.S. objectives or (inaudible)?

MR. BOUCHER: I'm not -- Jonathan, it's the same kind of question, and asking me to explain to --

QUESTION: It's a reasonable question. Anyway, what's your answer?

MR. BOUCHER: Another problem with the adjectives that you guys are using. But it's the same -- it's the same issue. I'm not in a position to give you the calculation on the breakdown of this. The amounts the Israeli Government spends on settlement activity, on fence, and which parts go where, I have to leave it to the Israelis to explain their budget, not me.

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