Delay urged for Israeli loan action Bush aims to protect Mideast peace talks


WASHINGTON -- President Bush called on Congress publicly yesterday to postpone action on Israel's request for $10 billion in loan guarantees for four months to avoid undercutting chances for a Middle East peace conference.

"We don't need an acrimonious debate just as we're about to get this peace conference started," Mr. Bush told reporters summoned to the Oval Office. He urged Congress to "give peace a chance."

His statement came just hours before Israel made its long-expected formal request for the guarantees, which would back loans needed to help settle an influx of Soviet Jews.

The administration fears that Arabs would view the loans as a way for Israel to facilitate settling still more Jews in the occupied West Bank and Gaza despite long-held U.S. opposition to the settlement policy.

"If the $10 billion guaranteed issue is raised now, others are bound to raise all sorts of questions about how and where this money is going to be used. Issues related to the occupied territories are bound to be raised. We are seeking to avoid that linkage so that we don't undercut our ability to launch peace negotiations," said State Department spokeswoman Margaret D. Tutwiler.

But Mr. Bush's request has stunned and angered Washington's muscular pro-Israel lobby, which continued to mount a strenuous campaign on Capitol Hill.

Israel's ambassador to Washington, Zalmon Shoval, denied that the delay would affect Israeli participation at a peace conference. "We have always stated we are against linkage, and we are not going to make any linkage of any sort from our point of view."

The administration move was hardly disclosed before the president, whose aides have been mulling strategy for some time, lined up public support for a delay from a few key lawmakers, and most likely a number of others as well.

Sen. Patrick J. Leahy, D-Vt., who chairs the powerful appropriations subcommittee on foreign operations, disclosed that he would work to put off action on the foreign aid bill, to which Israel's backers planned to attach the loan guarantees.

This left supporters scrambling to find a new legislative vehicle, possibly a continuing resolution as the fiscal year ends at the end of this month, and awaiting decisions from other congressional leaders.

Barbara A. Mikulski, D-Md., a member of Mr. Leahy's panel, issued a statement opposing a delay and pledging to try to change the chairman's mind.

Mr. Bush said he would be lobbying lawmakers, as Secretary of State James A. Baker III already has done.He said "debate will be upcoming, but let's wait 120 days so we will take no chance of unraveling a peace process that . . . offers us the best hope for peace in decades."

Israel has projected the loans into its new budget and contends that the money is urgently needed.

The administration has given no assurance that it will support Israel's request once a peace conference is assured, although eventual congressional approval is widely expected.

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