Arab states delay sending delegates to talks in protest


WASHINGTON -- Syria, Lebanon and Jordan postponed the departure of their negotiating teams yesterday for the second round of peace talks with Israel in Washington, joining the Palestinians in protest over Israel's planned deportation of 12 Palestinians from the occupied territories.

But U.S. officials said that they expected the Palestinians, Syrians, Jordanians and Lebanese to turn up in Washington, where the talks are scheduled to resume at the State Department on Tuesday.

The officials said that the four delegations apparently felt the need to make some gesture of protest over the Israeli actions but that none of them appeared to want to scuttle the talks over the issue.

The chief Palestinian spokeswoman, Hanan Ashrawi, said by telephone from her home in the West Bank that the Palestinians "are making our point" by delaying their departure. But she said it was her "surmise" that the Palestinians and others would end up going to Washington, now that the United States has strongly condemned the Israeli deportation orders.

At the first round of Washington negotiations in December, Israel postponed its delegation's arrival in protest the venue of the talks, which it had wanted to hold in the Middle East.

While the postponements are troubling, U.S. officials are more -- worried about another issue that could have a far more lasting and explosive impact on the negotiations: Israel's pending request for $10 billion in housing loan guarantees to resettle Soviet Jews.

The loan request is coming up for reconsideration coincidental with this second round of peace talks in Washington, and how the Bush administration responds to it could drive either Israel or the Arabs away from the negotiating table.

When the Israeli loan guarantee request was first made last September, the Bush administration insisted despite Israeli complaints that it be postponed 120 days so that the issue would not complicate Washington's efforts to get the first round of the peace talks convened in Madrid, Spain.

The reason the loan issue might have complicated the peace talks is that the administration intends to demand certain restrictions on any new settlements that Israel might build as a precondition for the loan guarantees.

vTC U.S. officials knew that this demand would lead to a dispute with the Israeli government that might have dissuaded Israel from taking part in the peace talks.

Administration officials say recent actions by the Israeli government have not diminished the inclination of President Bush and Secretary of State James A. Baker III to insist on restrictions on Israel's use of any U.S. loan guarantees in building settlements in the occupied West Bank and Gaza Strip.

The actions U.S. officials point to range from the Israeli government's decision to allow Jewish settlers to buy homes in Silwan, an Arab neighborhood in East Jerusalem, over the protests of Mayor Teddy Kollek, to Prime Minister Yitzhak Shamir's promise to far-right members of his coalition last week that he would spend two-thirds of his 1992 housing construction budget -- $350 million -- on new Jewish settlements.

According to senior administration officials, no decisions have been made yet on how Washington will respond to the Israeli request. All the administration has been telling the Israelis for the past four months is that if and when such guarantees are granted, Washington reserves the right to attach certain "terms and conditions" on how the money is spent.

A senior administration official said the issue would be addressed when President Bush returns from Asia. "I would not speculate on what the outcome might be," the official said.

The loan guarantees would allow Israel to raise money from commercial banks at preferential rates of interest. The cost to the U.S. budget depends on certain accounting rules but probably would require at least $200 million to be set aside.

Interestingly, many prominent American Jews, who actively lobbied the administration for the guarantees in September, have since adopted a much more low-key approach.

In part, they recognize that the mood in America has shifted against foreign aid. In part, they realize that pro-Israeli members of Congress cannot pass the guarantees without Mr. Bush's endorsement, and therefore the Israelis are simply going to have to negotiate with Mr. Bush about his terms. Their shift in approach is also a silent protest against Mr. Shamir's policies.

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