JERUSALEM -- With relief but no euphoria over Washington's offer of $10 billion in loan guarantees to help absorb immigrants, Israel warily began looking forward to years of belt-tightening economic reform.
It was widely noted that the guarantees are carefully pegged to Israeli policy on settlements in the occupied territories, which Prime Minister Yitzhak Rabin has ordered frozen -- except for some to be completed for "security" reasons.
That argument is certain to be central to the Middle East talks scheduled to resume Aug. 24 in Washington. Palestinian delegates insist on proof that the freeze will be total.
Worries about Israel's rocky economy, with or without the loan guarantees, were underscored by a new government report that unemployment jumped 10 percent in July.
Joblessness is especially high in the controversial new settlements, designed in part to relieve the overcrowding caused by the huge flow of Russian immigrants in recent years. The loan guarantees are meant to ease their absorption.
The press and private analysts praised Mr. Rabin for a do-or-die effort to secure the guarantees but expressed little surprise.
They said he never would have visited President Bush without reasonable certainty he'd succeed.
"If Mr. Rabin had come back without them, it would have been a crisis -- so the loan guarantees took on highly charged political significance," said Zvi Rafiah, a political consultant and commentator.
"We don't need American pressure to feel the need for economic reforms. But the support Rabin got from Bush -- and that he will get from whoever is the next president, Bush or Clinton -- will enable the government to push forward with them."
Dan Halperin, Israel's former chief economic diplomat in Washington and now a private industry consultant, noted the Israeli stock market's lukewarm performance yesterday in saying the nation is aware, even with the guarantees, that it still faces knotty economic problems.
Still, Mr. Halperin said, the guarantees indirectly provide a "foreign currency umbrella, or safety net" -- an awareness in the world's financial centers that the U.S.-Israeli antagonism of recent years is over -- that will accelerate foreign investment here.