American Notes Foreign Policy

In a rare political setback for Israel, top congressional leaders announced last week that they would delay action on an "urgent" request that Washington guarantee $10 billion in loans from Western banks to provide housing and services for the 1 million Soviet emigres who are expected to resettle in the Jewish state. This would be in addition to the $3 billion in U.S. economic and military aid already extended this year.

The Bush Administration earlier provided $400 million in housing guarantees on the strict condition that the funds not be used to build new settlements in the occupied territories. Israel continued to build the settlements with non- U.S. funds, an action that irritated top Administration officials.

Leading lawmakers agreed with Secretary of State James Baker's argument that immediate action on the loan guarantees would anger Israel's Arab neighbors and endanger the October Middle East peace conference. Defying the Administration's request for a 120-day delay, however, Jewish lobbying groups and some of their allies on Capitol Hill vowed to push for quick congressional approval.