U.S. expected to approve $14 billion aid request

By Moti Bassok




Israel will submit a request Monday for $14 billion in economic aid to U.S. National Security Advisor Condoleezza Rice. President George Bush is expected to quickly approve the request - $4 billion in defense aid. and U.S. guarantees for $10 billion - with minor changes, Israeli sources said.

The sources said the Republican congressional majority would approve the aid within 3-6 months. After Finance Ministry director general Ohad Marani and Prime Minister Ariel Sharon's bureau chief Dov Weisglass submit the request, it will be handled by both Israeli and U.S. officials who will determine the duration of the grant and guarantees, and various technical details. The guarantees will apparently be for five years but it is unclear how the defense aid will be laid out.

Sharon told Defense Minister Shaul Mofaz during a meeting eight days ago with Finance Minister Silvan Shalom, that as soon as the U.S. makes a positive decision on the defense grant, he will consent to some of Mofaz's requests for budget increases. The sources say the grant will allow the government to direct defense spending to growth oriented projects.

Some treasury officials are not pleased with the request for such high guarantees, fearing that some of the money will not be directed to growth projects.

However, sources at the prime minister's office say news of the aid will improve the country's international financial standing, and could encourage both local and foreign investors to reconsider Israel. The U.S. aid will also substantially influence the strategic situation in the Middle East.

Sharon first raised the question of aid in his Washington meeting with Bush in mid-October. The formal request was completed by Marani's staff in the past two weeks, with the explanation that Israel has increased military spending in the past two years because of the Palestinian uprising and the expected U.S. war with Iraq. Last week, Turkey and Jordan received generous American military aid of $2 billion to prepare for the possible war with Iraq.

The request for the guarantees - the option of getting improved loan terms from U.S. banks - is based on Israel's need to stabilize the economy and pull out of recession.

Last week Washington approved Israel's annual military aid of $2.16 billion for 2004, and is expected to approve its civil aid soon.

Haaretz