- The Washington Times - Wednesday, November 27, 2002

From combined dispatches
Israel is asking the Bush administration for about $4 billion in new military aid and $8 billion to $10 billion in loan guarantees to bolster its economy, a U.S. official said yesterday.
Prime Minister Ariel Sharon's chief of staff, Dov Weisglass, and the director general of Israel's finance ministry, Ohad Marani, made the request at a meeting Monday with National Security Advisor Condoleezza Rice.
"They described the economic impact on Israel of the ongoing war on terrorism as well as the impact of continuing uncertainty in the region," White House spokesman Ari Fleischer said. "In this context, the officials indicated that Israel is preparing a proposal for assistance."
The Israeli Embassy declined to disclose how much help was requested, but said the Israelis were promised a prompt reply. An administration official provided the price tag on the condition of anonymity.
Mr. Marani presented an account of the economic situation in Israel and he and Mr. Weisglass had a detailed discussion with Miss Rice, the embassy said in a statement.
A 26-month war with Palestinian terrorists has strained Israel's defense budget while the violence has sharply reduced foreign investment and tourism.
Israel is the largest recipient of U.S. loans and grants, receiving about $2.9 billion annually.
The State Department said last week it would ask Congress for $2.16 billion in military aid for Israel for fiscal 2004, which begins next September. That is an increase of $120 million from a request for $2.04 billion for this year.
Israel relies on guarantees, which effectively make the U.S. government the "co-signer" on the loans, to borrow at lower interest rates. There is no cost to the United States if the loans are repaid, and Israel never has defaulted on a loan.
Israel's role, if any, in a U.S. war with Iraq is not clear. Mr. Sharon has said Israel reserves the right to respond if attacked. In the 1991 Persian Gulf war, even while under Iraqi missile fire, Israel complied with U.S. requests and did not respond in order to keep other Arabs in the American-led coalition against Iraq.
Preparations for a war are contributing to Israel's military expenses, but officials denied that military and economic assistance would be tied to Israeli cooperation in any war with Iraq.
"This is not directly related to compensation in the event of attack," Mr. Fleischer said.
Any aid package would be subject to congressional approval, which could come early next year.
The Bush administration is also assembling a military and economic aid package to help Turkey weather major economic disruptions if war with Baghdad breaks out, according to administration and congressional sources.
The congressional sources said Mr. Bush is considering an initial $700 million to $800 million package, which, in addition to economic assistance, could clear the way for Turkey to purchase eight S-70B Seahawk and six UH-60 Black Hawk helicopters. Over the next five years, bilateral aid could amount to several billion dollars.
Tourism and trade in mainly Muslim Turkey could be hurt if hostilities break out, strangling economic recovery and adding to the country's huge debt burden, which a $16 billion International Monetary Fund pact is supposed to reduce.


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