- The Washington Times - Tuesday, January 7, 2003

Senior U.S. and Israeli officials yesterday began negotiations on a "special military aid" request by Israel for up to $4 billion, along with $8 billion in loan guarantees, but officials said action likely will be delayed until after the United States deals with Iraq.
Sean McCormick, spokesman for the National Security Council, refused to comment on yesterday's meeting or confirm it took place.
A State Department official who asked not to be named said the United States supports Israel and "its efforts to secure its people," but also would not comment on the meeting.
Israel already receives nearly $3 billion a year from the U.S. government. The new request would be in addition to that amount.
According to White House sources, the Israelis attending yesterday included Dov Weisglass, Prime Minister Ariel Sharon's bureau chief; Ohad Marani, the Finance Ministry's director-general; and Amos Yaron, the Defense Ministry's director-general.
U.S. officials attending included Gary Edson, deputy assistant to the president for international economic affairs and deputy national security adviser; and John Taylor, Treasury Department undersecretary for international affairs, the sources said.
The $3 billion to $4 billion Israel seeks would be spent on American-made military purchases to prepare for the impact of a U.S.-led offensive against Iraq. In addition, the money would help fight terror, Israeli officials say, referring to the continuing conflict with Palestinian militants in the West Bank and Gaza Strip.
Israeli officials believe a new aid package would not be approved before a U.S. campaign to topple Iraqi leader Saddam Hussein, for fear of alienating Arab countries whose political support will be crucial in the effort. U.S. officials say the matter likely will not be taken up until March at the earliest.
In addition to money for military purposes, Israel wants loan guarantees, in which the United States would act as a co-signer, providing Israel a cheaper way to finance its national debt than floating bonds on local financial markets.
The Israeli economy has been going through one its worst periods in decades, shrinking 4.5 percent since 2000, and economists predict worse in 2003.
As the economy has faltered, violence has spiraled out of control. On Sunday, two Palestinian suicide bombers detonated explosives amid crowds of evening commuters near Tel Aviv's central bus station, killing 23 Israelis and injuring 110.
Also on Sunday, Israel test-fired an Arrow anti-ballistic missile, developed since the 1991 Persian Gulf war, when Iraq fired Scud missiles at Israel.
Israeli officials said the request for U.S. aid is driven in part by the cost of developing defenses. For instance, they said, the missile test Sunday cost $10 million. The requested aid, officials said, will help defray costs of deploying the Arrow missile, which the country will rely on to intercept Iraqi Scuds.
Although Israel stayed out of the Gulf war, Mr. Sharon has not pledged to stay out of a new conflict if Iraq fires on the nation again.
One Bush official said the requested aid could help Israel stay on the sideline in another Iraq war, but the White House downplayed the link between the payment and Israeli restraint in November.
"This is not directly related to compensation in the event of attack," Bush spokesman Ari Fleischer said.
Mr. Marani said Sunday the request for financial assistance is needed "to help us cope with the present difficulties in which the Israeli economy finds itself because of the continuing security situation."
But he added: "Fighting terrorism is not only about security, it's about the economy. It's very difficult funding the extra needs of defense. The burden is made more difficult because the economy has shrunk. We're asking the Americans to share part of the burden."

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