- The Washington Times - Tuesday, September 16, 2003

DREXEL HILL, Pa. — The White House yesterday said it planned to withhold money from Israel for continuing to settle in Palestinian areas and perhaps for pressing ahead with a security fence.

“If they spend money on settlements, it would be deducted from loan guarantees,” White House Deputy Press Secretary Claire Buchan told The Washington Times. She was referring to a $9 billion package of American loan guarantees to Israel, which was being rocked by a recession.

Miss Buchan said the administration has not decided whether to withhold additional funds to punish Tel Aviv for building a security fence separating Israel from the West Bank areas. President Bush has called the fence “a problem.”

A senior administration official said the White House did not expect its threat to dissuade Israel from continuing to spend money on settlements in Palestinian areas, but the president wanted to send a message that the United States disapproved of such activity.

The decision did not sit well with some in Congress.

“This could not have come at a worse time. They’re going through almost daily terrorist attacks and their economy is in deep trouble,” said Rep. Joseph Crowley, New York Democrat.

“How would we react to this sort of action from one of our allies?” said Mr. Crowley, a member of the House International Relations Committee.

On Friday, Mr. Bush delegated to Secretary of State Colin L. Powell the authority to withhold funds from the loan-guarantee package, although no amount was specified. Mr. Powell is one of the president’s top negotiators on the Middle East peace process.

“The president made the right decision today,” said Jean AbiNader, managing director of the Arab American Institute. “Israel’s settlement activity is illegal and it undermines the peace process, so we shouldn’t be contributing to it.”

Although the institute opposes the $9 billion in loan guarantees, it welcomes the decision to reduce that amount by whatever is spent on settlement activities. It also called on Mr. Bush to withhold additional funds for building the fence, which detractors likened to the Berlin Wall.

Charles Hurt contributed to this article.

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