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Reports on Possible US Reduction of Israeli Aid 'Premature,' says US Official


The State Department said Tuesday administration officials are discussing the possibility of reducing U.S. loan assistance to Israel because of the security barrier it is building in the West Bank. However officials said suggestions that such a decision might be near are premature.

The fact that officials here are acknowledging the possibility of linking U.S. aid to the fence project underlines the degree of U.S. concern about the controversial Israeli barrier, which Palestinians and other Arab critics contend could pre-judge the border of a future Palestinian state.

The New York Times reported Tuesday that the Bush administration was looking for ways to press Israel to halt construction of the fence, and that one option was reducing the nine billion dollar loan package approved by Congress for Israel earlier this year to help it cope with the economic effects of the Iraq war.

At a news briefing here, State Department spokesman Philip Reeker reiterated U.S. concern about the fence project and said administration officials are pleased that Israeli officials have said they are taking U.S. concerns into account.

As to the loan package, he noted that the relevant legislation already provides for deductions for Israeli settlement activity and acknowledged that linking U.S. loans to the fence project was under discussion. "Consistent with the legislation that authorizes loan guarantees, Israeli expenditures on settlements will be deducted from loan guarantees. But in terms of the specific link to the fence, that's something that we're discussing. And some of the reports that I've seen about decisions being made are clearly premature," Mr. Reeker said. In an interview Monday with the U.S.-funded Arabic broadcaster Radio Sawa, Secretary of State Colin Powell said a nation is within its rights to build a border fence.

But he said when a fence "crosses over onto the land of others," and is built in a way which makes it more difficult to move forward on the "road map" to Middle East peace, this as he put it, "causes us a problem."

The Israeli barrier, only partially completed, loosely follows the 1967 "Green Line" that separated Israel from the West Bank, but it veers deeply into occupied territory at several points to protect Jewish settlements and leaves several Palestinian villages cut off from the rest of the West Bank.

Israel contends the barrier is for security only and not meant to delineate a border for a future Palestinian state, which is to be negotiated under the final stage of the "road map."

Any attempt to pressure Israel through aid reductions is likely to be controversial in Congress and officials stressed that no early decision on such a move is anticipated.

Secretary of State Powell flew to Texas late Tuesday for a two-day set of informal meetings with President Bush on foreign policy issues including Middle East peace efforts.