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Bush Affirms Support for a United Jerusalem : Foreign policy: He asks Jewish leaders to back U.S. efforts to secure elections in the West Bank and Gaza.

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President Bush, seeking to repair a growing rift between the United States and Israel over the continued settlement of Israeli-occupied Arab territories, publicly renewed his support Monday for a united Jerusalem and for the right of Jews to live there.

In a telephone call to Seymour Reich, president of the Conference of Presidents of Major American Jewish Organizations, Bush also appealed to Jewish leaders to support his Administration’s effort to arrange a dialogue between Israelis and Palestinians over elections in the West Bank and Gaza Strip.

“The United States supports a united Jerusalem whose final status is determined by negotiations,” a White House summary of the telephone call said. “The President also made clear U.S. support for Jews as well as others to live there in the context of a negotiated settlement.”

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Bush’s statement was designed to defuse anger among both Israeli and American Jewish leaders over a comment he made Saturday opposing new Israeli settlements in both the West Bank and in East Jerusalem. Israel formally annexed East Jerusalem in 1967 and considers it part of its capital, but the United States has never recognized the annexation.

“The question of Jerusalem isn’t just an Israeli issue, it’s a Jewish issue,” said a ranking Jewish organization official who asked not to be named.

“We were concerned that the United States had changed its position regarding Jerusalem,” Reich said in a telephone interview from New York. “I think the President satisfied those concerns.

“He said that there’s been no change in U.S. policy; that he supports a united Jerusalem, and he supports the right of Jews to live in Jerusalem,” Reich said. “He acknowledged that his comment may have been unfortunate; that linking East Jerusalem with settlements on the West Bank may have been an unfortunate reference.”

Bush’s statement came on the heels of another U.S.-Israeli rift, touched off last week when Secretary of State James A. Baker III suggested that U.S. housing aid for Israel might be blocked if it continues building new settlements in the occupied lands.

When Baker’s statements caused an uproar in Israel, State Department spokeswoman Margaret Tutwiler backtracked somewhat, saying the Administration would be satisfied with assurances from Israel that U.S. aid would not be used to help pay for new settlements.

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The United States and most other countries oppose Israel’s policy of building Jewish settlements on the occupied Arab lands because they say it makes it more difficult to negotiate over the final ownership of the territories.

The issue has flared again recently because of a flood of Soviet Jewish emigrants to Israel, a handful of whom have settled in the West Bank.

Asked Saturday at a news conference in Rancho Mirage, after his summit meeting with Japanese Prime Minister Toshiki Kaifu, to explain his position on the occupied territories, Bush said: “My position is that the foreign policy of the United States says we do not believe there should be new settlements in the West Bank or in East Jerusalem. . . . “

Asked specifically whether he would make aid to Israel contingent on whether the Israeli government pressed ahead, against U.S. wishes, with plans to resettle Soviet Jews in the occupied territories, the President replied: “I will just simply reiterate that . . . we are not going to look favorably upon new settlements.”

The White House statement on Bush’s call to Reich sought to play down the contretemps over U.S. policy--but also reaffirmed, gently, the Administration’s opposition to settlements.

“The President also reiterated longstanding U.S. policy that all parties avoid unilateral actions, including settlement activity,” the statement said.

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