Bush Vows Veto of Israel Aid Bill : Middle East: Angry President assails those pushing a $10-billion loan-guarantee package for housing. He wants a four-month delay to assist the peace process.

President Bush angrily vowed Thursday to veto any quick congressional attempts to provide Israel with $10 billion in loan guarantees as he stiffened his stand in what has become the sharpest confrontation between Washington and Jerusalem in a decade.

In a blast of frustration, Bush said he is opposed by “powerful political forces” but warned in dire terms that postponement of debate on the loan guarantees to provide housing for Israel’s influx of Soviet immigrants is necessary to “give peace a chance” in the Middle East.

The President has insisted that U.S. approval of the Israeli aid could inflame Arab resentment and shatter a balance that has brought the two sides closer than ever before to the bargaining table. But Israel has found resounding support on Capitol Hill for its argument that the humanitarian housing aid, which would provide refuge for Jewish immigrants from the Soviet Union and Ethiopia, should in no way be linked to the peace talks.

With even Republican congressional leaders edging toward mutiny in favor of the immediate action sought by Israel, Bush invoked an executive right to take charge of foreign policy and pledged: “I’m going to fight for what I believe in.”

The extraordinary exercise in brinkmanship, mounted at a midday news conference, was all the more unusual for its thinly disguised attacks on a Mideast ally that historically has been immune from direct presidential criticism.

His face seeming at times to contort in displeasure, Bush suggested disbelief that a nation protected by the United States against Iraqi missile attacks and the beneficiary of American aid averaging $1,000 a year for each Israeli citizen might challenge what he described as a “principled” call for delay.

“We are the United States of America,” the President declared. “We have got our policy.”

But there was no sign of widespread support for the President’s position on Capitol Hill, where leading supporters of Israel vowed to oppose what Rep. Mel Levine (D-Santa Monica) called “a return to high-profile, sledgehammer diplomacy” on the part of the White House.

Only two prominent Republicans stepped forth to endorse Bush’s argument. And among those who weighed in with a torrent of criicism, Rep. Charles E. Schumer (D-N.Y.) declared: “This has more to do with the pique of the President than with peace.”

Bush said he chose to speak out after a morning in which he “woke up” to the recognition that his voice was being drowned out in Congress by a massive blitz staged by about 1,200 representatives of major Jewish groups.

So overwhelming is the apparent majority in Congress in favor of immediate loan guarantees that even some of Bush’s closest allies on Capitol Hill have called for a compromise.

But Bush bluntly rejected what has been outlined as a possible accord, vowing that he would “absolutely not” make a commitment to support the loan guarantees four months from now in exchange for congressional acquiescence to the delay. “That would undermine everything,” he said.

In arranging for a news conference to lay out his position, the President was clearly seeking to muster public support for a stance on which his efforts at personal diplomacy have thus far won him few friends.

Saying he had already “worn out the telephone in one ear” in private lobbying efforts that have borne little fruit, Bush said he now owed it to the American people to “get our message out loud and clear.”

Bush suggested that his message “may be popular politically, but probably it’s not.” But he seemed deliberately to be pushing potent political buttons as he reminded voters of the $4 billion in aid the United States provides annually to Israel and invoked his success in leading the war against Iraq as a lesson against congressional meddling.

“Now again, there is an attempt by some in the Congress to prevent the President from taking steps central to the nation’s security,” he said. “But too much is at stake for domestic politics to take precedence over peace.”

The Administration is expected ultimately to support the new aid, which would obligate the United States to provide guarantees to help Israel borrow the $10 billion for new housing.

But officials said the firm refusal to assure such support in advance is based on concern that the loans would subsidize continued Israeli settlement in the occupied West Bank. By holding back on aid now, they also suggested, the White House could hint at a later reward that might encourage Israeli cooperation at the upcoming peace conference.

Democratic and Republican leaders on Capitol Hill nevertheless said they continued to hold out hope that Bush might yet step back from the precipice and agree to some compromise in order to avoid a damaging confrontation.

“All interests would be best served if it can be resolved,” Senate Majority Leader George J. Mitchell (D-Me.) told a group of reporters. “A divisive debate could be embittering and affect the peace process and relations between the United States and Israel.”

Sen. John Seymour (R-Calif.), who only last Friday urged expedited approval of the loan guarantees “in the strongest possible terms,” said Thursday he was optimistic that a compromise could be worked out between the President and Congress on the issue. Among Republicans, only House Minority Leader Robert H. Michel of Illinois and Sen. John H. Chafee of Rhode Island lined up solidly behind the call for delay. “Now is not the time to rock the boat,” Chafee said.

The abrupt veto threat by Bush apparently marked the first time an American President has threatened to reject a congressional vote in favor of Israel. The stiffened stand by the White House provided new fuel for what is easily the sharpest U.S.-Israel clash since President Ronald Reagan sought in 1981 to sell AWACS reconnaissance planes to Saudi Arabia.

Times staff writers Alan C. Miller in Washington and Rone Tempest in Paris contributed to this report.