Baker Confers With Shamir Amid Aid Furor

The trail in search of peace in the Middle East took a detour into a quest for diplomatic calm between Israel and the United States as Secretary of State James A. Baker III met Monday with Prime Minister Yitzhak Shamir for three hours without reaching an agreement over a disputed Israeli request for new U.S. aid.

The pair emerged virtually mum from their talks, announcing only that another session will occur today. Israeli officials were quick to characterize the meeting as friendly and evidence of a reversal of the angry mood that had prevailed in the right-wing Shamir government in the last few days.

Publicly, the Israelis stood by their request for Washington to immediately underwrite $10 billion in loans to help house and provide jobs for new Soviet immigrants in the next five years. Privately, a few words of compromise were floated, with both sides evidently looking for a way to avert a head-on collision over the aid request. President Bush wants to delay the loan guarantees for four months to give proposed Middle East talks a chance to get under way.

“We had a good discussion,” Baker told reporters, “and we will continue that discussion.” When asked if he had supplied Shamir with a compromise solution to the $10-billion conflict, he smiled and responded, “We had a very good discussion.”

A spokesman for Shamir added flatly, “The prime minister and secretary of state did not conclude their discussion.”

Israeli officials said that some form of compromise is under consideration but that Shamir is demanding that Washington free the aid issue from discussion of progress on peace talks; in effect, Shamir wants to take the stick of foreign aid out of Bush’s hands.

“We cannot accept linkage of aid to anything,” a senior Israeli official said. “If we are forced to accept this now, who knows what Bush will hit us with later, when the talks are under way.”

Shamir also pressed Baker to explain the reason for the sudden request by Bush for the aid delay, Israeli officials added.

Reports from Washington attributed the President’s move to dissatisfaction with Shamir’s accelerated program to settle the occupied West Bank and Gaza Strip with Israeli colonizers. Shamir considers the land, which Israel won in the 1967 Middle East War, to be part and parcel of Israel, while Bush believes that surrendering at least part of the territory, home to 1.7 million Palestinians, is a key to peace between Israel and its Arab neighbors.

On Monday, an Israeli peace group published a report that Israel is spending $50 million to expand industry in the settlements this year. Opposition politicians estimate that Israel will build 22,000 homes in the territories and in the Golan Heights, which Israel took from Syria during the 1967 war and later annexed.

The vow to delay aid set off an explosion of calls from Shamir supporters for Israel to pull out of the talks. Someone threw a tomato at Baker’s motorcade as it entered Jerusalem, and right-wing demonstrators demanded that Baker go home.

No date has been set for the proposed peace talks, which Washington and Moscow, the co-sponsors, had tentatively scheduled to begin in October. The talks would bring Israel together with Syria, Jordan and Lebanon as well as with representatives of the Palestinians. Israel has agreed to attend on condition that it has veto power over the list of Palestinian delegates.

Earlier in the day, in a swing through the Soviet republic of Kazakhstan, Baker told reporters that he is not discouraged by the bitter dispute with Israel, saying: “We have always known there would be bumps along the way. We said it would go forward a little, maybe slide back some, (then) go forward.”

The Palestinians have yet to sign on to the talks, and three local Palestinian leaders met with Baker for three hours to work out persistent snags. Aides to Baker stayed on after the meeting ended, leading to speculation of a breakthrough. The three Palestinians, Faisal Husseini, Hanan Ashrawi and Zakaria al Agha, are to meet with Baker again today. “We’re getting some answers,” Baker told reporters. “And I expect to get some others tomorrow.”

Before the meeting, Palestinian leaders said the delegation was bringing Baker a soft approach to the talks by offering a means of skirting the delicate issue of Palestinian representation from Jerusalem and confirming that the Palestinians are willing to go to the talks in a joint panel with Jordan rather than on their own. But specific plans would be subject to approval by the Palestine Liberation Organization, which is to meet in Algeria later this month, the Palestinians said.

Israel has balked at letting Palestinians from Jerusalem or with ties to the PLO take part. In Israel’s view, the Jerusalem representation jeopardizes its claim to the entire city, Arab districts of which were annexed in 1967. The PLO, in Israel’s view, is a terrorist organization, and its demand for an independent state is unacceptable.

Israeli officials contend that Bush’s delay in approving the loan guarantee will make the Arabs less prone to compromise in forthcoming talks. Yosef Ben-Aharon, a top aide of Shamir, said the dispute has undermined Israel’s confidence in Washington.

“Things like preventing loan guarantees cast their shadow on the process and on the positions of the United States, which for us is the leading party, the honest and trustworthy broker,” Ben-Aharon said in a radio interview. “Whoever thinks that Israel can be pressured is mistaken.”

While insisting that Israel is still willing to go to the proposed talks, Ben-Aharon noted that Baker has yet to produce a series of guarantees demanded by Israel. A Foreign Ministry official added sharply: “We expected that Baker would produce a memo of understanding by now, and we don’t have any word on it.”

Besides a veto over the Palestinians, Israel wants assurance that Palestinian statehood will not be a subject for discussion during the talks.

Meanwhile, as part of the controversy caused by the President’s proposed delay of the Israel loan guarantees, Rabbi Marvin Hier of the Simon Wiesenthal Center in Los Angeles rejected the suggestion this weekend by Israeli Minister Without Portfolio Rehavam Zeevi that Bush is anti-Semitic.

“Anti-Semites don’t go out of their way to rescue Ethiopian Jews and send them to Israel, and anti-Semites don’t shed tears when they visit Auschwitz and Babi Yar,” Hier said. “While I strongly disagree with the President’s refusal to move ahead with the $10-billion loan guarantee, even after the 120 days he requested, and while I was dismayed by some of the terminology the President used, which can be fodder for anti-Semites, calling the President of the United States an anti-Semite is absurd and false.”

Times staff writer Norman Kempster in Washington contributed to this story.