Shamir Bitterly Assails U.S. Delay on Housing Loans

Prime Minister Yitzhak Shamir expressed bitter regret Monday at Washington’s delay in granting new U.S. loan guarantees to help integrate Soviet immigrants and at the same time expressed satisfaction over the spread of new settlements on occupied land--the very issue that has put him at odds with President Bush and brought on the aid showdown.

In a list of government accomplishments that was read to the fall, opening session of Israel’s Knesset (Parliament), Shamir included the expansion of Israeli settlements “from the Jordan Valley to the coastal plain,” an area that includes the occupied West Bank. “A construction momentum unmatched since the establishment of the state is being felt,” he told the Israeli Parliament.

Acceleration of the settlement program prompted Bush to delay guarantees for massive loans designed for use in financing jobs and more housing for tens of thousands of Soviet immigrants.

Israel wants the United States to underwrite $2 billion in loans for each of the next five years. But Bush has argued that granting the loan guarantees and lessening the burden for Israel would drive Arab participants away from negotiations for a proposed Mideast peace conference. That is because, indirectly, the aid also would subsidize Israel’s settlement program, U.S. officials say.

In his fullest response yet to Bush’s move, Shamir said the link between aid and the peace process causes “disappointment and pain.” He accused the U.S. of undermining the basic role of Israel: to bring in Jewish immigrants.

“The pain and disappointment are especially great that the United States has . . . decided to take a measure which is harmful to the deepest fundamentals of Jewish and Zionist consciousness,” Shamir said as he read from a prepared text.

Shamir hopes that the Administration and Congress will authorize the loan guarantees early next year, at the end of the four-month delay requested by Bush.

Relations between Israel and the United States have worn raw. Israeli officials are publicly complaining about stands taken by Washington in advance of the proposed--but still unscheduled--Mideast talks. Top government officials said the Bush Administration is favoring Arab positions, especially by its persistence in pushing for Israel to give up occupied land in return for peace.

“As long as the Americans determine a position, and this position is viewed by the Arabs as support . . . it will only create obstacles for the continuation of negotiations,” said Yosef Ben-Aharon, one of the prime minister’s senior aides.

Israel took the West Bank and Gaza Strip along with the Golan Heights in the 1967 Middle East War. The Golan was annexed in 1981. The West Bank and Gaza remain beyond Israel’s internationally accepted borders, although, since 1977, successive right-wing governments have pressed ahead with ambitious settlement drives.

Shamir, unbowed, took a hard line toward territorial compromise. The West Bank and Gaza, which the Palestinians claim for their own homeland, are no different from other parts of Israel proper, Shamir said. Israel’s annexation of the Golan is final, he said of the land that Syria lost and is demanding back. “The situation which has existed for 10 years will continue to guide us without change,” he declared.

The status of Arab neighborhoods in Jerusalem is not up for bargaining, Shamir said. This position puts him directly in conflict with Washington, which for many years has insisted that the “final status” of the city is subject to negotiations.

Finally, the sections of U.N. resolutions that call for withdrawal from land as part of a comprehensive peace settlement are “guidelines and no more,” Shamir added. “The various parties have their interpretations of these passages, and there is a firm basis for our position, which rejects the version of ‘territory for peace,’ ” he advised.

Reading impassively as he was interrupted by an occasional heckler, Shamir repeated his opposition to any role for the Palestine Liberation Organization in the proposed talks. If the Palestinians, who are expected to join the talks with a delegation from Jordan, identify themselves in any way with the PLO, “Israel will not sit with them,” Shamir said.

As he said this, an Arab member of Parliament who favors talks and a right-winger who opposes them both shouted that all Palestinians say they identify with the PLO. A television announcer quipped that a new Parliament alliance had been instantly formed.

Shimon Peres, head of the Labor Party, the largest minority faction in Parliament, also spoke and took Shamir to task.

Peres said Shamir has told Washington to “go to hell” and yet is asking for loan guarantees. Peres’ speech sounded like the opening of a political campaign. He accused Shamir of economic failures--unemployment stands at 11%--and of wasting money on the settlement program.