Emigres Get West Bank Pitch on Bus Tour : Israel: The campaign by the ruling Likud Party seeks to win over immigrants from the ex-Soviet Union to its settlements policies.

Although Israel and America have been wrangling over limits on construction in the West Bank and Gaza Strip, here in a burgeoning West Bank enclave representatives of Prime Minister Yitzhak Shamir’s ruling party on Thursday drove home the point that the settlements must and will grow.

The officials made the pitch to new immigrants from the former Soviet Union--just the group that stands to gain most if Shamir and the Bush Administration reach an accord on the settlements. President Bush has made American support for massive development loans conditional on a halt to the expansion of settlements; Shamir is resisting that.

“These immigrants are being told that 10 years ago, there was nothing here,” said Israel Katz, a member of Shamir’s Likud Party, as he pointed to rows of bungalow-style housing. “And they can dream that they can come to places like this to live and build their own future.”

Katz led about 300 newcomers on the first day of a Likud-organized campaign to educate immigrant voters to the need to settle and keep the West Bank and Gaza.

Elections are scheduled for June, and the immigrants form a large, yet untested bloc of voters. One group of new citizens formed a “Russian” party on Thursday to protest unemployment and lack of housing in convenient urban centers.

Shamir and Likud are expected to work hard to convince the newcomers that, despite joblessness, prosperity is around the corner.

Likud, the party that has dominated Israeli politics since 1977, must also convince the immigrants that money spent on remote housing, much of it in settlements, is well spent.

Katz told his tour group that the attempt to link economic aid to a settlement freeze was a “silly thing.”

“No one has the right to tell us where we can build. This is a free country,” he said. “I have the right to convince the immigrants of our truth. And our truth is what you see here: settlement.”

Such words underline what more and more observers here are saying--that Shamir will not give in to pressure from Washington, at least not before the elections.

At stake is backing from Washington that would make billions of dollars in loans cheaper and more readily available for Israel. By all accounts, talks between Israel and the United States on the loan-settlement issue are deadlocked. Last week, Zalman Shoval, Israel’s ambassador to Washington, discussed the issue for a second time with Secretary of State James A. Baker III.

Baker wants all building stopped--after allowing for completion of construction under way. The sum that Israel spends to finish these projects would be deducted from the amount of future loans. U.S. officials estimate that 6,000 to 9,000 housing units are in progress.

Shoval, viewing Baker’s formula as an opening bid, countered with a proposal that would let Israel complete buildings under way--estimated by the Shamir government to number 13,500--but without penalty. Only the sum spent on future construction would be deducted from guaranteed loans. Further, private building in the territory would be permitted, without penalty, on the grounds that expanding families need more room.

Baker and Shoval are to meet again as early as next week. Publicly, Shamir has taken a hard line on the talks, saying Bush has the right to restrict the use of money but not the right to restrict Israeli policies.

On Wednesday, Finance Minister Yitzhak Modai told reporters that the money is not of “fateful importance” to Israel.

When asked before whether he would choose settlement growth or easy loans, Modai has answered settlement.

In Washington, Jewish-American activists fear that the American and Israeli positions are irreconcilable.

“This is one negotiation in which the sides could get further and further apart rather than closer together,” said an official of a leading U.S. Jewish organization. The official added that, because of Americans’ increasing reluctance to grant foreign aid at a time of domestic economic troubles, “Our advice to Shamir is to seek a serious accommodation with Bush.”

Baker also is taking a tough public stand. In testimony to a congressional panel last week, he recalled that Israel turned down a deal that, in return for a settlement freeze, would have meant an end to the Arab economic boycott against Israel.

He also took exception to Israel’s oft-repeated boast that it has never defaulted on a loan.

Baker attributed Israel’s repayment record to American aid grants that make it possible for Israel to pay off debts to the United States, saying, “We appropriate the money up here with which to repay ourselves.”

In Alfe Menashe, the seven-bus excursion, which attracted 300 immigrants, is the first of dozens that Likud hopes will take 100,000 new voters on their initial West Bank and Gaza visits.

The former Soviet citizens seemed more curious than committed, although one who identified himself as Boris said, “We want to know how it is for Jews to live here. Maybe we will live here.”

With its usual theatrical flare, Likud has dubbed the campaign “Operation Life”--to suggest that holding on to the territories is a life-or-death matter. The government named a cross-West Bank road “Life Way” to emphasize the point that it would be dangerous for Israel to grant independence to the Palestinians.

Underlying the loan-settlement conflict are opposing notions of how to resolve the Middle East conflict and the direction that current peace negotiations should flow.

By accepting a settlement freeze, Shamir believes he would signal a willingness to turn over control of the West Bank and Gaza to the Palestinians. Shamir is offering them limited self-rule under a formula that would leave land and resources in Israel’s hands.

But at the peace talks, which began last October, the Palestinian delegates have repeatedly sought a pledge of a halt to settlements and have threatened a walkout if Israel gets new foreign aid unconditionally.