Sharon's team is working on a proposal to request U.S.$ 10 Billion from the U.S.

TEL AVIV, October 21 (IslamOnline & News Agencies) - An inter-ministerial team headed by Israeli Prime Minister Ariel Sharon's bureau chief, Dov Weisglass, is working on a proposal requesting American economic assistance that could top $10 billion, an Israeli newspaper reported Monday, October 21.

The team includes representatives from the treasury, the Foreign Ministry and the Defense Ministry, reported Ha'aretz.

A government source said the reason for the aid request stems from the United States' expected campaign against Iraq coupled with the American desire that Israel not interfere with Washington's plans or use its troops against Iraq, the paper reported. It added that sources at Sharon's Office said Sunday, October 20, that American readiness to provide economic assistance has not been made in concrete terms.

"However, a number of ideas have cropped up in Jerusalem over the type of aid Israel could use: cash, guarantees for low-interest bank loans from American banks, direct state-to-state loans from the U.S. treasury, and the conversion of some American defense aid into shekels.

"Currently, Washington provides Israel $2.1 billion a year that must be spent in the United States on defense supplies. One proposal is for $2 billion to be converted to shekels and used to purchase defense equipment from Israeli manufacturers in the hope that it would invigorate the Israeli economy," said Ha'aretz. 

According to the paper, discussions about economic aid came up during the prime minister's recent trip to Washington, and, in particular, during talks between Weisglass and National Security Advisor Condoleezza Rice.

Weisglass said the aid was necessary to get the Israeli economy moving; U.S. President George W. Bush mentioned American confidence in Israel's economy during a White House press conference with Sharon after their meeting last week, it said.

Other than the annual economic aid, Israel expects fulfillment of a July 2000 decision made by then-president Bill Clinton to then-premier Ehud Barak for a $800 million grant. Since then, the sum has dropped to $200 million, and discussions were frozen, for bureaucratic reasons, after Clinton left office, according to the Americans. But with help of pro-Israel congressmen, discussions are expected to resume at the beginning of the new year, reported Ha'aretz.

Meanwhile, BBC News Online reported that Israel is hoping to head off higher European Union import duties on $200m worth of products from Jewish settlements in the West Bank and Gaza Strip.

Israeli Foreign Minister Shimon Peres will meet his 15 E.U. counterparts at a meeting Monday, with the aim of settling the proposal and avoiding international arbitration, said BBC.

Goods from the areas nominally controlled by the Palestinian Authority are not covered by a trade agreement signed in 2000 between the E.U. and Israel, which offers low or zero tariff access. Only about 2% of the $7.6bn worth of exports from Israel to the E.U. would be affected.

"The outcome of talks last Thursday were not made public, but Israeli officials said they were optimistic about a resolution with their largest trading partner.

"The issue is highly political because it deals directly with the legality of Israel's occupation and borders," said BBC.

However, BBC also said that the E.U. is expected to level a "catalogue" of criticisms against Israel, ranging from human rights violations to reparation for destroyed E.U. projects in the West Bank and Gaza Strip.

"Israel must proceed with easing of restrictions on Palestinian population and allow full, safe, and unfettered access to the occupied territories for international and humanitarian personnel," said Danish Foreign Minister Per Stig Moeller, according to BBC.

"Israel must immediately stop the on-going expansion of settlements," he added.

Denmark currently holds the E.U. presidency.

Goods manufactured in the West Bank, Gaza Strip, occupied East Jerusalem and Golan Heights cannot be labeled as "Made in Israel" under the trade agreements, BBC reported. In November, the European Commission told importers they would have to collect deposits for the full duties on imports from these areas.  

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