US, Israel resume talks on $1.2b special aid package

The US initiated the present resumption in the talks. US foreign aid for 2006 includes $2.52 billion for Israel.

The US and Israel have resumed talks on a special $1.2 billion aid package for developing the Negev and Galilee, sources in Washington told “Globes” today.

Israel suspended its request for special aid when the extent of damage caused to New Orleans and the Gulf Coast from Hurricanes Katrina and Rita ten weeks ago became known. At the time, the US estimated the cost of rebuilding the affected areas at $100 billion.

The US initiated the present resumption in the talks. “Patience apparently pays,” said a knowledgeable source. However, intensive lobbying by the American-Israel Political Action Committee (AIPAC) seems to have been the main factor behind this development.

The current talks focus on finding a legislative vehicle to which the special aid package can be added. It is unclear if the Israeli request for $1.2 billion will be approved in full. Israel has already been told that neither the Bush administration nor Congress would welcome a separate request for $800 million in aid to cover military aspects of the disengagement plan. Reactions by senators and representatives to a bill including a special aid package are also unclear.

Pro-Israeli sources were encouraged by the fact that legislators have not asked for across-the-board cuts in foreign aid to help finance recovery efforts in New Orleans and elsewhere.

US foreign aid for 2006 includes $2.52 billion for Israel: $2.28 billion in military aid, $248 million in civilian aid, and $40 million for absorbing refugees. A special clause in the law exempts Israel from bearing operational costs related to military exercises and other activities, which saves Israel $50-75 million.

The package also includes $150 million in aid for the Palestinians, double the amount for this purpose last year.

Published by Globes [online], Israel business news - www.globes.co.il - on November 15, 2005

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