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Bush strikes Israel loan deal with Rabin

By STEVEN HEILBRONNER

WASHINGTON -- President Bush, following a meeting with Israeli Prime Minister Yitzhak Rabin, announced he will ask Congress to approve up to $10 billion in loan guarantees to help 'Israel's historic task of absorbing immigrants' from the former Soviet Union.

The long-awaited announcement made at a joint news conference Tuesday with Rabin at the president's summer home in Kennebunkport, Maine, ushered in an improved climate in relations between the two countries that have squabbled over numerous issues during the past several years.

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Bush, who later flew to Washington with Rabin, said there is an improved friendship with Israel and said he would call for 'swift action' from Congress on the loan deal.

'I'm extremely pleased to announce that we were able to reach agreement on the basic principles to government granting of up to $10 billion in loan guarantees,' Bush said.

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'I've long been committed to supporting Israel's historic task of absorbing immigrants and I'm delighted that the prime minister and I have agreed to an approach which will assiti these new Israelis without frustrating the search for peace,' he said, adding, 'We can best pursue these two humanitarian goals at one and the same time.'

Conspicuously absent from their remarks was any mention of settlement building in the disputed occupied territories that delayed the loans for nearly two years.

However, the loans were agreed to after Rabin topped the Lukud administration of former Prime Minister Yitzhak Shamir in June's election and promised to freeze construction of new settlements in the West Bank and Gaza Strip, meeting a U.S. stipulation for the loans.

Rabin hailed the decision and vowed to 'inject new momentum in the negotiations, both in the multilateral and bilateral spheres,' a reference to the Middle East peace talks set to resume in Washington on Aug. 24.

He added, 'The chances for a better peaceful future are there. Let us take advantage of them.'

Bush was glowing in his praise of Rabin and said that the relationship between their two countries 'goes beyond weathering differences to accomplishing great things.'

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In a favorable turn in attitude toward the new government and it's commitment to peace, Bush said, 'I think the approach of this new government is extremely the kind of thing it's going to take to achieve real peace.'

The U.S. commitment to Israel's 'security and military edge' will endure, Bush said.

Bush also said that 'our 100 percent goal goes beyond ending a state of war' in the Middle East to 'a comprehensive peace on all fronts, grounded in U.N. Resolutions 242 and 338,' which followed the 1967 Arab-Israeli War.

Budget officials say that securing the loans could cost up to $200 million, though Rabin said Tuesday his government would pay the cost of securing the loans.

During the questioning, Bush was asked whether the United States would recognize Jerusalem as the capital of Israel, and replied that the U.S. position is unchanged, that it was a subject for negotiations, but that the United States did not want to see a divided Jerusalem.

Bush said Rabin 'has pursuaded me that Israel's new government is committed to making' the Middle East peace talks succeed. 'And I call upon the Arab parties to respond in kind,' he added. 'The time has come to make peace, not simply to talk of it.'

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