U.S. suggestion of sanctions causes stir in Israel

[babylonsister]

U.S. suggestion of sanctions causes stir in Israel
Jeffrey Heller
JERUSALEM
Sun Jan 10, 2010 8:20am EST


JERUSALEM (Reuters) - A U.S. peace envoy's suggestion that Washington could penalize Israel financially to force it into making concessions to the Palestinians drew Israeli ire on Sunday.

"Under American law, the United States can withhold support on loan guarantees to Israel," George Mitchell said on U.S. television on Wednesday after being asked about the kind of pressure that could be brought to bear on Israel.

Over the past two decades, Israel has received U.S. guarantees covering billions of dollars in loans, underwriting that has been instrumental in raising money overseas more cheaply.

Although such guarantees have slipped in importance and Mitchell made clear in the U.S. public television interview that no sanctions against Israel were being considered, the remarks added more discord to Israeli relations with President Barack Obama's White House.

In a statement late on Saturday "in reaction to media inquiries after Mitchell's interview," Prime Minister Benjamin Netanyahu's office blamed the Palestinians for a peacemaking impasse which the envoy, due back in the region later this month, has failed to break.

"Everyone knows that the Palestinian Authority refuses to renew peace talks, while Israel took significant steps to restart the process," the statement said.

Israeli media seized on Mitchell's remarks as reminiscent of a low point in U.S.-Israeli relations -- President George Bush's withholding of $10 billion in guarantees in 1991 after Prime Minister Yitzhak Shamir refused to freeze settlement expansion.

"Mitchell's threat," said the main headline of Israel's mass circulation Maariv newspaper, which described the envoy's comments as a "bombshell."

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http://www.reuters.com/article/idUSTRE6074ZC20100110