Clinton to seek $15bn package for Middle East deal

The Clinton administration is preparing to ask the US Congress to approve at least $15 billion extra spending - and possibly …

The Clinton administration is preparing to ask the US Congress to approve at least $15 billion extra spending - and possibly as much as $40 billion - to implement the key terms in any Middle East peace deal reached as a result of the talks at Camp David, it emerged yesterday.

As negotiations between Israel and the Palestinians continued for a sixth day at the presidential retreat in Maryland yesterday, reports in Washington underlined the scale of the price which the administration is willing to pay for a peace deal in a presidential election year - and to secure President Clinton's legacy.

While its military and political power are fundamental to the US ability to bring the opposing sides together at Camp David, the reality is that it is US money which is the ultimate guarantee of any deal reached there.

Any agreement is certain to be conditional upon the US agreeing to implement the largest new Middle East aid package in nearly a quarter of a century. Under the 1978 Camp David accord, the US still provides Egypt and Israel with combined annual support amounting to $5 billion. The 1998 Wye River accord between Israel, Jordan and the Palestinians came with a $1.88 billion US aid tag.

READ MORE

Among the items for which US financial support would be required would be the relocation of Israeli military bases and borders, a fresh arms deal with Israel and compensation for Palestinian refugees over the loss of their homes.

Officials describe the emerging terms of any such package as "still vague", but the US Secretary of State, Ms Madeleine Albright, has begun to discuss the broad outlines with senators. Senator Mitch McConnell, a leading Republican, yesterday accused Mr Clinton of trying to "buy an agreement because it's an election year".

Not surprisingly, there are signs that both the Israelis and the Palestinians have embarked on a bidding war for financial support from Washington as part of any deal on new borders in the region.

The Israeli ambassador to Washington, Mr David Ivry, spent much of last week mobilising congressional allies in support of a huge request for extra aid to implement any deal. In the last week alone, Mr Ivry held separate meetings with between 30 and 40 US legislators on the issue, the Israeli embassy in Washington confirmed.

Palestinian officials, meanwhile, have floated the figure of $40 billion, with the Clinton administration to cover compensation to Arabs who lost their land and homes at the time of Israel's establishment in 1948.

Even if, as expected, this proves to be an unrealistic figure, there is no doubt that Washington will have to write several large cheques to ensure Palestinian agreement to any Camp David package.

The lion's share of any new US financial package would almost certainly go to Israel to pay for the country's security needs as a result of any peace agreement. Israel is expecting to spend billions of dollars relocating its military machine to defend the redrawn borders that are at the heart of any deal. Some Israeli officials have asked for more money to "remake the Israeli military in the US image," a Republican source said.

While the White House accepts that Washington will be the principal financial guarantor of any US-brokered deal, the administration has said that it expects Washington's allies to contribute too.

The EU, Japan and Saudi Arabia will all face demands for support, and Mr Clinton is likely to raise the issue at the Group of Eight summit in Okinawa this week.