WORLD : U.S. Holding Up Financial Aid to Soviet Immigrants in Israel

JERUSALEM —  The United States has delayed financial aid to Soviet immigrants here after controversy over Israeli promises not to settle the newcomers in Arab lands captured in the 1967 Middle East war.

Israeli officials today blamed “unauthorized information” from Israel and technical delays for holding up U.S. guarantees to repay $400 million in commercial loans to house an influx of Soviet Jewish immigrants.

But five newspapers and army radio said Secretary of State James A. Baker III has barred a U.S. team from going to Israel to work out details until it is assured that the newcomers will settle only inside the pre-1967 borders of the Jewish state.

President Bush regards as an obstacle to peace the 90,000 Jews living in settlements among the 1.75 million Palestinians of the occupied West Bank and Gaza Strip who are waging a 34-month-old anti-Israel revolt.

Washington is worried Israel’s hard-line government will ignore an Oct. 2 pledge by Foreign Minister David Levy to limit settlement of Arab East Jerusalem and to report on any further settlement in occupied lands.