U.S., Israel Fail to Resolve Dispute Over Settlements

WASHINGTON —  Secretary of State James A. Baker III and Israeli Ambassador Zalman Shoval failed on Friday to resolve an emotional dispute over settlements in the occupied West Bank and Gaza Strip.

The dispute is blocking American action on Israel’s request for $10 billion in loan guarantees.

Shoval said Israel’s need for the money--to help accommodate an influx of Jewish immigrants from the former Soviet Union--is more crucial than ever. But he said his government is not prepared to stop building settlements in the occupied territories as the Bush Administration has demanded.

Meanwhile, Israeli Prime Minister Yitzhak Shamir startled U.S. officials by asserting that his government no longer considers itself bound by the Palestinian self-rule provisions of the 1978 Camp David accords. Shamir’s remarks, although somewhat ambiguous, could put more obstacles in the way of the already stalled Israeli-Palestinian peace talks.

“We are not obligated to every word written there,” Shamir said of the Camp David agreements in an interview published in most Israeli newspapers. The Associated Press reported from Jerusalem that he added that Israel would adhere to the accord “in principle.”

Israel had agreed in the Camp David negotiations with Egypt to negotiate an autonomy plan that would, among other things, authorize creation of a Palestinian police force. But militant Jewish settlers are demanding that Shamir’s government refuse to cede to the Palestinians any part of the police power of the West Bank and Gaza Strip. With new elections expected in June, Shamir is unwilling to alienate the settlers, long a bulwark of his political support.

Although Shamir, as prime minister, never before publicly questioned the validity of the agreements, he voted against ratification of the pact as a member of the Knesset, the Israeli Parliament.

Palestinians also rejected the autonomy plan when it was first proposed, but the Palestinian delegation to Mideast peace talks has implicitly accepted the formula.

Despite U.S. officials’ initial surprise at Shamir’s comments, a senior State Department official said later that the prime minister’s remarks were not “in and of themselves disturbing.” He said Israel specifically accepted the Palestinian autonomy formula when it agreed to take part in the U.S.-backed peace talks.

Shoval said he and Baker would resume their negotiations when Baker returns from a trip beginning Sunday to Russia and the former Soviet republics in Central Asia. But the dispute over settlements involves fundamental principles that neither side seems ready to compromise.

Baker told congressional committees this week that the Administration would like to help Israel settle more than 300,000 Jews from the former Soviet Union but is unwilling to do so “under conditions that would contravene our long-established policy views.”

Baker also expressed concern about Israel’s ability to repay the housing loans, noting that under American law, the U.S. government is required to provide Israel with foreign aid payments at least high enough to cover its payments on debts owed to the United States.