U.S., Israel Unable to Agree on Settlements

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

The dispute is blocking action on Israel’s request for $10 billion in U.S. loan guarantees to resettle Jewish immigrants from the former Soviet Union.

After the meeting of nearly an hour, a senior State Department official said only: “They will have to meet again.”

Meanwhile, the chairmen of the Senate and House subcommittees that handle foreign aid appropriations both vowed to block the loan guarantees unless Israel ends or sharply restricts construction of Jewish settlements in the occupied territories.

Rep. David R. Obey (D-Wis.), chairman of the House Appropriations subcommittee, said that American money must not be allowed to support--even indirectly--Prime Minister Yitzhak Shamir’s settlement policy, which is intended to solidify Israel’s hold on the disputed territory.

During a daylong hearing on the loan proposal, Obey added that Israel’s plan to spend some of the loan money on programs to create jobs for immigrants would be difficult to explain to the American public because “we cannot get support in this city for a job creation program of our own in this country.”

Sen. Patrick J. Leahy (D-Vt.), Obey’s counterpart in the Senate, was even more blunt.

Emerging from a meeting with Baker just before Shoval arrived, Leahy said: “It will be Israel’s choice but . . . if you’re going to have further settlements, then you run the real risk of losing U.S. guarantees.”

Shamir, facing general elections this year, has made it clear that he is unwilling to curtail settlement activity.