Israel has asked the U.S. administration for guarantees to secure $8 billion in the U.S. bonds market

TEL AVIV, January 13 (IslamOnline & News Agencies) – The Israeli government’s application to the U.S. for loan guarantees reflects Israel’s dire economic situation, former Israeli finance minister told an Israeli newspaper on Monday, January 13.

Avraham Shochat told Ha'aretz that “this application is one of the heaviest indicators for Israel's weakness in the international markets.”

He added that “in the 1990s Israel needed guarantees because it had to absorb massive immigration and did not have sufficient foreign exchange reserves. Now the story is different, because we have large forex reserves.

The reason for the current application is the dire economic crisis and the high interests charged from the government both in Israel and abroad."

"The guarantee is intended to finance the deficit and repay $12-$13 billion over the next three years. Namely, in terms of being able to secure and repay loans, we have reached bankruptcy. The public should know this will not boost the economy; the guarantees are like oxygen for an economy that is in bad condition,” Shochat told the paper.

Israel has asked the U.S. administration for guarantees to secure $8 billion in the U.S. bonds market. In addition, Israel asked for special defense aid of $4 billion, said the paper.

An Israeli team is currently negotiating the new loan with Condoleezza Rice's National Security Council but little has emerged about their visit in the American press.

Israel is pleading for the money on the grounds that a U.S. invasion of Iraq will provoke further attacks against Israel.

It argues that some of the aid should be given to anti-missile defense systems for El Al airliners. Alleged Al-Qaeda members tried to destroy an Israeli civilian aircraft with missiles at Mombasa last year, but narrowly missed it.

The Israeli delegation to Washington is led by Dov Weissglass, from the private office of the Israeli Prime Minister, Ariel Sharon.

The U.S. response is likely to be made public within a month – before the expected invasion of Iraq. The State Department spokesman, Richard Boucher, has refused to talk about the negotiations, save for a passing remark that "we always try to help our friends and allies to the best of our ability".

Israeli officials accompanying the delegation said they believed the U.S. would respond favorably to their loan request when their country was facing a global recession as well as "terrorism''.

On Sunday, U.K. newspaper the Independent said that one of the members of the Israeli delegation, Director General of the Israeli Ministry of Defense Amos Yaron, is a former army officer implicated in the 1982 Sabra and Chatila massacre.

Yaron was the Israeli military commander in Beirut when the Israeli troops entered the refugee camps and slaughtered up to 1,700 Palestinian refugees, said the paper.

Yaron was appointed to the post of Defense Ministry director by the former Prime Minister, Ehud Barak. The two men are accompanied to Washington by the Israeli Ministry of Finance accountant general, Nir Gilad, the paper said.