Prometheus 6

U.S. May Punish Israel for Building Fence in W. Bank
Because security barrier enters Palestinian land, recent loan guarantees could be reduced.
By Robin Wright, Times Staff Writer

WASHINGTON — The Bush administration is preparing to notify Israel that it may reduce recently approved loan guarantees in proportion to the amount Israel spends on a new security fence and on Jewish settlements, U.S. officials said Monday.

The move, meant to make clear the administration's objections to the fact that the fence is being built partly inside the West Bank, would mark a rare instance of Washington penalizing Israel for its policies.