Israel to ask US for $500-700m in disengagement aid

If Israel does not obtain the aid, a large cut will have to be made in the 2006 budget.

Jerusalem is still deliberating how much to ask the US for covering security expenses related to the disengagement plan. The figure is currently estimated at $500-700 million. The special US aid is meant to cover "infrastructure support" investment items for new communities in the Negev and Galilee.

It is believed that Israel will not ask the US to cover the cost of compensation for evacuees from Gush Katif and northern Samaria. Senior officials said that Israel's request should be based solely on actual defense needs and expenditures. The final amount of aid will also include funds for upgrading the security fence around the Gaza Strip.

The senior officials said the process of submitted a request for aid to Washington should be completed before the start of the disengagement plan, in April or May. Prime Minister Ariel Sharon will visit Washington next month.

If Israel does not obtain special US defense aid for the disengagement plan, or if the amount of aid is reduced, a large cut will have to be made in the 2006 budget. The special US aid is estimated at NIS 2.6-3 billion, exactly the expected excess amount, compared with the original disengagement allocation.

It was reported yesterday that the cost of the civilian evacuation and military redeployment under the disengagement plan would reach NIS 7 billion, compared with NIS 5 billion in the original plan, an excess of 40%.

Expenditures in the 2005 budget, which is expected to be passed by the Knesset next week, are already far greater than in the original plan. There are signs that these excess financial demands could cause budgetary distress toward 2006.

Published by Globes [online], Israel business news - www.globes.co.il - on March 24, 2005

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