JERUSALEM - Israel was up in arms yesterday after Washington's envoy to the Mideast suggested the US might impose sanctions on Israel to press it into making concessions in negotiations with the Palestinians.
Talks broke down a year ago and have not resumed because the Palestinians insist that Israel halt all construction on the disputed lands they want for a future state. Israel says the Palestinians should return to the negotiating table without conditions.
Envoy George Mitchell was asked in a television interview last week what sort of pressure could be applied on Israel.
"Under American law, the US can withhold support on loan guarantees to Israel," Mitchell said, noting that the previous Bush administration had done so in the past. But he added that he preferred persuasion to sanctions.
Israel's finance minister, Yuval Steinitz, yesterday said he was unaware of any formal threat to withhold the guarantees, which he characterised as a "token of friendship" that Israel does not intend to use.
In 2003 the US whittled down the guarantees after Israel built part of its separation barrier inside the West Bank .
Prime minister Benjamin Netanyahu's office, in response to Mitchell's comments, pinned the blame for the deadlock on the Palestinians.
"Everyone realises that the Palestinian Authority refuses to renew peace talks, while Israel took steps to advance the process," the statement said.
The Palestinians say they will not speak to Netanyahu unless he freezes all construction in the West Bank and east Jerusalem. - Sapa