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Ampal Securities Corporation (313) 253-6363 or 1-800-445-6508 Operator 903 Member NASD and SIPC This is neither an offer To sell nor a solicitation of an offer to buy securities The offer is made only by the prospectus which may be obtained in any state wherein the underwriter may lawfully offer the securities FIRMLY ROOTED IN ISRAEL, BRANCHING OUT IN NEW DIRECTIONS AMERICAN ISRAEL CORPORATION Last week, more than 30 Israelis were arrested follow- ing a raid on the Arab village of Kifl Harith, where settlers threw a petrol bomb into a house killing a 13-year-old girl. They then set fire to trees and crops, smashed win- dows and shot up solar heating panels on the roofs of dwellings. Defense Minister Yitzhak Rabin described the incident as a "violation of Israeli values" and, anticipating an expansion of settler violence against the army, noted that the security forces would be augmented in order to deal with "those who organize, in- cite and perpetrate violent acts against Israeli soldiers." According to senior military sources, the activities of the settlers, some of whom have physically attacked Israeli soldiers when attempts were made to restrain them, now represent the most serious challenge to the authority of the army in the occupied territories. Moreover, there are growing fears that their violent ac- tions and use of weapons could dramatically increase the temperature in this highly inflammable area and persuade the Palestinians that they have nothing to lose by taking up arms. Such an event would radically change the terms of the debate and place the con- flict in an entirely new dimension. Nor is the malaise confined to the zealous settlers in the occupied territories; it has found expression at the highest level of public life in Israel. Trade Minister Ariel Sharon has served notice that he will challenge Shamir's leadership over the peace in- itiative, while Chief of Staff Dan Shomron has come under increasing, and un- precedented, fire from right- wing politicians, led by Gen. Yehoshua Saguy, a former head of military intelligence, for his failure to deal decisive- ly with the Palestinians. In an interview with Israel Radio at the weekend, Shomron conceded that the settlers were "shouldering a large part of the struggle with the Palestinians," but he also warned that the army would deal with anyone who "takes the law into his own hands and causes unnecessary harm to local Arab residents." The settlers have warned that unless the army takes off the gloves and brings the in- tifada to a decisive conclu- sion, they will do the job themselves. It is not an idle boast. Ze'ev Schiff, a senior Israeli military commentator, sound- ed a chilling note: "The Israeli Army," he wrote in the Hebrew-laguage daily Armed vigilante groups now patrol the roads. Ha'aretz, "is on the verge of losing control of the settlers." The settlers had per- petrated acts of vengeance against the Arabs and were now prepared, for the first time, to "physically harm ar- my officers who seek to pre- vent them from carrying out their illegal acts." The army "is greatly con- cerned by this development," he added. "There is no danger of the army losing control with regard to the Palestinian uprising, but there is such a danger where the settlers are concerned." The army confirmed late last week that it was plann- ing to act against vigilante settlers by restricting their movement, although no specific steps have yet been announced and no restric- tions have been announced. Any such action, however, is likely only to harden the resolve of the settlers and in- tensify intra-communal tensions. To remove any doubt about their response to restrictions by the army, the settlers reacted swiftly and angrily: "Such moves should be reserved for the enemy," said one settler statement. "Lum- ping Jews together with the terrorist enemy is a grave mistake. We will oppose it with all our might." Concern about the growing tensions within Israeli socie- ty, and the consequences of Jewish settlers declaring all- out war on the Palestinians, has been expressed by all of Israel's major newspapers. An editorial in the respected Hebrew-language daily Ma'ariv, not noted for an apocalyptic vision of the world, warned bluntly: "The rule of law is coming apart at the seams . . . We stand on the edge of the abyss and we must save ourselves from ourselves." The paper pointed out that