Analysis Camouflage Rapport between Bush, Sharon masks differences on key issues. LESLIE SUSSER Jewish Telegraphic Agency Jerusalem West Bank, might similarly be considered untenable Israeli development on Palestinian land. said. "But with the fence stopping the suicide bombers, it won't be so easy for them to do so." The second possible flashpoint in Israel-United States relations is the question of a settlement freeze and the dismantling of unauthorized Israeli settle- ment outposts — often a mobile home or two on a hilltop not far from an existing settlement. Again, the problem is the president's fear that settlement expansion could compromise the chances of creating a viable Palestinian state. The administration fears that unauthorized outposts will be joined to existing settlements, taking in swaths of land Palestinians claim as their own. Israeli officials counter that that's simply not on the agenda, noting that 22 such outposts have already been dismantled and that 12 more will be taken down over the next few weeks. Still, there could be problems. The Americans insist on a building freeze even in existing, full-fledged settlements, while Israel says it must be allowed to accommodate natural population growth in existing set- tlements — though the road map peace plan clearly prohibits that type of expansion as well. In Israel's view, in any case, the key to the success of the diplomatic process isn't the fence or the settle- ments but whether or not the Palestinians disarm the terrorist mili- tias, as called for under the road map. Building Pressure he way top Israeli officials tell it, ties No decision has been made yet on the loan-reduc- between Jerusalem and Washington have tion proposal. Israeli officials, however, believe the never been better. They point to the Americans wanted to broach the idea to pressure relaxed camaraderie of Prime Minister Israel into building the rest of the fence more or less Ariel Sharon's late July meeting with President along the Green Line, the boundary that divides George W. Bush at the White House, which they Israel proper from the West Bank, captured from describe as their best ever. "The two leaders are on Jordan in 1967. the same wavelength on all the big issues," a close Israel, it seems, is ready to comply. One of the Sharon aide said. For all the upbeat talk, however, the Sharon-Bush meeting revealed at least three major issues on which Israel and the United States are divided and could clash further down the road: • Construction of the Israeli secu- rity fence, which Bush called "a problem," and over which his administration is threatening to cut promised loan guarantees to Israel; • The concept of a settlement freeze, which Israel and the United States interpret differently; and • The timetable for the Palestinian Authority to dismantle terrorist groups. According to Israeli officials, Bush's unease over the security fence stems from a fear that it could com- promise his vision of Israeli and Palestinian states living side by side No Disarmament in peace. For the vision to become a P.A. Prime Minister Mahmoud workable reality, the Palestinian Abbas and his security chief, President Bush and Israeli Prime Minister Ariel Sharon walk through the Rose Garden state, in Bush's view, "must be Mohammed Dah.lan, say there's no colonnade after their joint news conference on July 29. viable." A fence cutting into need to confront groups like Hamas Palestinian territory and disrupting and Islamic Jihad as long as they are territorial contiguity could destroy maintaining the temporary cease- that viability, Bush believes. fire, or hudna, that they declared at the end of June. options for the fence was to go around the city of In their meeting, Bush urged Sharon to look at Taking on the terrorists now, they argue, would Ariel, Israel's largest settlement in the West Bank, "the big picture," and not to build the fence in such spark a Palestinian civil war. some eight miles from the Green Line. That would a way that it prevents a viable Palestinian state. They say they prefer to wait until the Palestinian have meant cutting deeply into West Bank territory A few days later, Secretary of State Colin Powell public gets used to peace and quiet and rejects in that one spot. Now, however, officials are saying declared that what worried him and the president groups like Hamas, whose ideology would lead them privately there are other ways of defending places was the fence "producing faits accomplis with back to violence and suffering. like Ariel. respect to what a state might look like" — that is to Israel says the groups are using the cease-fire to re- The rest of the fence, another 100 miles to the say, that Israel was moving unilaterally to determine arm for future confrontations, and that allowing the south, probably will run very close to the Green a border of a future Palestinian state. groups to flourish — even if they're not carrying out Line. Then State Department officials leaked news of a attacks right now — is like keeping a loaded gun to Israeli officials are telling their American col- contingency proposal to reduce the $9 billion in Israel's head, one that surely will be fired sooner or leagues that the main reason the Palestinians don't loan guarantees promised to Israel for every dollar later. want the fence is that it will take away the leverage spent on the fence where it veers into the West The Israelis argue that Abbas and Dahlan easily terrorism has given them throughout the past Bank. It long has been American policy to cut aid to could dismantle the groups right now: The decade of negotiations. "The Palestinians thought Israel for its non-security expenditures on settle- Palestinian Authority has 20,000 men under arms in ments in the West Bank and Gaza Strip. In the State they would come to negotiate now, and if it doesn't Gaza and 30,000 on the West Bank, whereas the work out, simply go back to terror," one official Department view, the fence, where it cuts into the T Paul Morse/Wh i te H ouse 8/15 2003 10