US offers Israel billions in aid

The US has offered $10bn to Israel, to bail it out of the worst economic crisis in its history.

Israel's Finance Ministry said the package consisted of $1bn in direct military aid and $9bn in loan guarantees.

The 30-month-long Palestinian uprising against Israeli occupation and the global economic slowdown have plunged the country into its third year of recession.

Israel - the biggest recipient of US aid worldwide - initially asked for $4bn in military aid and $8bn in loan guarantees.

The US will deduct from the loan guarantees any Israeli expenditure on settlement activities in Palestinian areas.

The package, which is part of President George W Bush's war budget, still needs approval by the US Congress.

US National Security Adviser Condoleezza Rice pledged the aid to Israeli Finance Minister Benjamin Netanyahu on Wednesday.

"Rice told Netanyahu that the (Bush) administration decided to raise the amount of the guarantees by $1bn over what had been planned because the Americans were impressed by the economic plan that has been presented to the government," Israel's finance ministry said in a statement.

Israel's economy contracted by 1% in 2002 after a 0.9% fall in 2001 and the budget deficit is running at 6%, twice the forecast for 2003.

Mr Netanyahu on Monday announced government spending cuts and reductions in the public sector wage to rein in the budget deficit.

Israel already receives $3bn a year from the US, mostly as military aid.

Meantime, The EU will pays 100 million extra for the Iraqi refugees caused by the unilateral agressive action of the US/GB