Analysis: Paying for peace

Shadows cast by White House spokesman Joe Lockhart at a Camp David press briefing

By BBC News Online's Stephen Mulvey

Washington is reported to be preparing to spend $15bn or more over the next few years to underpin any peace deal between Israel and the Palestinians.

We would look to other nations to provide assistance

White House spokesman, Joe Lockhart

The overall cheque from the international community may be much higher, with Palestinians reportedly seeking $40bn in compensation for refugees unable to return to Israel.

President Bill Clinton will be asking for contributions from Europe and Japan at the G8 summit of the world's richest nations in Okinawa later this week.

White House spokesman Joe Lockhart has said that the US sees aid for Israel and the Palestinians as an "international effort" - though one in which the US will take a lead.

"The EU has been involved as an important player here, and we would look to other nations to provide assistance as appropriate," he told a press briefing.

Security costs

About 40% of the US's $13bn annual foreign aid bill already goes to the Middle East, much of it in payments linked to the deal between Israel and Egypt agreed at Camp David 22 years ago.

US payouts for Middle East peace

Camp David I: $5bn per year

Wye: $1.9bn

Camp David II: $15bn?

Israel-Syria deal: $18bn?

The aid package resulting from any new agreement at Camp David would be the largest bill for Middle East peace since then.

US Secretary of State Madeleine Albright and the Israeli ambassador to Washington, David Ivry, are reported to have been lobbying members of Congress to gather support for the package.

Most of the US aid would help Israel adapt its security arrangements to the changed circumstances.

Israeli officials say they may need to:

• move military bases out of the West Bank and Gaza
• build early-warning stations
• provide security for Jewish settlements

They also want help to upgrade the Israeli army, and are reported to be eager for high-tech American weapons.

Assistance to Palestinians would be used for:

• compensating families made homeless when Israel was founded in 1948
• funding water infrastructure projects
• economic aid

Peace dividend

The US has been paying Israel and Egypt a total of $5bn per year in military and economic aid as a result of the first Camp David agreement.

Some of this money comes back to the US in the form of payments for arms purchases. Israel and Egypt accounted for 15% of all US arms shipments in 1997.

The Wye River peace agreement reached between Israel, Jordan and the Palestinians in October 1998, and implemented the following year, was backed with US aid of $1.9bn.

Israel originally asked for more than $3bn for purposes ranging from improving water supplies to development of a missile defence capability, but the US only agreed to provide $1.2bn.

Last year, as a peace deal between Israel and Syria began to look possible, Israeli treasury officials were looking to the US to help cover a bill they estimated at $18bn for withdrawing from the Golan Heights.

US officials point out that reducing the threat of conflict in the Middle East increases the US's own security, and removes a potentially expensive burden on the US armed forces.

The EU is expected to make a considerable contribution to any new Camp David package, as it is already the largest donor to the Palestinian Authority.

Other major donors are likely to be Japan and Saudi Arabia.