Washington, Nov 05: The United States has opposed the Israeli fence diving Palestine and Israel, saying it "believed" that Israel did not need the fence and warned it may reduce Israeli loan guarantees on the issue. Deputy State Department spokesman J Adam Ereli yesterday said the Bush administration "does not believe" Israel needs the security fence and repeated the US decision to reduce loan guarantees to Israel on the issue as mandated by Congress.

Such a fence should not infringe upon the lives of Palestinians or prejudge the outcome of a final status agreement, the spokesman said.

Ereli added the Bush administration had decided to "deduct money for guaranteeing loans, based on Israeli settlement activity," but had not yet determined how much money would be withheld. Speaking on the Palestinians, Ereli said the United States was monitoring the formation of a new cabinet, and believed that the Palestinian Prime Minister "must have control of all the security forces."

He said the Palestinian cabinet must clearly state its opposition "to all forms of terrorism," as well as take steps to disarm and dismantle "terrorists" and military organisations not under control of the Palestinian Authority.

Bureau Report