Atmosphere is ‘warm and Cordial’ As Bush and Rabin Meet in Maine

President Bush and Israeli Prime Minister Yitzhak Rabin engaged Monday in talks that senior administration officials described as "warm and cordial."

The upbeat picture was delivered at a background briefing for reporters at the president’s vacation home in Kennebunkport, Maine, where it was strongly hinted that the announcement of a long-awaited loan guarantee package for Israel would come Tuesday morning.

"There was an extensive discussion of loan guarantees," an administration official said, adding that the talks were "constructive and productive."

When pressed on whether an agreement had been reached, the official said, "I don’t think I’m being ambiguous," but then added: "Wait until the press conference" Tuesday.

Administration officials also used the briefing to announce that all parties to the Middle East peace talks had agreed to participate in the sixth round, scheduled to begin in Washington on Aug. 24.

The day and a half of talks at Bush’s seaside retreat are aimed at forging closer ties between the two countries and securing a deal on U.S. guarantees-for billions of dollars of commercial loans Israel wants to help absorb immigrants from the former Soviet Union.

According to officials, there was considerable progress on these issues. They said the two leaders had one-on-one discussions in the morning which "covered a full range of topics, including loan guarantees, the Arab-Israeli peace negotiations, a survey of the challenges and opportunities in the (Middle East) region," and global problems.

‘BETTER AND MORE INTIMATE RELATIONSHIP’

The two leaders were later joined by Secretary of State James Baker, National Security Adviser Brent Scowcroft, Israeli Ambassador Zalman Shoval and Cabinet Secretary Elyakim Rubinstein, who heads the Israeli delegation to the peace talks.

The talks continued through lunch, after which Bush and Rabin scrapped tennis plans to stroll on the patio and view the seascape from the rocks.

More talks were slated for Monday night, along with a cocktail party and dinner hosted by Bush for Rabin.

The only public appearance came when the two posed for photographs before the talks and exchanged pleasantries that showed Rabin’s visit was starting off on the right foot.

"The welcome mat is out," Bush said to Rabin. "We are looking forward to strengthening a relationship that is strong and will be even stronger."

Bush added that the prime minister should consider him a friend.

"We would like to make sure there is a better and more intimate relationship between our two countries, our two peoples and our two governments," said Rabin. "And let’s hope this visit will give the chance to at least make clear where we stand, what we can do to achieve these goals."

The warm remarks and harmonious atmosphere signaled a sharp departure from the chilly relationship Bush maintained with Rabin’s predecessor, Yitzhak Shamir.

STRONG SUPPORT ON CAPITOL HILL

Much of the strain in the relationship was caused by Shamir’s resistance to territorial compromise with the Arabs and his unwillingness to freeze Jewish settlements in the territories, which Bush made a condition for receiving the loan guarantees.

Rabin already has demonstrated he will make compromises and is eager to press forward quickly with the peace process. "We would like to give a real chance to the peace, negotiations," he said Monday.

On Sunday, Israeli officials announced they would try to change a law that bars Israelis from contact with the Palestine Liberation Organization.

Rabin also has called for a halt in "political" settlements in the territories, canceling 6,500 planned units, while reserving the right to continue building "security-related" settlements.

On Monday, he underscored the vast transformation he is orchestrating in Israel. "We would like to change the order of our national priorities. We believe the real problems are in the domestic field," he said.

These changes are what has helped pave the way for the loan guarantee package, which is supposed to help create jobs for immigrants.

The assistance enjoys strong support on Capitol Hill. Roughly 250 members of the House of Representatives sent a letter to Bush last month, in anticipation of the Rabin visit, urging him to approve a loan package.

"The purpose of our letter is to let President Bush and Prime Minister Rabin know that Congress is ready, that there is no obstacle here to approval of the loan guarantees," said Rep. Charles Schumer (D-N.Y.), who co-authored the letter. He predicted Congress would approve the package as soon as Bush submits it.

But ironing out what Rabin means by "political" settlements was expected to be high on the agenda of the Bush-Rabin talks. Also expected to be worked out was how much money, if any, should be deducted from the amount guaranteed for any building that continues to take place in the territories.

ECONOMIC ISSUES KEPT SEPARATE

The White House had also been expected to place extensive demands on Israel to reform its economy in exchange for the loan guarantees, a prospect criticized in some Israeli quarters.

But a highly placed American Jewish source said Monday that, following a visit to Washington last week by Bank of Israel Governor Jacob Frenkel, economic reforms would be kept separate from an agreement on the guarantees.

The stakes are high on this visit for both leaders. Bush would like to point to progress in the peace talks as one of the few fruits of the Persian Gulf War. He also is looking at a loan guarantee deal as a way to win back Jewish the Shamir government.

Rabin, meanwhile, is eager to deliver to his country much-needed U.S. aid and a closer relationship with its most important ally.

The prime minister, whose settlement policies triggered a large demonstration in Israel prior to his departure for the United States, also encountered opposition here.

The right-wing extremist Kahane Chai group had chartered a sailboat to deliver a petition protesting Rabin’s settlement policies, but the sailboat was intercepted by the Coast Guard.

The group claimed it did manage to stop Rabin’s motorcade in Kennebunkport before members were detained and taken to local police headquarters.