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Publisher\Editor Don Canaan

                       Aug. 22, 1996 V4, #155
All the News the Big Guys Missed

PA Almost Bankrupt

"The Palestinian Authority is on the verge of economic collapse," says Terje Larsen, the UN special coordinator with the PA. He claims that the huge financial deficit could lead to political instability. The PA owes almost 7 million shekels to Hadassah Hospital in Jerusalem; the Israeli government refuses to pay the hospital from funds it has agreed to pay the PA, because Hadassah is a private institution.

Netanyahu and Peres At It Again

Sources within the Palestinian Authority are saying a meeting between Arafat and Shimon Peres will likely take place this week in Ramallah. The meeting has become the subject of controversy and mutual attacks between Peres and Prime Minister Netanyahu. The Prime Minister has attacked Peres for "placing sticks in the wheels of the negotiations. When I was in the opposition, I never deigned to hold negotiations with Arab leaders."

Peres responded to the criticism by saying, "Netanyahu's memory is a bit short. He met with King Hussein and with Crown Prince Hassan, and no one said a word to him. I have no intention of representing the government, but I represent at least half of the nation who wants the peace process to continue."

Levy Messages Assad

By Al Pessin (VOA-Jerusalem)

Israel's foreign minister has sent a message to Syria in an effort to ease tensions which have built between the two countries during the past few days.

Levy told Israel Radio the message is intended to clarify to Syrian President Hafez al-Assad that Israel wants to resume peace talks, and believes the rhetoric of recent days is counter-productive.

Early in the week, Israeli leaders vowed to respond forcefully to any strike against Israeli forces, particularly in southern Lebanon, where Syria has considerable influence.

Official Syrian newspapers responded by blasting Israeli leaders for, in the Syrian view, abandoning the search for peace. In addition, Syria recently tested a new, more-sophisticated version of the SCUD missile, capable of reaching Israeli cities. And on Tuesday, Israel conducted the first operational test of its new anti-missile missile.
The combination of rhetoric and missile tests, along with the lack of peace talks, raised new fears in Israel of a possible future war with Syria, although there was harsh Syrian rhetoric even during peace talks with Israel's former government. Levy said Wednesday the new government's top priority is to avoid war.

Syria: Israel Conducting Hysteria Campaign

By Laurie Kassman (VOA-Cairo)

Syria's official media accuses Israel of waging a campaign of hysteria a day after Israel's foreign minister accused Syria of undermining the peace process with its long-range SCUD missile tests. Tensions are rising between two reluctant peace partners

The Baath party newspaper accuses Israel's Prime Minister Benjamin Netanyahu of fueling tensions to force Syria into a compromise on the Golan Heights.

Syria wants israel to return all the strategic border area, which is seized in the 1967 Arab-Israeli war. Netanyahu opposes the principle of land for peace and wants Syria to first talk about security in southern Lebanon.

Al Baath newspaper accuses Netanyahu of shutting the door on the peace process and resorting to a policy of threats to escalate tension to the maximum.

Al Baath Monday accused the Israeli prime minister of beating the drums of war when he threatened to intensify the battle against Hizbullah terrorists in south Lebanon.

Syria's official daily Tishreen went on the offensive, calling Israel's nuclear facilities a threat to regional peace and calling for their inspection.

Tensions have increased between Syria and Israel since the election of a hardline Israeli government in May. Netanyahu rejects the land for peace principle that has been the reference point of the five year old peace process. Syria says there will be no peace until it gets back all the Golan Heights.

Last month, Israel offered to resume peace talks with Syria, but Netanyahu says he wants to talk about security in southern Lebanon first. Syria and Lebanon refuse the Lebanon First proposal.

Syria reportedly tested SCUD missiles capable of reaching any point in Israel. Syria recently carried out a test launch of SCUD-C missiles, which have a range of approximately 375 miles and are capable of reaching any location in Israel.

The test launch, together with recent military exercises of the Syrian Army, have raised concern among Israeli defense officials. The officials believe that the launch, which attempted to test an ability to fire the missiles under operational circumstances, was meant as a veiled threat toward Israel. Israel Radio quoted foreign reports claiming that Syria possesses more than 300 ballistic missiles. In addition to developing the improved SCUD-C rockets, Syria is also working on a torpedo and has developed the most advanced chemical weapons program in the Arab world.

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