WASHINGTON, Sept 16: The United States said on Tuesday it was working on how much money to deduct from loan guarantees for Israel in response to Israel’s refusal to stop building Jewish settlements on the West Bank.

White House spokesman Scott McClellan said US Secretary of State Colin Powell would make the determination on how much of the $9 billion in loan guarantees will be withheld. A decision was expected soon.

Under a US-backed Middle East peace “road map,” Israel is required to freeze settlement activity on the West Bank. Israel’s refusal so far to do so, coupled with Palestinian suicide bomb attacks on Israeli targets, have stalled the road map plan.

The deductions would come from a $9 billion package of US loan guarantees to help Israel weather a deep recession and fiscal crisis stemming in large part from the three-year-old Palestinian militant revolt against Israel.

The object of any deductions would be to ensure no American money is used to fund settlements. White House officials said such deductions were not unusual and in fact were done annually from 1992 to 1998.

“The precise amount is still being determined but will be an estimate based on a range of Israeli government expenses associated with the settlement activity,” said a State Department spokesman, Adam Ereli.

Mr McClellan said the United States still has concerns about a barrier fence Israel is building through the West Bank but had not decided whether to deduct from the loan guarantees over this issue.

“We have made our concerns known. Those concerns remain,” said Mr McClellan. “We will continue to talk about these concerns with the Israel government.”—Reuters