Secy. of State Baker continues talks with PM Rabin, joined by fin. min. and Bank of Israel gov. concerning loan guarantees. Baker also proposes U.S.-Israeli defense pact in return for Israeli readiness to withdraw from Golan Heights, parallel with Syrian readiness for peace agreement. (Yedi'ot Aharonot 7/21 in FBIS 7/21, 7/23 in FBIS 7/23; NYT, WP 7/21)
Baker then meets with 5 members and advisors of the Palestinian delegation, led by Faisal Husseini and Hanan Ashrawi. Ashrawi says the Palestinians would "tolerate" a near-total settlement freeze, as well as an accountable loan guarantee package. (NYT, WP 7/21)
Palestinian leaders submit memorandum to Baker calling on U.S. to resume dialogue with the PLO and halt all settlement construction in the o.t., including East Jerusalem. (Algiers VOP 7/20 in FBIS 7/21)
PLO Exec. Comm., PNC chairmanship, and general secretariat of Palestinian factions meet in Tunis to discuss Baker visit, Rabin govt., and peace process. (MENA 7/21 in FBIS 7/22)
Islamic resistance fighters attack SLA post in Tayr Harfa, S. Lebanon, damaging 1 tank, killing 1, wounding 4 Israeli soldiers. Israel shells villages of Haddathah, 'Ayta al-Jabal, Haris north of "security zone," conducts helicopter mock raids. (VOL, Radio Free Lebanon 7/21 in FBIS 7/21)