PM Shamir, Secy. of State Baker fail to reach compromise on loan guarantees issue. Baker re-states U.S. offer to compensate Israel for losses incurred during the 120-day delay, but refuses any compromises beyond that. Journalists traveling with Baker as he flies to Cairo report he states that eventual decision to grant aid would be conditioned upon halt to settlement building. (NYT, WP 9/18, 9/19)
Palestinians are given a letter from Baker by U.S. officials stating U.S. will agree to listing question of Jerusalem on agenda of peace conference, U.S. support for Palestinians' right to name their conference delegates, but adds that U.S. prefers joint Palestinian-Jordanian delegation. Negotiator Faisal Husseini flies to London to convey contents of letter to PLO officials. (Radio Monte Carlo 9/17 in FBIS 9/18; MEM 9/17)
PNSF issues statement claiming PLO never responded to PNSF proposal for PLO-PNSF dialogue [See 9/10]. PNSF expresses regret that PNC meeting will therefore be held before agreement could be made for including PNSF groups, which will not attend. (al-Dustur 9/19 in FBIS 9/20)
Press reports indicate recent Arab League meeting decided to end Arab boycott of companies dealing with Israel if such companies establish industries in Arab countries on same technical level as those they maintain in Israel. Decision stipulated companies wishing to comply must submit detailed plans of proposed project, must not support Zionism, and cannot have factories in Israel producing goods related to Israeli military. Arab League took decision to boycott airlines, shipping companies, shipping agents which facilitate Jewish immigration to Israel. (MENA 9/17 in FBIS 9/18)