(WMR) -- America�s special envoy to the Middle East, former Senator George Mitchell, is facing the wrath of Israeli government ministers and the Israel Lobby�s most strident supporters in Congress over his threat of withholding U.S. loan guarantees to Israel if the Israelis continue to build illegal settlements in east Jerusalem and the West Bank.

Mitchell�s threat, aired during an interview on PBS, witb Israeli Finance Minister Yuval Steinitz saying Israel could live without U.S. loan guarantees. WMR previously reported that jailed Wall Street fraudster Bernard Madoff had parked much of his ill-gotten money in Israeli banks, so Steinitz�s statement that Israel can live without loan guarantees from the United States may not be a mere idle boast.

Israeli Education Minister Gideon Sa�ar also shrugged off Mitchell�s threat. Senators John McCain and Joe Lieberman immediately criticized Mitchell�s attempt to deny Israel assistance for its continuing insistence on building illegal settlements. Both senators are completely owned and operated by the American Israel Public Affairs Committee (AIPAC).

The suspension of loans guarantees for Israel hearkens back to the George H. W. Bush administration that faced similar recalcitrance from the Yitzkak Shamir government over the building of illegal settlements in the West Bank. AIPAC immediately used its clout in Congress to override any threat of housing loan guarantee suspensions by the Bush I administration. Israel�s demands that the Bush administration continue its loan guarantees prompted Secretary of State James Baker to say in a private conversation that became public, �Fuck the Jews. They don�t vote for us anyway.� However, Baker soon backed down and phoned Israeli Foreign Minister David Levy to announce that the U.S. would provide $400 million for housing loan guarantees for continued Israeli illegal settlement expansion.

Mitchell is on political thin ice in confronting Israel, according to WMR�s White House press sources. Former Bill Clinton Middle East envoy Dennis Ross, who headed up the neocon Washington Institute for Middle East Policy before being hired on as a special envoy for Iran in the Hillary Clinton State Department for Iran issues, has been placed inside the White House national security team with a Middle East advisory portfolio. Ross is known as a supporter of the �Jerusalem will always be united as Israel�s capital� camp and his strongly pro-Israel policies ensured that when he was at the State Department, Hillary Clinton ensured that Ross had little access to important State Department documents and meager responsibilities. Mrs. Clinton reportedly does not care for Ross and blames him for �stabbing Bill in the back� during the Camp David peace talks between Palestinian leader Yasser Arafat and Israeli Prime Minister Ehud Barak.

After Ross was placed by Clinton in his State Department Middle East job without responsibilities, Ross complained to White House Chief of Staff Rahm Emanuel -- whom Hillary Clinton also despises from her husband�s days in the White House, Obama policy adviser David Axelrod, and Thomas Donilon, the deputy national security adviser under Obama. Previously, Donilon worked for the law firm O�Melveny & Myers and his top clients included Goldman Sachs, Citigroup, and Hyatt hotel heiress and strong Israel backer Penny Pritzker of Chicago. Ross was moved from the State Department to the White House where he now has much more sway over Obama�s Middle East policies.

Ross has now positioned himself, with the assistance of Obama economic adviser Larry Summers, as a virtual AIPAC wall within the White House. That means that Mitchell, in throwing down the loan guarantee gauntlet to Israel, must now worry about his back -- and the long knives wielded by Ross, Emanuel, Axelrod, Donilon, and Summers are drawn with Mitchell as the target.

Previously published in the Wayne Madsen Report.

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