S-word rattles Israel?

I shouldn't get excited by this because it is probably all down to choreography but Reuters is reporting that the mere mention of sanctions by US "peace envoy", George Mitchell, has caused a "stir" in Israel:

"Under American law, the United States can withhold support on loan guarantees to Israel," George Mitchell said on U.S. television on Wednesday after being asked about the kind of pressure that could be brought to bear on Israel.

Over the past two decades, Israel has received U.S. guarantees covering billions of dollars in loans, underwriting that has been instrumental in raising money overseas more cheaply.

Although such guarantees have slipped in importance and Mitchell made clear in the U.S. public television interview that no sanctions against Israel were being considered, the remarks added more discord to Israeli relations with President Barack Obama's White House.

In a statement late on Saturday "in reaction to media inquiries after Mitchell's interview," Prime Minister Benjamin Netanyahu's office blamed the Palestinians for a peacemaking impasse which the envoy, due back in the region later this month, has failed to break.

"Everyone knows that the Palestinian Authority refuses to renew peace talks, while Israel took significant steps to restart the process," the statement said.

Israeli media seized on Mitchell's remarks as reminiscent of a low point in U.S.-Israeli relations -- President George Bush's withholding of $10 billion in guarantees in 1991 after Prime Minister Yitzhak Shamir refused to freeze settlement expansion.

"Mitchell's threat," said the main headline of Israel's mass circulation Maariv newspaper, which described the envoy's comments as a "bombshell."

Let's take another look?

Mitchell made clear in the U.S. public television interview that no sanctions against Israel were being considered

And that's a bombshell? Is this how Israel exists? On the verge of a nervous breakdown.

And what's this tosh about Bush Snr "withholding of $10 billion in guarantees in 1991 after Prime Minister Yitzhak Shamir refused to freeze settlement expansion". Rubbish! The loan guarantees were for settlement expansion. They were withheld because Shamir (or this or that henchman/woman) wouldn't get his or their picture taken with some Palestinians of Shamir's own choosing. The photo-op went ahead, as did the guarantees, as did the settlement expansion.

Et tu, Reuters?