Prime Minister Ariel Sharon has been counting on the United States to give Israel $2 billion in aid to develop the Negev and Galilee and approximately $700 million to cover moving military bases from Gaza to the western Negev.

In addition, an expected reduction in U.S. foreign aid may cause a major headache for the proposed 2006 budget, which already is in political trouble because of demands from the Labor party, which is part of the coalition government.

Finance Minister Ehud Olmert, who also serves as Sharon's deputy, told a press conference Tuesday, "Israel will not bother the American government on matters that are not suitable at this time." He added that Israel is postponing and not forfeiting the aid request.

"The Americans are busy right now in rehabilitating the south after the damages of the Katrina storm," Olmert explained. Damages from the storm are estimated at more than $100 billion.

"Israel will be lucky to get $1 billion for developing the Negev and Galilee in 2007. It can forget about getting $2 billion," Globes Business Services quoted an unnamed American source saying.

A Finance Ministry delegation headed by Dr. Joseph Bachar and Sharon's office director Ilan Cohen postponed its trip to Washington set for next week, when they planned to talk with American officials about the aid package.

The Palestinian Authority (PA) also will feel the cuts in American aid. Congress has allocated the PA $50 million in direct aid in what PA leaders expected to be the first part of a larger package, but that is likely to be scrapped along with the Israeli request.