Bush defying long, awesome tradition in telling Congress to delay Israeli aid

THE BALTIMORE SUN

WASHINGTON -- In pushing for delay in Israeli loan guarantees, President Bush is defying an awesome tradition.

Since its founding in 1948, Israel has drawn more than $50 billion in loans and grants from the United States, making it the largest annual and cumulative recipient. The aid flows under a unique set of rules that grant Israel privileges other countries are denied.

What's more, the aid has been largely impervious to other foreign-policy pressures, strains in the relationship, U.S. budget woes and Israeli resistance to economic reforms.

Now Mr. Bush is subordinating Israel's proclaimed needs to what he sees as a larger goal. Saying that progress toward a Middle East peace conference may hang in the balance, he wants Congress to delay the consideration of $10 billion in loan guarantees for the absorption of up to 1 million Soviet and Ethiopian Jews.

Other presidents have battled Israel's supporters on foreign policy, most notably over sales of aircraft and other weapon systems to Arab states. But generally they, too, have refrained from going beyond mere threats of holding up aid.

Coinciding with the Bush drive, however, are other mounting pressures that threaten Israel's long-term share of the U.S. budget, among them the huge economic needs of Eastern Europe and the Soviet Union, and taxpayer resistance to foreign aid generally.

"We helped create Israel, and we have a responsibility to sustain her," says Representative David R. Obey, D-Wis., chairman of the House Appropriations subcommittee for foreign aid. "But I do not think Israel has an entitlement to the American budget lTC regardless of their economic policy and their policy in other areas."

From its modest start as a $100 million loan in 1949, the basic package of military and economic aid now totals more than $3 billion annually.

In the fiscal year ending Sept. 30, the United States gave Israel an extra $45 million for refugee resettlements, $700 million in surplus weapons from Europe, $650 million in emergency aid to rebuild from Iraqi Scud attacks and $7.5 million in added grants. It also guaranteed $400 million in loans for immigrant housing.

Huge periodic infusions have tended to raise the baseline. Aid totals shot up after Israel fought off Arab attacks in the 1973 Yom Kippur War. That same year, military loans were supplemented for the first time by large grants. Implementation of the Camp David agreements in 1979 saw aid more than double, mostly in military aid.

Economic aid was converted fully from loans to grants in the early 1980s. In 1985, Israel got an added major sum to help stabilize its inflation-ravaged economy.

The figures tell just part of the story. Over the years, Congress has sweetened the package with a number of other concessions. Some are shared with other aid recipients, but in their totality, they give Israel a unique status.

Israel, for example, gets its money at the beginning of the fiscal year, allowing it to collect interest on the amount invested.

It bypasses the Pentagon's foreign military sales bureaucracy, buying its weapons directly through its own office in New York, and it does not have to abide by the standard $100,000-minimum purchase requirement, avoiding Pentagon scrutiny for thousands of small purchases.

And while the U.S. military sales program is aimed in part at helping U.S. industry, Israel is allowed to use some of its aid money to develop its own defense industry. U.S. contractors also agree to offset some of Israel's military costs by buying components or materials from Israel.

Israel's excellent loan-repayment record, cited by proponents of the new guarantees, is helped by a policy adopted by Congress in 1985 that annual economic aid be at least equal to the amount Israel owes the United States in loan payments.

Congressional support for Israel is ensured by a tough, sophisticated and well-financed lobby, backed by political action committees and Jewish activists in districts across the country, that excels in the Washington arts of persuasion, intimidation and reward.

"For most members of Congress, the issue is not if Israel should receive U.S. foreign assistance, but under what conditions should Israel receive the aid," writes Congressional Research Service analyst Clyde R. Mark in a CRS issues brief.

Israel is far from being the only country able to marshal forces on Capitol Hill. Taiwan had the fabled "China lobby." Greek-Americans wield substantial clout, as do Baltic-Americans.

Israel's power is bolstered by continued strong public support -- for the constantly threatened democracy born after the Nazi Holocaust, and by lack of a potent countervailing force.

"I've been impressed by the support for Israel over time," says Karlyn H. Keene, who follows public opinion trends carefully and is editor of the American Enterprise, put out by the American Enterprise Institute. Even after periods of widespread condemnation, such as after the massacre of Palestinians by Israel's allies in Lebanon, support returns over time, she said.

Sociologist Seymour Martin Lipset of George Mason University says that many non-Jewish Americans, in effect, cede the Middle East debate to their Jewish friends and acquaintances who back Israel. "Politicians are responsive to local pressures and efforts. The ones they see remain pro-Israeli," he says. If public enthusiasm is weakening because of the perceived intransigence of the present Likud government, "that doesn't translate into support for Arabs."

With Congress' help, the U.S.-Israeli relationship has been institutionalized in a variety of exchanges and contacts. The Reagan administration enshrined Israel's status as an ally on a par with NATO. Anti-terrorist cooperation has grown. Some, though by no means all, intelligence is shared.

But these close strategic ties have failed to prevent explosive episodes in which Israel was seen to act against U.S. interests and perhaps even to have violated specific terms of U.S. aid. These included the invasion and other raids into Lebanon, the Jonathan Pollard spy case and Israeli dealings with South Africa.

With the removal of the threat of Soviet expansionism in the Middle East, moreover, one of the sources of Israel's value as a strategic ally has been removed.

But the United States retains an interest in maintaining "a stable military balance so no one contemplates the use of force," says the Brookings Institution's William Quandt. "Even a critic of Israel doesn't want to see it weakened to the point where . . . Syria would think military confrontation is feasible."

And some analysts see Israel's role as strategic ally as largely beside the point when it comes to U.S. aid, since Israel is itself a paramount American interest. For nearly 50 years, says Mr. Quandt, two issues have dominated U.S. concern in the Middle East: "the survival of Israel as a Jewish state" and the free flow of oil.

This won't prevent ever-tougher scrutiny and growing pressure on Israel to alter its socialist economy and change its settlement policy.

Herbert Stein, former chairman of the President's Council of Economic Advisers, says that Israel has made "moderate but disappointing progress" toward a free market.

With the influx of huge numbers of well-educated and skilled Soviet Jews, he said, the need for reform is much more critical to get the immigrants producing for a world market.

Mr. Obey says that when the loan-guarantee debate gets under way, "I want to see it demonstrated [that the aid] is aimed at helping refugees and is not a giant pump-priming for another economy at the expense of a strapped American economy."

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