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

September 15, 1991|By Mark Matthews | Mark Matthews,Washington Bureau of The Sun Peter Honey of The Sun's Washington bureau contributed to this article.

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.

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