Israel seeks U.S. loan help for more than immigrants

March 13, 1992|By Marcia Kunstel | Marcia Kunstel,Cox News Service

WASHINGTON -- The $10 billion in loan guarantees Israel wants from the United States, billed as humanitarian relief for Soviet immigrants, in fact would help support a sweeping economic face lift for the Jewish state, fixing everything from sagging railway lines to gridlock in Tel Aviv.

Israeli leaders have drawn a plan that goes far beyond addressing the immediate needs of hundreds of thousands of Jewish immigrants. The plan also would correct problems that have plagued the country's infrastructure and its economy for years.

Israeli officials acknowledge their vast development plans when asked. But in their attempt to secure U.S. approval, for months they have emphasized the humanitarian dimension of housing and putting to work as many as 1 million Soviet Jewish immigrants who may arrive by 1996.

"It can change all of our society," Amnon Neubach, minister for economic affairs at the Israeli Embassy, said of the plan in an interview.

"If we implement it well and open the market well, and the private sector takes this opportunity, then five or six years from now, this will be another economy."

The $10 billion Israel is requesting in loan guarantees would be used for: job development, $5 billion; infrastructure, $3 billion; housing and mortgages, $2 billion.

The total program of $60 billion to $70 billion, described in an Israeli document "Absorption of Soviet Jewry Immigration," would include:

* $4.4 billion to build a major north-south artery called Highway 6, new metropolitan road networks for Tel Aviv, Jerusalem and Haifa, and other road system improvements.

* $1 billion for two new 747 jumbo jets and other equipment for El Al, the national airlines.

* $6.5 billion for new power plants and oil refinery improvements.

* $1 billion to $1.5 billion to expand and improve port facilities.

* $1.3 billion to $1.5 billion to improve the deteriorated railway system, including new commuter train networks.

* $2.5 billion for education, plus an additional $1.9 billion for school construction over the decade.

* $3 billion for health services, in the Israeli system that is primarily publicly funded.

* $9.5 billion for government-funded housing and mortgages.

Attention on the loan issue in Washington has focused on a hot political debate: the Bush administration's efforts to condition the guarantees on Israel's halting the construction of settlements in occupied Arab territories.

Israel's broader aim also has drawn some questions, most notably from Rep. David R. Obey, D-Wis., whose House subcommittee on foreign operations recently held a hearing on the loan guarantees.

"We're going to have a devil of a time convincing the American people, in light of our own economic situation, that we have an obligation to retool the Israeli economy," Mr. Obey said.

He particularly raised questions about the extensive infrastructure improvements. The Israeli government would only fund about one-third of them directly, but would make loans available to private enterprise to accomplish the rest.

Likewise, several billion dollars would be lent to private business to expand and help create the 620,000 new jobs Israel expects to need by 1996 to accommodate both immigrants and long-standing residents. The goal, according to the planning document and to Israeli officials, is buttressing the nation's weak private sector and redirecting it into lucrative export production.

Israel doesn't have enough money either for its own budget or for the loans to business, which is why it wants the $10 billion in loan guarantees. Israeli officials say the guarantees would show U.S. confidence in their plans, making it possible not only to get loans at low interest rates in the United States, but also enable Israel to borrow another $10 billion in other foreign markets.

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