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By DAVID ELLIS

The Bush Administration's reluctance to grant Israel's request for $10 billion in housing-loan guarantees may not be just a ploy to press the Shamir government to talk peace with its Arab neighbors. Some of Bush's advisers make an economic argument: they see little difference between Israel's economy and the state-run mess in the Soviet Union. "We've had some suggestions -- including some from Israelis -- that the worst thing we can do is send a $10 billion loan guarantee to the socialist system in place in Israel," says a senior official. Bush is considering a plan that would channel any new U.S. housing aid through private lenders, so that the money would be more likely to build shelter for Soviet immigrants and less likely to disappear in the sprawling Israeli bureaucracy.

With reporting by Georgia Harbison