Middle East: No Give and Take

By Jill Smolowe

On the face of it, the request seemed reasonable enough -- especially since the friend doing the asking was also the friend destined to be doing the giving. But last week when President Bush, anxious to keep the Middle East peace process on track, asked Israeli Prime Minister Yitzhak Shamir to delay his request for $10 billion in loan guarantees to help with the settlement of Soviet Jewish emigres, Shamir responded with a belligerent no. Americans, Shamir insisted, "are obliged, from a moral point of view, to give Israel this aid." Moreover, he lectured, "humanitarian aid" should not be mixed up with political considerations.

Morality lectures from Shamir, Bush did not need. And when the pro-Israeli lobbyists subsequently stepped up their efforts to secure quick passage of the loan guarantees on Capitol Hill, an irate Bush summoned his aides, saying, "I want to talk to the American people." Last Thursday afternoon Bush stepped into the White House press room, the stony fighter-pilot look in his eyes not unlike the determination he exhibited the morning after Iraq invaded Kuwait. In plain language he threatened to veto any congressional loan bill that might emerge before the prospective Middle East peace conference, which he hopes to get off the ground next month. Pounding the lectern, he warned that a divisive congressional debate over the guarantees "could well destroy our ability to bring one or more of the parties" to the Middle East peace table. "Too much is at stake to let domestic politics take precedence over peace," Bush declared.

It was the most fractious moment in U.S.-Israeli relations since Ronald Reagan tried in vain to stop Israel's advance on Beirut in 1982. Bush's decision to abandon quiet diplomacy and publicly flag his determination to push the Shamir government toward a peaceful resolution of its conflict with its Arab neighbors left Israel stunned -- but largely unrepentant. After days of bellicose statements from Shamir hinting that he would rather see the peace conference founder than withdraw his request for loan guarantees, Israel offered one carrot. "Israel is not seeking a confrontation with the U.S., its ally," said Foreign Minister David Levy, whose views do not always reflect Shamir's. Yet Israeli officials continued to balk at Bush's linkage between the guarantees and the peace conference. "Our request for guarantees," Levy said, "is not a provocation against anyone, nor a hindrance to the advancement of the peace process."

The very public -- and very ugly -- spat left the historic affinity between Jerusalem and Washington more strained than ever. Israel, which has traditionally relied on a sympathetic U.S. Congress to circumvent setbacks with the Oval Office, has brushed up against a stern challenger in Bush. With the cold war ended, Israel no longer enjoys standing as Washington's "unsinkable aircraft carrier" in the Mediterranean. Indeed, the Bush Administration believes the biggest threat to U.S. interests in the region stems from the Arab-Israeli conflict, which gives Muslim fundamentalists a stick with which to beat their moderate, pro-U.S. governments. Moreover, Bush, who has a 70% approval rating, knows that unquestioning popular support at home for economic aid to Israel has weakened for three reasons: America's own pressing economic needs; mounting skepticism about Israel's ability to spend the money prudently, given its inefficient, centralized economy; and the callousness of the Shamir government toward Palestinian rights.

Bush's harsh message came at a particularly awkward moment. Just a day earlier, Israel had released 51 Lebanese prisoners and the bodies of nine others, reviving hope for a comprehensive hostage solution that would lead to the release of the 10 Westerners still missing in Lebanon -- among them, five Americans. But if Israeli officials hoped this timely gesture might lower the heat emanating from the Oval Office, they were sorely disappointed. To remind Israel of its debt to the U.S., and maybe even to diminish the importance of the relative power Israel now wields over the fate of the five American hostages, Bush said, "Just months ago, American men and women in uniform risked their lives to defend Israelis in the face of Iraqi Scud missiles."

But Shamir cannot afford to worry about a collision with the U.S. Administration when his own political future is so shaky. Shamir has staked his reputation on a concise formula: no land for peace. He has no sympathy for Bush's concern that an aid package to Israel at this time would be interpreted by Arabs as a tacit endorsement of Jerusalem's policy of building Jewish settlements in the occupied territories. Quite the contrary, Shamir fears that if he capitulates to Bush and freezes construction of the Jewish settlements, the move might signal that a question mark hangs over the future of the West Bank, Gaza and East Jerusalem -- and as a result, his government might fall.

Shamir also confronts an economic morass that does not permit him to ease up on his request for loan guarantees. Since mid-1989, 300,000 Soviet Jews have emigrated to Israel, and it is estimated that the number may top 1 million by 1995. Israel, which had a population of 4.5 million before the influx began, lacks the resources to absorb so many. Health care, schools and infrastructural needs are all suffering; early this year unemployment hit a record high of 10.8%. Moreover, the tide of immigrants improves the demographic position for Israel's Jews, many of whom feared until recently that they would be outnumbered within the next 25 years by Arabs living in Israel and the occupied territories.

If Shamir is not overstating Israel's great need, Bush is not overstating the potentially catastrophic effect of an extension of unconditional loan guarantees on the peace process. Arabs are convinced that any such guarantees will go toward the settling of Soviet Jews in the occupied territories, whether they are applied directly to that purpose or simply free up other Israeli funds for settlement construction. Syria's President Hafez Assad might refuse to attend the peace conference, taking Jordan and the Palestinians with him. "This is a classic lose-lose proposition," says a senior Administration official. "If the bill provides for guarantees without conditions, we lose the Arabs. If it provides for guarantees with conditions, we lose the Israelis."

Loan guarantees could also upset the hostage negotiations at a delicate moment. In 1990 kidnappers threatened to harm American hostages if the immigration of Soviet Jews to Israel continued. A favorable vote on Capitol Hill could unravel months of careful diplomacy by U.N. Secretary-General Javier Perez de Cuellar. Last week the prospects for an end to the seven-year- old hostage insanity looked more promising than ever. In exchange for the release of 51 prisoners and nine bodies, Israel received firm confirmation from the pro-Iranian Hizballah of the death of one of its seven missing servicemen and inconclusive evidence of the death of another. Through a separate channel, Israel also secured the remains of a soldier in exchange for allowing a deported Palestinian militant to return to the West Bank.

The flurry of activity produced other promising signs. Encouraging communiques issued by two groups of kidnappers confirmed for the first time since his abduction in May 1989 that Briton Jack Mann is still alive. Reuters quoted an unidentified official in Beirut as saying an American and a Briton, possibly envoy Terry Waite, would be released "for certain" within a week. That sounded as though the end game may now be under way in earnest. But nothing on the Middle East chessboard is for certain.

With reporting by Lisa Beyer/Jerusalem, Dan Goodgame/Washington and Lara Marlowe/Beirut