Diplomacy Thou Shalt Not Build

By PRISCILLA PAINTON

During the Persian Gulf war, George Bush asked more of Israel than any other President ever had -- to do nothing while Iraqi Scuds screamed down on its cities. That is why it is riveting to watch Bush now in the role of Israel's angry disciplinarian. But just as it took a fierce anticommunist like Richard Nixon to open the door to China, it was Bush, the Commander in Chief of the armed forces that seven months ago routed Israel's enemy from Kuwait, who had to deliver the message no other President has ever delivered so publicly before: Israel can no longer expect to exercise a veto over U.S. policy in the Middle East.

Bush's predecessors have wagged their fingers at Israel over the issue of building settlements in the occupied territories. But the Bush Administration went much further last week, not by using stronger language but by breaking one of the oldest taboos in Washington's patron relationship with Jerusalem; it used money as a cudgel. After two fruitless days in Jerusalem, Secretary of State James Baker made clear that Washington did not intend to grant Prime Minister Yitzhak Shamir the full $10 billion in loan guarantees he has requested to help accommodate an expected 1 million Soviet Jewish emigres. More important, Baker implied that the U.S. would not grant the Israelis any loan guarantees unless Jerusalem agreed to freeze settlement in the occupied West Bank, Golan Heights and Gaza Strip.

On the surface, U.S. policy had not changed. Two weeks ago, referring to the guarantees, Bush promised only that he was "committed to seeing that they get considered." Last week, instead of subtly pointing at its wallet, the White House made clear that it was ready to pull it away. What had been an admonition came close to sounding like coercion, at least for some Israelis. Said Yossi Olmert, the Israeli government spokesman: "Bush has crossed that Rubicon."

If he means what he says, Bush has initiated a fundamental change in America's "special relationship" with Israel. For two decades that relationship has meant unconditional subsidies to Israel, which put the U.S. in the awkward position of indirectly financing the illegal settlements. "This," said a White House official, "is very high stakes." But higher still are the stakes involved in a peace conference that the Bush Administration hopes to co-sponsor in October and sees as the culmination of its post-gulf war strategy. Like any good mediator, the Bush Administration is determined to get both Arabs and Israelis to the bargaining table without appearing to favor either side. "If we're willing to underwrite an economic program to settle the occupied territories, we don't exactly look like a neutral party," said a senior Administration official.

As if to underline his evenhandedness, Bush last week briefly resumed his role as the leader who crushed the Arab world's largest army. He interrupted a scenic walk through the Grand Canyon to tell reporters that the U.S. had alerted warplanes that they might have to return to Saudi Arabia to pressure Saddam Hussein into complying with the gulf war cease-fire.

The move comes after six months of frustrated efforts by United Nations inspectors to uncover Iraq's leftover arsenal. According to U.N. resolutions passed after Baghdad surrendered in February, Iraq must allow the U.N. to inspect and destroy its nuclear, chemical and biological weapons, but recently Saddam has refused even to let the teams use their own helicopters. Although U.S. fighter planes are still awaiting orders to escort inspectors, Bush made clear that his patience with Saddam was running out. "I'm plenty fed up," Bush said. "He's not going to question our resolve on this. He knows better than to take on the United States of America."

Lately the bulk of Bush's impatience has been directed at Jerusalem rather than Baghdad, as the Administration pursues its goal not just of drawing Arabs and Israelis into negotiations but of keeping them there. The U.S. is gambling that it is better to confront Israel now, rather than later, with the inevitability of trading part or all of its occupied territories for peace. "We are trying to shake them up, make them talk about it at home, and face that reality," said a senior Administration official.

While there may be a diplomatic logic to the upheaval in U.S.-Israeli relations, the White House did not expect the exchange to be so acrimonious. Bush wrote to a major Jewish organization in the U.S. last week saying that he was "concerned" that some of his public suggestions the week before about the power of the Jewish lobby may have "caused apprehension" and that he "never meant to be pejorative in any sense." But by the time the letter went out on Tuesday, personal insults and cries of betrayal were in the air. Bush picked up Monday's newspapers to read that he had been called an anti- Semite by a member of the Israeli Cabinet. And when Baker arrived in Jerusalem, his motorcade was pelted with tomatoes.

Within days, Israel's Foreign Minister, David Levy, was lamenting the "Kafkaesque situation" in U.S.-Israeli relations, while Finance Minister Yitzhak Modai said Israel had engaged in "unprecedented folly" by stepping up the pace of construction in the settlements and thereby "provoking" Washington. Nonetheless, there were few signs that Shamir planned to appease Bush on the issue. Shamir's mood was perhaps best captured by the comments of Israeli Agriculture Minister Rafael Eitan, who heads the right-wing Tzomet Party. Said Eitan: "We should make do without these guarantees and should stop being humiliated."

Like many showdowns, this one was brewing for months, blew up quickly and was, at some level, personal from the outset. Bush, who rests much of his geopolitical calculations on his relationships with world leaders, felt Shamir had twice misled him about the settlements, first in 1990 and again last February. On both occasions, the White House claims, the Prime Minister assured the President that Israel contemplated no new ones and then permitted fresh construction to go forward only a few months later.

On Aug. 31, the Bush Administration asked Israel privately to postpone for 120 days its request for the loan guarantees. When Israel refused, Bush tried to persuade the pro-Israeli lobby and its friends in Congress to go along with the delay. But while they continued to listen, they cranked up their counteroffensive. Says a senior Administration official: "We knew there would be opposition, but we had no idea they would launch a full-blown lobbying campaign against us."

Within a few days, the lobby expanded plans already in place for a Sept. 12 "fly-in" of about 1,200 supporters of Israel from 40 states to make their * case to their lawmakers. One of their whispered arguments was that Bush and Baker, a pair of Waspy Texans who did oil business with the Arabs before they went into politics, had demonstrated dangerous anti-Israeli inclinations and needed to be shown that they could not push Israel or the Jews around. Lobbyists also threatened to turn Jewish financial contributors and voters against recalcitrant Congressmen. Bush, already aware of the arguments of the campaign, was made even more furious by wire reports of statements by Israel's Housing Minister, Ariel Sharon, that Bush, in pursuing peace, had fallen into "an Arab trap."

On Sept. 11, Bush and his advisers met with Republican congressional leaders and phoned other lawmakers of both parties to assess the situation. "They were afraid to oppose Israel's request unless the President showed that he would go all the way, take the debate out of the backrooms, where the lobby almost always wins, and take it to the American public," a White House official said.

Before going that far, a team that included National Security Adviser Brent Scowcroft and chief of staff John Sununu waged a last-minute telephone campaign out of Scowcroft's offices that went on into the evening of Sept. 11. They were trying both to seek a compromise and to take the measure of the Israel lobby's pre-emptive strike. The next morning Bush made a final pitch in the Oval Office to Mayer Mitchell, a leader of the American-Israeli Public Affairs Committee (AIPAC), the largest pro-Israeli lobby. When Mitchell proved to be noncommittal, Bush decided to move.

The speech he gave later that day was meant to strike the tone of a leader courageously breaking with the past. But domestically, it carried few political risks and even played to Bush's advantage. As a Republican, Bush has little to lose by having the Jewish vote remain solidly in the Democratic camp -- less than 1 percentage point of the total vote, by one White House measure. And he has much to gain by betting that few images rankle voters more today than that of their government being held hostage to special interests. A poll conducted last week for TIME and the Cable News Network seems to prove his point: 37% favored providing Israel with the guarantees; 56% were opposed.

That is why Bush has carefully cast his fight over the loan guarantees in terms that average Americans can appreciate. In the speech he pointed out that the U.S. spends nearly $1,000 for every man, woman and child in Israel each year. Then he suggested that the aid was not so much charity as it was extortion at the hands of AIPAC. "I'm up against some powerful forces," he said. "They've got something like 1,000 lobbyists on the Hill working the other side of the question. We've got one lonely little guy here doing it." The Bush strategy left Israel with nothing but the prospect of a Pyrrhic victory. Said a Bush adviser: "If he wins, he wins big, because he beats the Israeli lobby. If Shamir wins, he has to put up with Bush's longevity and hard feelings."

The Democrats, for their part, lose in two ways. They have been forced to the sidelines as Bush keeps the focus on foreign policy, reminding voters that the mastermind of Desert Storm is again at the helm. And Bush has taken a step toward defusing the one issue they have put forward on the eve of the 1992 campaign: he would rather spend money solving foreign problems than domestic ones.

Last week both the Democrats and the Israeli lobby fell silent, tacitly acknowledging they were outgunned. The lobbyists were almost nowhere in sight, with some confessing to friends like Wisconsin's Democratic Congressman David Obey, "The President has all the cards." Said Rabbi Marvin Hier, dean of the Simon Wiesenthal Center in Los Angeles: "The campaign is gone. No one is going to take on the President of the United States."

Wisconsin Republican Robert W. Kasten, who with Democrat Daniel Inouye of Hawaii has sponsored a Senate proposal to approve the guarantees without a 120-day delay, agreed to wait for Baker to return from the Middle East before taking the bill any further. Meanwhile Vermont Democratic Senator Patrick Leahy, who chairs the Senate Subcommittee on Foreign Operations, said he would hold off pushing for the $10 billion loan program and planned to toughen restrictions on any future aid, so that Israel would, in effect, be punished for every dollar it spends on the settlements.

"We may not be able to pass a law to stop the Israelis from building in the occupied territories, but we can see that they don't use our taxpayers' money in a way that is contrary to American policy," Leahy said. Even House majority leader Richard Gephardt, a frequent critic of the Administration who had been pushing for quick approval of the loan guarantees, rushed to the floor to denounce the "polarizing comments" coming from Israel's leaders.

If Bush's sense of resolve has become a bit infectious, it is because on foreign policy he does what he often will not do at home: he stands for principle, explains himself and takes risks. But in the delicate strategy game of securing Israel's presence at the negotiating table, Bush may find himself on the losing side. The Israelis have said emphatically they will not allow the tempest over loan guarantees to keep them from taking part in the peace talks. But they have also suggested that without the U.S. in their corner, they cannot engage their Arab neighbors with confidence and goodwill. That would make, in the end, for a brief and barren conference.

With reporting by Lisa Beyer/Jerusalem, Michael Duffy/Washington and Christopher Ogden with Baker