Reagan Administration Plans to Recommend Additional Aid to Israel over a Two-year Period

The Reagan Administration plans to recommend additional aid to Israel over a two-year period to help it carry out economic reforms, but still has not decided how much, a senior State Department official said today.

“Some transitional assistance will be required,” Richard Murphy, Assistant Secretary of State for Near Eastern and South Asian Affairs, told the Senate Foreign Relations Committee’s subcommittee on the Near East and South Asia. “The amount, the rate by which it will be dispersed, is the subject of our continuing discussion with the Israeli government.”

Murphy’s remarks came as he was pressed by Sen. Paul Sarbanes (D. Md.) on when the Administration will make the decision on the economic aid for Israel for the 1986 fiscal year.

The Administration has recommended that military aid to Israel be increased from the $1.4 billion it is getting in 1985 to $1.8 billion. But it has made no decision on Israel’s request that economic aid be raised from $1.2 billion to $1.8 billion in 1986 and that Israel get an $800 million supplementary appropriation this year.

REPEATS ADMINISTRATION’S CONTENTION

At the outset of today’s hearing, Murphy stressed that Israel will receive at least the same $1.2 billion it is getting this year. But he repeated the Administration’s contention that the Administration believes that Israel has not made enough economic reforms to justify additional aid from the U.S. He added that if Israel does not now make decisions that it considered “painful” it will in the future have to take “draconian measures.”

But Murphy stressed that the U.S. is not in “an adversary” relationship with Israel but is consulting with it. He noted the recent meeting between the Administration and Israel’s Finance Minister Yitzhak Modai, and that two American economists, Herbert Stein and Stanley Fisher who are consultants to Secretary of State George Shultz, have recently returned from a visit to Israel.

The House Foreign Affairs Committee’s subcommittee on Europe and the Middle East approved the Administration’s recommendations yesterday. But Sarbanes said the Senate subcommittee will be acting on foreign aid to the Mideast and if it does not have a recommendation on economic aid to Israel from the Administration, it will have to act on its own. Murphy said he does not believe the Administration will be ready by then.

Sarbanes said that some in the Administration appear to be “captive to pure economic theory” and do not see the importance of helping Israel’s unity government survive. He said without “strong leadership” it will be difficult for Israel to take advantage of opportunities that may arise in the overall peace process.

Murphy conceded that the unity government of Premier Shimon Peres and Deputy Premier and Foreign Minister Yitzhak Shamir is “essential” for the economic reforms Israel’s must make and for its withdrawal from Lebanon. But he said while the Israeli government is looking for a way to advance the peace process, “when things become more tangible we may see a revival of the political byplay” between Labor and Likud.

QUESTIONS RAISED ABOUT EGYPT

Sen. Rudy Boschwitz (R. Minn.), the subcommittee chairman, and Sen. Chrisopher Dodd (D. Conn.) pointed to Congressional concern about Egypt’s continued refusal to send its Ambassador back to Israel. They also noted that it will be difficult to justify the large amount of aid to Egypt when the government of President Hosni Mubarak appears unwilling to cooperate with the U.S.

Dodd said if the Egyptions turn down “something as small” as the request by the U.S. to station in Egypt a Voice of America transmitter what will happen when the U.S. asks for something important.

Murphy replied that despite problems Egypt has adhered to its peace treaty with Israel and is playing a major role in the overall peace process. Meanwhile, the House subcommittee on Europe and the Mideast voted yesterday to condition any sale of arms to Jordan on King Hussein’s recognition of Israel and the beginnings of direct negotiations.