Agency Plan to Give Olim Loans Instead of Grants is Criticized

A plan by the Jewish Agency for Israel to convert part of the aid it gives immigrants from grants to loans has come under fire from senior members of the Israeli government involved in immigrant absorption.

But Jewish Agency leaders defend the plan, saying it would actually increase the amount of cash available to immigrants, the vast majority of whom come from the Soviet Union. They said the loans would be made on easy terms.

The issue was raised Sunday night at a meeting of the government-Jewish Agency Coordinating Committee, whose members include Israeli Cabinet ministers and the top leaders of the agency, a non-governmental body that receives most of its funding from Diaspora Jewry.

Among those strongly opposed to the plan, which is supposed to take effect March 1, were absorption Minister Yitzhak Peretz and Housing Minister Ariel Sharon. Peretz has vowed to fight the plan, which requires approval of the Finance Ministry to be implemented.

He charged it would further reduce aliyah from the Soviet Union, which has decreased since the Persian Gulf war began. Many prospective immigrants would be reluctant to enter into a situation in which they would have to take out loans, he said.

Michael Kleiner, the outspoken Likud chairman of the Knesset’s Immigration and Absorption Committee, said, “This proposal means that the Jewish Agency is bankrupt as an institution. This is what is implied when the leaders of the agency say that they cannot afford to pay the grant.

‘UNABLE TO FULFILL ITS BASIC FUNCTION’

“When only a small number of immigrants were arriving, the agency could manage,” Kleiner said. “But now, with the ‘disaster’ of hundreds of thousands of immigrants coming, it turns out that the agency is unable to fulfill its basic function of absorbing immigrants. The government should either dismantle the agency or replace its current leadership.”

Simcha Dinitz, chairman of the Jewish Agency Executive, and Mendel Kaplan, chairman of the agency’s Board of Governors, said Monday that the Israeli government, too, should consider providing loans, not grants, to the newcomers.

A year ago, the agency provided 50 percent of the initial absorption grant given to new immigrants from countries of distress, with the government funding the rest.

But during the past year, with the crush of newcomers from the Soviet Union, the Jewish Agency’s share was cut to 30 percent. And the total grant given to the immigrants was reduced from 22,000 shekels for a family of four to 14,000 shekels, a decrease from about $11,250 to $7,150.

The loan plan, prepared over the past few months by the agency and the Council of Jewish Federations, the American confederation of Jewish community welfare funds, calls for the agency’s share to be provided as an optional loan rather than a grant. The loan would be provided by Israeli banks and guaranteed by the federations.

Dinitz and Kaplan said a family of three, which now gets $900 per person from the agency as part of the absorption grant, would instead get $1,000 per person in the form of a loan.

The loan would have to be paid back over a period of 10 years, beginning three years after the loan is taken. Under the terms of the loan, only the interest would have to be paid during the subsequent two years, with both the principal and interest due in the last five years.

The reason given for the change of policy is a gap of some $113 million in the Jewish Agency budget for the nine months between April and December 1991.

Kaplan said the shortfall was a direct result of a “blessed” rise in the number of Soviet immigrants.

Dinitz said the Jewish Agency would not have enough money to give cash grants to the 300,000 immigrants expected to arrive this year.

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