Baker Says U.S. Needs Time to Assess Loan Request’s Impact on Peace Process

Secretary of State James Baker asked Congress on Wednesday to give the Bush administration time to study Israel’s request for U.S. guarantees covering $10 billion in loans the Jewish state is seeking for immigrant resettlement.

The United States wants “a little bit of time to review this request, in order “to assess its impact on the peace process,” Baker said during an afternoon news conference.

“We hope and expect and believe that the Congress will give us the time we need to study and further explore this request, and deal with it in the manner that it deserves,” he said.

The secretary made the statement a day after Israeli Prime Minister Yitzhak Shamir reportedly turned down a personal plea from Baker to delay making the request for the guarantees until later this fall.

Instead, Israeli Ambassador Zalman Shoval, who returned from Jerusalem on Wednesday, is expected to request the guarantees formally at a meeting with Baker on Friday.

Israel and its supporters want Congress to act now on the requested loan guarantees, so that they can be included in the U.S. foreign aid bill for the 1992 fiscal year, which begins Oct. 1.

They point out that, at the administration’s request, Israel had already deferred asking for the guarantees earlier this year and that it was agreed Jerusalem could do so in September.

GROWING CONCERN ABOUT ‘LINKAGE’

But Baker’s remarks Wednesday seemed to confirm the growing apprehension in Jerusalem and among American Jews that the United States will seek to hold up the guarantees until it gets some concessions from Israel on political or economic issues.

The secretary maintained at the news conference that he was not “drawing any linkage” between the guarantees and the Middle East peace process, which, he said, is a “very sensitive” matter that must be dealt with “in a way that does not undercut” the opportunity for progress.

But then he added, “I am not suggesting that there’s not some relationship. There will be an impact.”

In Jerusalem, officials said earlier this week that there were signals from Washington that a “favorable diplomatic atmosphere” on the peace process would facilitate congressional approval of the loan guarantees.

Some Israeli officials interpreted this as a new threat by the administration to link approval of the guarantees to a freeze on the building of Jewish settlements in the administered territories.

Others suggested Washington wants greater Israeli flexibility on the Middle East peace conference the administration, along with the Soviet Union, still hopes to convene in October.

The Palestinians still have not submitted a list of their representatives, apparently because of Israel’s objection to having any Palestinian residents of East Jerusalem in the delegation.

Baker is expected to discuss these issues when he goes to Israel later this month, after a visit to Moscow, which still maintains it will co-sponsor the conference despite the turmoil there.

Baker denied reports he would hold up approval of the loan guarantee request until the regional peace conference is held. He said that if the United States took that position, Israel “might say, ‘Well, you can’t give us any assurance that one ever will take place.’

“I’d be a lot more specific and discreet than that,” the secretary told reporters.

A SEPARATE, HUMANITARIAN ISSUE

The administration has also told Israeli officials that it would like Israel to move more quickly on economic reform, particularly privatization of state-owned industries.

There have been rumors that the Office of Management and Budget might set this as a condition for approval of the loan guarantees. The OMB will set the one-time cost to the United States of granting the guarantee, which has been estimated at from $50 million to $1.9 billion.

There has been some indication that Israel might give back to the United States a portion of the loan to cover all or some of this amount.

Malcolm Hoenlein, executive director of the Conference of Presidents of Major American Jewish Organizations, said Wednesday that there have been rumors about linkage since the loan guarantees were first mentioned.

“We don’t dismiss anything right now,” he said. The conference, he said, is stressing that granting the guarantees is a humanitarian issue that “should be dealt with separately from anything else.”

That point was made in a joint statement issued by Shoshana Cardin, chairman of the Conference of Presidents, and Arden Shenker, chairman of the National Jewish Community Relations Advisory Council, the two groups that have been mobilizing American Jewish support for the loan guarantees over the summer.

They pointed out that Israel is not asking for U.S. funds, but guarantees to the private commercial banks from which Israel will borrow money over a five-year period, which will be repaid eventually.

MASSIVE LOBBYING EFFORT SET

The two Jewish leaders said that because President Bush, Vice President Dan Quayle and members of Congress played “key roles” in pressing for the emigration of Jews from the Soviet Union, “we are confident that they — like the American people — will want to see the job through by supporting this legislation.”

The Conference of Presidents and NJCRAC expect some 750 Jewish leaders from 40 states to converge on Washington on Sept. 12, for a National Leadership Action Day in which they will lobby their senators and representatives to support the guarantees.

Even before the massive lobbying effort, Orthodox, Conservative, Reform and Reconstructionist rabbis will deliver sermons on Rosh Hashanah to urge their congregants to lobby their representatives before Yom Kippur.

The Religious Action Center of Reform Judaism in Washington set up a special Western Union telephone number, 1-800-92-ALIYA, through which people can send prepared messages to their senators and representatives.

(JTA correspondent David Landau in Jerusalem contributed to this report.)

NEXT STORY