News Analysis: Baker Ultimatum on Loan Guarantees Paints Pro-israel Lobby into Corner

Secretary of State James Baker threw the ball to Israel this week, forcing it to choose between settlements and loan guarantees.

Baker put Israel on notice that if it wants the United States to guarantee $10 billion in loans to help resettle an expected 1 million immigrants, then the Likud government will have to scale back its ideological commitment to populating Judea and Samaria, as it calls the West Bank.

Some of Israel’s staunchest allies in Congress publicly oppose Baker’s take-it-or-leave-it proposal, which also allows Israel to receive considerably less than the full $10 billion, depending on how much money it spends each year on settlement activity.

They argue that Soviet Jewish resettlement is a humanitarian effort that should not be tied to the 24-year-old U.S. policy of opposing Jewish settlements in the West Bank as an “obstacle to peace.”

But the chairman of the House and Senate Appropriations subcommittees on foreign aid, Rep. David Obey (D-Wis.) and Sen. Patrick Leahy (D-Vt.), have endorsed the Baker proposal and, given election-year considerations, will thwart any unilateral initiatives from pro-Israel members of Congress.

Pro-Israel lawmakers would have liked to have played ball with the Bush administration on the loan guarantee issue. They attempted to do so last fall, when they agreed, under daunting pressure from President Bush, to defer a vote on the Israeli request for 120 days.

ICY EXCHANGE WITH CONGRESSMAN

But after that deadline passed, they found an administration still opposed to guaranteeing the loans without an iron-clad Israeli commitment to halt settlement activity.

And now because of America’s preoccupation with domestic priorities, they have little choice but to defer to the administration again.

Just as Bush threatened last fall to take his case to a foreign aid-wary U.S. public, Baker made a point this week, during his appearance before the two subcommittees, of detailing how much financial assistance Israel already receives from the United States.

“Nobody else is asking us for $10 billion in addition to the $3 (billion) to $4 billion that we give every year with no strings attached,” Baker told the House subcommittee Monday.

That brought an icy response from Rep. Lawrence Smith (D-Fla.), who said he found the remark “extremely offensive.”

Smith said it was unfair of Baker to imply that the loan guarantees might cost the U.S. government $10 billion, which would be the case only if Israel defaulted.

While the staunchly pro-Israel Smith is notorious on Capitol Hill for his sharp temper, particularly with U.S. secretaries of state, the exchange was more testy for him than usual.

It may have reflected Smith’s frustration with the lack of influence he and other pro-Israel lawmakers have been able to exert with Baker on the loan guarantees issue.

In fact, pro-Israel members of Congress have lost considerable clout over foreign aid since the onset of the recession.

Smith and other key lawmakers still shepherd through Congress the $3 billion in all-grant aid for Israel every year, along with other perks.

But U.S. budget constraints and the politics of the recession have made it difficult to get any additional aid for Israel approved.

DEFENDING THE ARAB STATES

More generally, the pro-Israel lawmakers have lost influence over U.S. policy in the Middle East since the end of the Persian Gulf War, which placed some Arab countries on par with Israel as regional allies.

One area where this plays out is in arms sales to Arab countries. Saudi Arabia, previously the pro-Israel community’s chief target in arms sales battles, is now regarded as having legitimate defense needs to deter Iraq.

Pro-Israel lawmakers are also now finding that when they portray Arab countries negatively, the Bush administration often comes to their defense. The administration can now point to the Arab countries’ backing for the United States during the Gulf war and their decision to negotiate face to face with Israel.

For example, Baker this week strongly defended Bush’s proposal to provide Jordan with $77 million in economic and military aid this year, despite its support of Iraq during the Gulf crisis.

He cited Jordan’s decision to negotiate with Israel and Israel’s preference to see King Hussein remain a stable ruler, given an increasingly hostile Palestinian population there.

Baker also defended Syria, even though the State Department has found that it is still engaged in harboring terrorists and drug trafficking.

Sen. Alfonse D’Amato (R-N.Y.), who faces a tough re-election fight this fall, accused Baker of favorably portraying Syria to a point that to criticize it is like “attacking Mother Theresa.”

Sen. Frank Lautenberg (D-N.J.), apparently exasperated at the U.S. failure to prod Syria to let its 4,000 Jews emigrate, asked the secretary if he could ask President Hafez Assad to “deport the Jewish population.”

‘OBLIGATION’ TO U.S. TAXPAYERS

But Baker praised Syria for its involvement in both the U.S.-led Gulf effort and the Middle East peace process.

Sen. Robert Kasten (R-Wis.), who is also facing a tough re-election fight, questioned whether Baker’s reasons for placing conditions on the loan guarantees was solely related to U.S. policy on the settlements.

He wondered out loud if the conditions reflect new U.S. thinking about Israel’s strategic value, given the diminished threat from what was the Soviet empire.

Kasten said the administration may be trying to “tree” Prime Minister Yitzhak Shamir, who is unpopular in the White House, or may be concerned that without conditioning the guarantees, “the Arabs will walk out of the peace process.”

Baker, again playing to domestic concerns about spending dollars abroad, responded that the conditions came about because of his “obligation to the American taxpayer” not to allow U.S. aid to directly or indirectly support settlements.

Baker called it a “canard” that he wants to influence the Israeli elections and called it an “equally phony canard” that he is “doing it for the Arabs.”

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