Baker Now Said to Be Proposing Cuts in Aid to Israel Based on Settlements
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Baker Now Said to Be Proposing Cuts in Aid to Israel Based on Settlements

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The Bush administration may have added a new condition for guaranteeing $10 billion in loans to aid immigrant absorption in Israel, complicating the chances of congressional approval.

According to Sen. Patrick Leahy (D-Vt.), the administration is now suggesting that the amount Israel spends on settlements in the administered territories be deducted from the $3 billion Israel receives each year in U.S. foreign aid, rather than from the total amount of loans guaranteed.

“I am less optimistic than I was on Friday” that there will be a bill approved in the Senate by March 31, Leahy said Monday after meeting with Secretary of State James Baker.

Leahy, who chairs the powerful Senate subcommittee on foreign appropriations, has said that if the administration and Congress cannot reach an agreement on the loan guarantees soon, it will be impossible to pass a foreign aid bill by March 31, meaning Israel will have to wait until the next fiscal year for the loans.

“If I could bring the parties together, we’ll have a foreign aid bill,” said Leahy. “If we can’t bring the parties together, then it becomes sort of jump ball, and everybody’s going to be for themselves.”

Senior administration officials could not confirm that Baker had proposed a deduction from Israel’s foreign aid package, saying they were not briefed after the meeting with Leahy. But they also did not deny that Baker had floated such an idea.


When queried, the State Department’s press office referred reporters to Baker’s congressional testimony last week and said the administration wants to see “some sort of fungibility principle applied” to the cost of Israeli construction activity in the territories.

Clarification may come Tuesday morning when Leahy’s subcommittee reconvenes to discuss the foreign aid bill.

“I think that there are many, many people of good faith in both the Congress and the administration working on this. But I think the approaches they are taking are so different that it is hard to bring them together,” Leahy told reporters after his meeting with Baker.

“And there are still some in the Congress who really want no restrictions on foreign aid,” he said, referring to, among others, Sen. Robert Kasten (R-Wis.), the panel’s senior Republican.

“I cannot believe that’s the way the American people feel. It’s not the way I feel,” Leahy added.

Baker told Congress last week that Israel could not receive U.S. guarantees for the full $10 billion unless it agreed to stop building in the territories.

The secretary said that the amount Israel spent on competing construction already begun in the territories could be deducted from the total guaranteed by Washington.

Asked about taking the deductions out of Israel’s regular foreign aid, Baker told Kasten: “No sir, we have not suggested that.”

But now, Leahy said, “the administration has recommended that they would be taken out of foreign aid funds themselves,” referring to Israel’s annual $3 billion package of economic and military grants.


The senator called this “obviously a major difference” from his own proposal, which is a “dollar-for-dollar reduction in any future loan guarantees” as a penalty for spending on settlements.

“I would take that money out of the loan guarantees,” he emphasized.

Leahy said that he has a second difference with the administration: He wants Congress to have some leverage over whether Israel continues to receive the loan guarantees after the administration issues the first of five annual installments covering $2 billion each.

If the administration decided to cut off the guarantees after the first year, for instance, Congress would want to have the power to veto that decision by a two-thirds majority.

“I, of course, have maintained that whatever decisions were made on future loan guarantees by the president would be reviewable by the Congress,” the senator said.

Taking issue with those members of Congress who want to approve the guarantees for Israel without conditions, Leahy said, “It really comes down to a question with some in Congress still wanting to give basically a blank check.”

“I’m not going to vote for a blank check for foreign aid for any country,” he said. “I don’t care whether it’s Israel or Russia or any other country. I’m not going to do that, nor is the administration.”

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