JERUSALEM (Aug. 4)
A week before Prime Minister Yitzhak Rabin is scheduled to meet with President Bush, U.S. Ambassador to Israel William Harrop stressed that the Bush administration is anxious to assist Israel’s economy.
But many here are concerned that Washington’s assistance may come at the expense of Israeli economic independence.
Harrop’s remark was made to reporters prior to a get-acquainted session with Israel’s new Immigration and Absorption Minister, Yair Tsaban.
His comments were immediately linked to news reports stating that Washington intends to place strenuous economic demands on Israel before granting Jerusalem’s request for loan guarantees, as anticipated. These strictures would come on top of political demands for a settlement freeze in the administered territories.
The ambassador, diplomatic as ever, refused to be drawn into these speculations. But Israeli economic sources nonetheless expect tough and detailed discussions between the Israelis and Americans regarding the specific purposes to which the loans will be put.
Earlier this year, Bush had rejected an Israeli request for $10 billion worth of loan guarantees because of the Likud government’s aggressive policy of settling the administered territories.
Rabin has vowed to discontinue that policy and has already frozen much of the construction in those areas. Observers in Washington and Jerusalem say this change will help clear the path for Bush’s approval of at least part of the original proposed package.
FRENKEL ALSO FLIES TO WASHINGTON
Scheduled to arrive in New York on Friday, Rabin will spend the weekend privately prior to traveling to Maine for a day-and-a-half of talks with President Bush and top aides at the President’s holiday home in Kennebunkport, Maine.
Later in the week, Rabin has scheduled meetings with Defense Secretary Dick Cheney and with key congressional figures in Washington.
Several days prior to the Rabin visit, the Governor of the Bank of Israel, Jacob Frenkel, flew to Washington to hold preliminary talks about the economic aspects of the American-Israeli summit.
Sources in the U.S. Treasury have reportedly said that Frenkel will tell Washington that Israel is going to press ahead with economic reforms, including changes in the foreign exchange and capital markets.
U.S. government economists want to be sure that the new Israeli government has formulated a comprehensive program of economic growth in which new capital will be directed toward investment in infrastructure and industry — and not to consumer consumption or government spending.
In this way, Washington believes, the problem of job-creation for the new immigrants — the ultimate goal of the guarantees — can best be addressed.
In addition, Washington wants to see tangible progress in Israel’s “privatization” program and in the liberalization of the Israeli economy.
Israeli economic policymakers are not at odds with these goals. But there is some natural apprehension in Jerusalem over the extent of American “supervision” of Israeli policy-making and policy implementation.
One recent headline in an Israeli newspaper complained that the Americans actually seek to “control” the way the loan funds are to be spent.
The influential newspaper Ha’aretz endorsed the broad goals outlined by the Americans, but is nevertheless questioning whether Israel need accept everything that Washington lays down.
The paper even went so far as to ask whether Jerusalem ought not to hold out for more favorable terms for the guarantees themselves and referred obliquely to the issue of “scoring,” whereby the Bush administration will set a premium that Israel will have to pay to cover the risk involved in granting the guarantees.
Ha’aretz, echoing the views of many Israelis involved in the process, pointed out that Israel has never missed payments on its international debts and that a high “scoring” will tend to undermine the economic viability of the entire loan process.