Foreign Aid Outlook: Proposals to Reform Aid Program Could Mean Future Cuts for Israel

Despite the Clinton administration’s commitment to maintain aid to Israel for at least another year at its current annual level of $3 billion, many observers here are predicting a coming sea-change in U.S. foreign aid practices.

And these changes could affect Israel, the largest recipient of American aid.

There is growing talk on Capitol Hill of overhauling the entire U.S. foreign aid system now that the Cold War is over.

The Clinton administration is clearly concerned about progress in the Middle East peace talks and is well aware of Israel’s security concerns, especially if Israel makes territorial compromises to secure peace.

But in an America concerned with its own economic problems, no one seems certain what the future holds for Israel’s aid package.

“The aid level can be maintained for maybe another two or three years, but the handwriting is clearly on the wall,” said Stuart Eizenstat, a adviser in the Carter White House who recently contributed to a report on the U.S. Israel relationship prepared by the Washington Institute for Near East Policy.

While this year’s foreign aid bill seems likely to pass with the aid to Israel intact, the future of foreign aid bills, and the shape of U.S. foreign aid in general, is not as certain.

Among the critics of the current system are some powerful members of Congress involved in approving foreign aid legislation, including Sen. Patrick Leahy (D-Vt.).

Leahy, who chairs the Senate Appropriations subcommittee on foreign operations, has been calling for several years for “fundamental reform” in U.S. foreign aid.

“A consensus has emerged, including the new administration,” that “our foreign aid program needs top to bottom reform,” Leahy said at a subcommittee hearing last month.

“A program designed in the Cold War is simply not capable of taking on the global challenges that have replaced communism as the gravest threat to our security,” he said.

ISRAEL SEEN AS A ‘SEPARATE ISSUE’

While some in the pro-Israel community are nervous that such an overhaul would adversely affect Israel, others noted Leahy has said Israel is not going to suffer under a changed policy.

In a Washington Times interview this winter, Leahy said that Israel “will fare well” in future aid legislation.

A congressional source said that while other foreign aid programs will be re-examined in any aid overhaul, “people see Israel and Egypt as a separate issue, as part of U.S. diplomacy,” and thus it is unlikely that “anything bad” will happen to Israel’s and Egypt’s aid packages.

Egypt, the second-largest recipient of American aid, receives $2.1 billion annually.

Another powerful congressman, Rep. David Obey (D-Wis.), has also questioned current aid practices. Obey chairs the House Appropriations subcommittee on foreign operations.

Among other things, Obey has criticized the current system whereby aid recipients agree ahead of time to purchase expensive military equipment, thereby locking the U.S. into maintaining high levels of aid to these countries, so that they can pay for the equipment.

But one congressional observer said that most plans to revamp aid would probably not have a major effect on foreign assistance to Israel.

The observer said that most of the changes being contemplated will be made in reorganizations of the Agency for International Development and various State Department functions.

And others point out that not every plan for revamping foreign aid calls for cutting it.

The Congressional Black Caucus, generally not among foreign aid’s greatest supporters, has called for increasing overall foreign aid levels, in part to give greater assistance to African nations.

One aide on the Hill said some pro-Israel members welcome this idea, because it would lessen the image of Israel receiving such a huge piece of the foreign aid pie.

Aid to Israel, this aide said, is really only a “drop in the bucket” when one considers the entire U.S. budget picture. But because the level of the foreign aid program is so low, the aide said, “Israel and Egypt stand out like a sore thumb.”

A NEED TO REDUCE ISRAEL’S DEPENDENCE?

In addition to calls for overall reform, some on the Hill and elsewhere have suggested specific changes in foreign aid practices.

Some argue that aid does not always have to come in the form of traditional outlays of money. Instead, the United States could supplement traditional aid by helping a country with programs that would enhance the aid recipient’s economy.

In Israel’s case, the United States has entered into an agreement that provides Israel with $10 billion in loan guarantees over a five-year period to help resettle immigrants from the former Soviet Union and Ethiopia.

In addition, the United States and Israel recently agreed to establish a joint science and technology commission to enhance cooperation and create technology-based jobs in both countries.

But pro-Israel activists point out that such gestures of friendship have been going on for years and could never replace the $1.8 billion in military aid and $1.2 billion in economic aid that Israel currently receives.

Yet all the talk among Israel’s supporters here of maintaining aid to Israel at its current level leaves out one factor: that even in Israel, there is a growing current urging that Israel wean itself away from such dependence on the United States.

In a recent interview in the Forward, the former Israeli ambassador to Washington, Zalman Shoval, called for a lessening in U.S. aid.

And a recent study by the Washington Institute for Near East Policy, while opposing an immediate cutback in aid levels, called for the United States and Israel to work together to lessen Israel’s need for such large amounts of aid.

New York Times columnist A.M. Rosenthal, who is staunchly pro-Israel, said in a recent column that an aid cut “could be one of the best gifts Israel could give itself and the U.S., and the sooner the better.”

REMINDER: The JTA Daily News Bulletin will not be published Wednesday, April 7, or Thursday, April 8.

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