A report just issued by a congressional watchdog agency is being used by some in Congress to bolster the Bush administration’s case for linking Israel’s request for U.S. loan guarantees to a freeze on settlement-building in the administered territories.
But Israeli officials believe the report may actually help convince Congress to approve the guarantees, which would make it easier for Israel to borrow $10 billion on commercial capital markets to help absorb thousands of immigrants.
The report by the General Accounting Office, released last week, demonstrates that Israel kept its promise not to use any of the $400 million in U.S. loan guarantees received last year in the West Bank or Gaza Strip, according to Yoram Ettinger, minister for congressional affairs at the Israeli Embassy here.
Furthermore, Ettinger said, the GAO report accepts Israel’s need for an additional $10 billion to help it absorb an estimated 1 million immigrants from the republics of the former Soviet Union over the next five years.
The report also expresses the belief that Israel will be able to repay the money so that the United States as the guarantor will not be stuck with the bill.
Nevertheless, the report is being used by Sen. Robert Byrd (D-W.Va.), chairman of the Senate Appropriations Committee, to argue that written pledges by Israel not to use the money in the territories are meaningless unless Israel institutes a freeze on settlements.
Byrd asked for the report from the GAO, which monitors for Congress the implementation of legislation and the use of federal funds.
“Receiving written assurances as to how the money will be spent, without any accompanying change in Israeli settlement policy, is an exercise in building a dam of paper,” Byrd said in releasing the GAO study.
The report points out that the actual use of the $400 million borrowed by Israel “cannot be determined because money is fungible — funds made available through loan guarantees made other Israeli funds available for use as the Israeli government determined.
“The dollars were deposited with the Israeli Ministry of Finance and became commingled with other money, thus losing their separate identity,” the report says.
But Ettinger argued that all money is fungible, since it all goes in and comes out of the same Treasury. “To suggest that money is fungible is to suggest that a circle is round,” he said.
LITTLE NEGATIVE IMPACT EXPECTED
Despite Byrd’s comments, pro-Israel lobbyists do not expect the report to have much of a negative impact on congressional support for the guarantees. They believe a majority of the Senate Appropriations Committee is ready to override any doubts by Byrd or Sen. Patrick Leahy, (D-Vt.), chairman of the panel’s foreign operations sub-committee.
The real question, as these sources see it, is whether Congress will authorize the guarantees without the backing of the Bush administration.
Congress was asked to do just that “as quickly as possible” by the AFL-CIO Executive Council at its annual meeting in Bal Harbour, Fla.
“Such support for Israel, a reliable democratic ally, is in the U.S. national interest,” the council said, according to Lenore Miller, president of the Jewish Labor Committee and a member of the Executive Council.
The council statement also noted that the 120-day postponement of congressional consideration of the loan guarantees asked by President Bush has passed, and “it is clear that President Bush has reneged on his promise to reinstate the loan guarantee process.”
As for the GAO report, Ettinger said it shows that the $400 million borrowed last year had no impact on Israel’s settlement policy. The report said Israel is expected to certify that the $400 million in loans was used to finance 12,303 housing mortgages valued at $425 million within Israel’s pre-1967 borders.
“Israel has not directed or required Soviet immigrants to settle in the occupied territories, and it does not offer special incentives that are unique to Soviet immigrants for settling there,” the report says.
But it points out that the Israeli government offers incentives to encourage Israelis, including immigrants, to move to the territories.
ISRAEL ABLE TO REPAY LOANS
The report estimates that 8,800 of 332,000 immigrants who arrived since 1989 — under 3 percent — have settled in the territories. But Ettinger said the actual figure is only 1,000, since Israel does not accept the U.S. contention that East-Jerusalem is part of the West Bank.
The GAO analysis finds that Israel will be able to repay the $10 billion in loans and “continue its past record of payment under most foreseeable circumstances.”
But the report stresses this will require Israel implementing its economic reforms and announced absorption plan, including providing most jobs for Soviet immigrants in the private sector.
Without the loan guarantees, the government would have to play a much larger role in the absorption process, Ettinger observed.
He also pointed out that the $400 million in loans provided $148 million in revenue for U.S. companies, chiefly in the housing industry. “Imagine how much can be earned from the $10 billion,” he said.
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