In Wake of U.S. Deficit Pressures, Israelis Consider Cuts in U.S. Aid

There is a growing inclination in Israel to voluntarily forgo some $80 million in U.S. military aid next year in view of accelerated efforts by the Reagan administration and the Congress to pare the huge federal deficit.

But the matter is being hotly debated, it was reported here Monday. Some senior political figures believe it is better for Israel to accept a small reduction as a gesture of good will toward Washington than to wage a struggle. Others however, insist Israel must not agree to cuts.

“Israel will have to decide within a short time whether to agree or fight it,” sources in Jerusalem noted Sunday. Maariv reported Monday that the Americans are feeling out Israel on the matter and in fact contacts between the two countries on this issue have already begun.

The $80 million constitutes 4.5 percent of the $1.8 billion in U.S. aid to Israel in the coming year. But the Gramm-Rudman bill may force an overall cut in foreign aid. Israelis fear that in light of President Reagan’s statement about budget cuts at his nationally televised news conference last week, there would be an unpleasant reaction in Washington should Israel balk.

But Defense Minister Yitzhak Rabin seems to be in the camp of those Israelis who would fight any cuts. “I am depending on the administration to fulfill its commitments,” he told military correspondents Sunday. He maintained that “the problem is in Congress.”

RABIN DEEPLY WORRIED

Rabin said he was deeply worried about Israel’s ability to pay for its future military needs. He noted there has been a real drop in the value of the U.S. dollar over the past two years, and this contributed to increased personnel costs in Israel’s weapons development programs, which are financed largely by American military grants. He said that while the U.S. Congress has traditionally been friendly to Israel, maintaining current levels of aid would be difficult if there is a downturn in the American economy. He noted that the amount of American aid to Israel will be decided by Nov. 20 and until then there is no certainty how much Israel would receive.

“In any event,” Rabin said, “the top priority is the signing of the deal for the third consignment of F-16Cs, which we will be receiving in the early 1990s.” The second consignment is presently being delivered to Israel.

The F-16Cs will replace the Lavi, Israel’s second generation jet fighter plane which the government cancelled last August. According to Rabin, “If we had not dropped the Lavi, the (Reagan) administration would not have backed us.”

Abandonment of the project was not without high price to Israel. Israel Aircraft Industries employed 6,000 engineers and aircraft workers to build the Lavi. Rabin said about 3,000 could be absorbed by other divisions of IAI, but the remaining 3,000 would lose their jobs. He said of that number, 800 temporary workers can be dismissed without any loss to IAI. About 400 over age 55 who have at least 15 years of seniority will be induced to take early retirement and 1,800 will be offered higher severance pay to leave, Rabin said.

IMPACT ON FUND RAISING

Israelis are also concerned that the Oct. 19 Wall Street crash may have repercussions on fundraising for Israel in the U.S. But Naftalic Lavie, head of the Israel office of the United Jewish Appeal, seems to believe there is no cause for worry.

He was quoted by Hadashot Monday as saying that in wake of the stock market debacle “there is no indication today as to whether there has been a withdrawal in everything connected to Jews who contribute to the UJA.”

He recalled there have been fluctuations in the stock market in the past without in any way affecting Jewish contributions to Israel.