News Analysis: Defeat in Battle for Loan Guarantees Seen As Beyond Jewish Groups’ Control

With Israel’s request for U.S. loan guarantees dead for the immediate future, American Jewish groups are trying to understand how they lost a battle they were once within reach of winning.

Their preliminary conclusion is that the effort to win American backing for $10 billion in loans needed for immigrant resettlement in Israel fell victim to events beyond their control.

In retrospect, the March 1991 decision, at the behest of the Bush administration, to postpone requesting the loan guarantees until after Labor Day “may have been an error,” Shoshana Cardin, chairman of the Conference of Presidents of Major American Jewish Organizations, conceded last week.

But Cardin and other Jewish leaders point out that one year ago, no one realized that the U.S. recession would become as deep as it did, that Americans would become even more opposed to foreign aid, that President Bush would face a challenge to his renomination from the right, that the Middle East peace talks would actually begin or that an Israeli election would be scheduled in the midst of the loan guarantee debate.

Frequently, when the political landscape appears unfavorable for a point of view, its advocates will wait for a more propitious time, observed Jason Isaacson, director of the American Jewish Committee’s office of government and international affairs.

But because of Israel’s urgent need for the loan money to help take care of the thousands of Soviet and Ethiopian immigrants streaming into the country, “we didn’t have the luxury of waiting for events to clarify,” explained Isaacson, who came to the AJCommittee after years on Capitol Hill.

“The entire organized Jewish community had to forge ahead,” he said. “This is the difference between this and other efforts of this kind.”

The push for the loan guarantees actually began in November 1990, when Israeli Prime Minister Yitzhak Shamir met with Bush at the White House. Shamir had planned to submit the request officially the following March.

But by that time the Persian Gulf War had taken place, and the United States had agreed to give Israel an additional $650 million in aid to cover the cost of the war to the Jewish state. So when Israel was asked to postpone the loan guarantee request until after Labor Day, it agreed.

ISRAEL MADE COMPROMISES

The Jewish community spent the spring and summer mobilizing a massive lobbying effort for the loan guarantees, led by the Conference of Presidents, the American Israel Public Affairs Committee and the National Jewish Community Relations Advisory Council.

Throughout that period, members of the Bush administration, including the president himself, assured Jewish leaders that Bush’s call for a freeze on Jewish settlements in the West Bank and Gaza Strip would not be linked to the humanitarian issue of settlements.

Indeed, when Bush asked Israel to delay the loan guarantee request for 120 days after Labor Day, he said the reason was so as not to endanger the peace talks. Bush received his delay but only after attacking the Jewish lobbying effort on the day some 1,000 Jews were on Capitol Hill to urge support for the guarantees.

But once the 120 days were over, Secretary of State James Baker said the administration would not support the loan guarantees without a freeze on settlements.

In negotiations between Baker and Israeli Ambassador Zalman Shoval, the Jewish state made compromises, Cardin told a news conference here.

A legislative compromise also was worked out by Sen. Patrick Leahy (D-Vt.), chairman of the Senate Appropriations subcommittee on foreign operations, and Sen. Robert Kasten (R-Wis.), the co-sponsor of a bill to grant the guarantees without strings attached.

But when Bush rejected that compromise last week, the loan guarantees appeared dead, probably until next year. The closer it gets to November, the less likely members of Congress will be to vote for any foreign aid measure, even one that has as much support as the loan guarantees.

“In retrospect, what was unclear to us in March 1991 that 20/20 hindsight shows is the inflexible position of the administration on this issue,” said Jess Hordes, director of the Washington office of the Anti-Defamation League.

One of the problems from the beginning was that the Bush administration and the Shamir government looked at the issue from almost diametrically opposed views.

TEMPORARY FREEZE WAS URGED

For the Israelis and most American Jews, it was hard to understand how the administration would refuse the humanitarian request after Bush had played such an important role in bringing Soviet and Ethiopian Jews to Israel.

On the other hand, the Bush administration could not understand how Israelis would jeopardize an aliyah that is so important for Israel’s future by sticking to a settlement policy the U.S. government cannot countenance.

Some American Jewish groups believe the fault lies with the Shamir government.

Americans for Peace Now had urged earlier this year that the loan guarantees be granted on condition that Israeli settlement activity ceases.

Gail Pressburg, co-director of the group’s Washington office, recalled that Ambassador Shoval had warned Israelis last summer that Israel would have to choose between the settlements and the loan guarantees.

And the leaders of most American Jewish groups, from one side of the political spectrum to the other, had urged Israel to agree to at least a temporary freeze, said Pressburg and other Jewish organizational officials. Most of this was done quietly, since most Jewish groups refrain from criticizing Israel in public.

Those who did so publicly hurt the effort, since it confused the issue for members of Congress, said William Rapfogel, executive director of the Union of Orthodox Jewish Congregations of America’s Institute for Public Affairs.

But Cardin stressed that the American Jewish community’s role on this issue was not to negotiate but to educate.

“We have played a major role in getting out the information, explaining the difference between a loan guarantee and a grant and foreign aid,” she said.

LINK TO ANNUAL AID PACKAGE

Despite this effort, there was still a perception among many Americans that the guarantees were a form of foreign aid and would come out of the pockets of U.S. taxpayers.

This perception was fed by remarks Bush made in September and by public comments he and Baker have made since January, said Isaacson of the AJCommittee. In discussing the loan guarantees, both have referred to the large amount of U.S. aid Israel already receives.

This has raised questions about whether the administration will next set conditions on the $3 billion in U.S. economic and military assistance that Israel receives each year.

Most American Jewish leaders, while upset about the loan guarantees holdup, are convinced the annual aid package is secure for now. They also believe the overall U.S.-Israeli relationship is still strong.

Cardin of the Conference of Presidents said she believes “the president is sincere in his commitment to Israel, despite his broken pledge” on linkage. But she added that this is something “we will be watching very closely.”