Senators See Eye to Eye on Loans, but Must Still Win Baker’s Assent

Two key senators have settled their differences on legislation that would provide Israel with U.S. guarantees for billions of dollars in loans needed for immigrant resettlement.

But they have yet to close the gap with the Bush administration, and one concerned member of the House of Representatives expressed doubt that they would strike a deal before a congressional deadline passes.

Sen. Patrick Leahy (D-Vt.), chairman of the Senate subcommittee that deals with foreign appropriations, announced Tuesday that he had reached a compromise with Sen. Robert Kasten (R-Wis.), the subcommittee’s ranking Republican.

Leahy, who has held up subcommittee action on the loan guarantees, said his panel could vote on the proposed legislation within a week.

Their proposal would require the Bush administration to release the first installment of a five-year package of loan guarantees this year. But in subsequent years, the administration would be given “a lot” of discretion in deciding whether to guarantee the remainder of the $10 billion total requested by Israel, a pro-Israel lobbyist explained.

Moreover, the total guaranteed would be reduced by the amount of money Israel spends completing construction projects already begun in the administered territories.

The Bush administration has insisted that Israel halt all new construction, but has said it would be willing to allow Israel to finish existing projects, provided that an amount equivalent to the cost is deducted from the loan package.

Secretary of State James Baker has also insisted in recent weeks that the administration have full discretion over the amount and timing of the loan guarantees. The Leahy-Kasten plan would only grant that discretion in the first year.

‘TIME IS RUNNING OUT’

In an effort to bridge their differences, Leahy and Kasten met with Baker several times last week, most recently on Friday. But the negotiations ground to a halt when Baker left over the weekend for meetings in Brussels. They were expected to resume following his return late Wednesday.

Rep. Lawrence Smith (D-Fla.) has cast doubt on the likelihood of loan guarantee legislation emerging within the next three weeks, as required by Congress’ legislative timetable.

Congress must adopt a foreign aid bill by March 31, in order for various countries to receive their U.S. aid for the last six months of this fiscal year. Israel is slated to receive the second $1.5 billion installment of its annual $3 billion in all-grant military and economic aid.

Because of the recession, foreign aid is not popular right now. The most politically insulated way for Congress to approve foreign aid now, given that it is an election year, is for it to be included in a so-called continuing resolution that would continue the assistance at existing levels.

But a continuing resolution could not include a loan guarantee package for Israel because it is not an existing program for this fiscal year.

Assessing the choice between a foreign aid bill and a continuing resolution, the strongly pro-Israel Smith said, “I doubt very seriously whether there will be anything but a C.R.

“Time is running out,” he said. “And getting the United States to agree to anything that Israel would agree to is almost impossible. Their points of view are 180 degrees apart,” Smith said in an interview Tuesday after addressing the Simon Wiesenthal Center’s National Leadership Conference here.

ISRAEL KEEPING OPTIONS OPEN

Smith said he had spoken to various members of the Senate, where any loan guarantee measure would first be voted on, and “no one is overly optimistic — nobody,” he said.

The pro-Israel lobbyist said there are “ample reasons for concern, and the patient has got a serious illness here.

“But to write premature obituaries here is a mistake, because there are substantial possibilities that a solution will be found,” he said. “People are working very hard to make it happen.”

Housing and Urban Development Secretary Jack Kemp, who also addressed the Wiesenthal Center group, told the Jewish Telegraphic Agency he believes “a compromise will be worked out.”

But Kemp said he was not “privy to any inside information.”

The HUD secretary, a staunch supporter of Israel and former congressman from New York, added that the issue is “so sensitive” that both Israel and the United States “should lower the profile and allow diplomatic relations to work in such a way as hopefully a compromise can be worked out.”

Sen. John Seymour (R-Calif.) predicted, “We will find a way to reach a compromise, and a satisfactory compromise, so that principle is maintained on both sides.”

Israeli Ambassador Zalman Shoval, who also addressed Hier’s group, said Israel is keeping its options open in deciding whether to favor any compromise guarantee bill ironed out between the Bush administration and Congress.

Shoval left the door open for Israel’s agreement to such a compromise “if that compromise takes care of the basic essential aim of this whole thing,” which is “to help us in absorbing immigrants from the Soviet Union.”