Shoval Says Israel Must Choose Between Settlements and Guarantees

Israel’s outspoken ambassador to Washington, Zalman Shoval, stirred up a hornet’s nest over the weekend when he advised Israelis that they would have to choose between building new settlements in the administered territories and U.S. economic aid to absorb Soviet immigrants.

In a series of Israel Radio interviews from the U.S. capital, the envoy made clear his opinion that Israel could not have both.

Israel’s official position is that the two issues are unrelated.

Government officials could not conceal their embarrassment and the political right is furious. Reports circulated that Shoval was upbraided by Prime Minister Yitzhak Shamir.

Shamir said Sunday that he merely had a “clarifying conversation” with the envoy, leaving observers to ponder the distinction.

Israel is expected to seek $10 billion in U.S. loan guarantees this September to help absorb Soviet immigrants. The Bush administration has hinted that its receptivity to the request may be influenced by the degree to which Israel co-operates with its peace efforts.

Israel’s settlement drive in the West Bank and Gaza Strip has been a major source of friction. The Americans view the settlements as an “obstacle to peace.”

But a statement issued by the Prime Minister’s Office on Sunday reiterated that Israel did not regard the two issues to be in any way linked.

The statement stressed that economic aid is humanitarian, while the settlements are a political matter.

Shoval’s remarks made clear his opinion that the Americans think differently.

“The government of Israel will have no choice but to decide if it is more important to continue settlement-building in Judea, Samaria and Gaza, or obtain American aid for the absorption of Soviet immigrants,” the ambassador said.

A POLARIZATION OF OPINION

He stressed that he himself took no position but intended only to lay out the problem facing the government.

“There is no escape from this choice,” Shoval said on his first Israel Radio interview. “If the government refuses to freeze the settlements, it must know whether it is capable of absorbing the immigrants without U.S. aid.”

He made the same point in subsequent interviews. Some observers said he pulled the rug from under the efforts of Israeli diplomats and pro-Israel lobbyists to persuade Congress that immigrant aid and peace policy should not be linked.

Shoval, a Likud Knesset member when he was appointed to Israel’s top diplomatic post abroad, has been in hot water before. He was rebuked by the White House in February for complaining publicly that the administration was foot-dragging on $400 million in loan guarantees to Israel to provide housing for Soviet olim.

His latest comments have contributed to a polarization of opinion along existing political and ideological fault lines.

Leftist Knesset members welcomed Shoval’s “straight talking” and praised his realism.”

On the right, there were demands for his recall.

Some Israeli newspapers reported from Washington and New York on Sunday that Shoval’s assessment of the situation is widely shared by the American Jewish establishment.

Ma’ariv quoted Abraham Foxman, head of the Anti-Defamation League, who is considered right of center on most issues, as saying Israel’s current settlement drive is “a provocative act that ultimately will harm the settlements themselves.”

Foreign Minister David Levy, who has the reputation of a “dove,” avoided reporters’ questions about Shoval’s remarks, saying he had not yet spoken to the ambassador.

But Shamir spoke to him at least twice on Saturday.

Shimon Peres, leader of the opposition Labor Party, said Shoval was reporting “the truth.” But according to Peres, the government prefers not to face the choice between “one million Soviet Jews and two million Palestinian Arabs.”

At the extreme right of the political spectrum, Rehavam Ze’evi, leader of the Moledet party, threatened to quit the Likud-led coalition which he joined only recently.

Ze’evi said he finds no fault with Shamir’s uncompromising stand on peace talks, but objects to his persistent refusal to even discuss “practical proposals” to end the intifada.

Among Ze’evi’s proposals is one for the “transfer” — meaning expulsion — of Palestinians out of the administered territories.

On the far left, Knesset members Yossi Sarid and Dedi Zucker of the Citizens Rights Movement hailed Shoval for pointing out “that the settlers are the main enemy of aliyah and absorption.”

But Geula Cohen, of the right-wing Tehiya party, called the linkage “immoral” and accused Shoval of allowing himself “to be pressured and then to pressure his government, rather than standing firm against Washington’s design.”