The Reagan Administration said Thursday it has agreed to study a proposal by Israeli Premier Shimon Peres for the creation of a “Marshall Plan”-like development fund for the Middle East “as the way to foster a better climate for peace” in the region.
“While we see potential political and financial obstacles to the Prime Minister’s proposal, we support its overall objective: economic development for peace in the region,” State Department spokesman Bernard Kalb said. Kalb said that Peres discussed the economic plan, which would be financed by various countries and international banks, during his talks here on Tuesday with Secretary of State George Shultz and other Administration officials.
The U.S. has agreed to discuss the proposal with its allies, according to Kalb. Peres reportedly has urged that the U.S. and the other major Western industrialized countries, including Japan, finance a $20 to $30 billion development fund.
Peres argued this week in public statements that the West Europeans could return some of the large amount of money they have saved from the drop in the oil prices, to the Arab countries which are suffering economically because of the falling prices. Peres apparently believes this pragmatic approach is needed to foster the peace process at a time when the political effort appears stalled.
A MAJOR PROBLEM
But a major problem, even if the Arab countries were to agree, is how the fund would be financed at a time when the U.S. is going through a budget crunch. When Peres was asked how it would be financed at a press conference here Tuesday, he quipped, “not through Gramm-Rudman,” a reference to the recently enacted U.S. law requiring mandatory budget cuts if the federal deficit is not reduced according to fixed annual guidelines. Kalb said Thursday that it was too early to discuss financing.
It has long been an argument made by Israelis, as well as American Jewish leaders, that economic cooperation between Israel and its Arab neighbors would benefit everyone in the region and bring about peace.
At a White House briefing for the Conference of Presidents of Major American Jewish Organizations last month, its chairman, Kenneth Bialkin, told President Reagan that if Egypt, Jordan and Israel worked together on a joint economic program, “that may bring peace faster than arms.” Bialkin’s remarks came after he voiced concern over the U.S. selling arms to countries that do not support the peace process.
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