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Bush Agreement on Loan Guarantees Seen As Reducing Strains with Israel

August 12, 1992
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President Bush’s warm welcome to Israeli Prime Minister Yitzhak Rabin this week and his agreement to provide the Jewish state with long-awaited loan guarantees appears to have put relations between the two countries back on track.

Observers say Bush’s strong expression of support for Israel’s new government may not win the president any more Jewish votes in November than the 30 percent he garnered in 1988.

But they say it goes far toward reassuring American Jews concerned with Israel’s security and strategic value in the aftermath of the Cold War. And it means the ill will that was generated by Bush’s previously hard-line stance on the loan guarantees will diminish.

Bush, who scolded American Jewish leaders last September for campaigning hard for the loan guarantees, announced Tuesday that he is now prepared to “recommend enthusiastically” that Congress grant Israel guarantees for up to $10 billion in loans, which would be used to help absorb immigrants from Ethiopia and the republics of the former Soviet Union.

Congress, which spent much of the early spring battling the administration on the issue, is now expected to adopt legislation authorizing the guarantees in September.

American Jewish leaders are clearly relieved the long battle over the loans is mostly over.

But the “most important factor” coming out of the talks at Bush’s home in Kennebunkport, Maine, was “the president’s clear and unequivocal reaffirmation of the special relationship between the United States and Israel,” said Shoshana Cardin, chairman of the Conference of Presidents of Major American Jewish Organizations.

‘LOYAL AND STAUNCH FRIENDS’

But Cardin cautioned against “euphoria.” She said that while the “reaffirmation was very reassuring, there will be differences between the two countries that should not be glossed over.”

But she said the summit ensures the differences that arise will occur in an atmosphere of increased trust and cooperation.

Bush said after the summit that Rabin had persuaded him that Israel’s new government is committed to the success of the peace talks, and he called on the Arab states to respond in kind.

He also said the United States has a “solid commitment to Israel’s security and its qualitative military edge,” a policy that will continue despite the end of the Cold War.

“Israel is a democracy surrounded by countries that are not, and they have been loyal and staunch friends,” Bush said. “It is in the security interest of the United States to retain the kind of relationship we have militarily and otherwise with Israel.”

Republican Jewish leaders, who have had an uphill fight trying to convince Jews to support Bush at the polls in November, were clearly thrilled with the president’s remarks.

“It is clear that both President Bush and Prime Minister Rabin-share the same vision of the Middle East and of the unique relationship between the United States and Israel,” said Matthew Brooks, executive director of the National Jewish Coalition, a Republican group.

“It also proves to Americans and to the Jewish community that George Bush is a man of his word, and when he makes a promise, he works to ensure that it is carried out,” said Brooks, referring to the loan guarantee package.

“It also puts to rest charges that George Bush is anti-Israel and anti-Semitic,” he said. Though the summit with Rabin was “not driven by election-year politics,” he added, “it will neutralize hostility” from the Jewish community.

A ‘MESSAGE OF REASSURANCE’

“There was a fundamental message of reassurance that the United States is not abandoning Israel,” said Yehudah Mirsky, an analyst with the Washington Institute for Near East Policy.

“And by moving ahead with the loan guarantees,” he said, it is clear Washington will “take steps to get Israel’s economic house in order.”

The talks at Bush’s seaside retreat were characterized by a warmth that marked a sharp departure from the chill that pervaded Bush’s relationship with Rabin’s hard-line predecessor, Yitzhak Shamir of the Likud bloc.

Bush himself noted the tone of the summit, calling it “a consultation between close friends and strategic partners,” one filled with “trust and a commitment to meeting common challenges. It is strategic cooperation at its very best.”

Much of the strain in the U.S.- Israeli relationship was exacerbated by Shamir’s resistance to territorial compromise with the Arabs and his unwillingness to freeze Jewish settlements in the territories, which Bush imposed as a condition for receiving the loan guarantees.

Rabin has already demonstrated he is far more flexible.

“We shall do our best to inject new momentum into the negotiations,” the prime minister said Tuesday at a joint news conference with Bush marking the end of the Kennebunkport talks.

He also pledged to institute economic reforms and “a change in national priorities to this direction.”

These changes are what has paved the way for the loan guarantees package.

Noting Rabin’s commitment to economic reform, Bush pledged swift action with the congressional leadership to authorize the loan guarantees. “A strong Israel that is better to cope is in our interest,” he said.

LEGISLATION EXPECTED NEXT MONTH

A loan deal is expected to be incorporated in the Senate foreign aid appropriations bill next month. A House and Senate conference committee will then work out a joint plan to be voted upon by the full Congress.

Congressional insiders say there will be important and contentious details to iron out before a package is approved, such as what settlements will continue to be built and how they will be funded, and exactly what Israel will do to reform its economy. “It is likely to work out, but (legislators) remain concerned that the money not fund things inconsistent with our policy,” said one Capitol Hill source. “But there is more hope with Rabin,” he added.

One pro-Israel congressman urged caution against any post-summit euphoria.

“It represents a warming, there’s no doubt about it,” said Rep. Larry Smith (D-Fla.), one of the most vocal critics of the Bush administration’s Middle East policy.

“But we have to watch what happens next,” he said, referring to the next round of peace talks, scheduled to begin here Aug. 24.

Smith said he feared the administration would apply pressure to Israel to make concessions in order to spur the peace process forward in time for a breakthrough Bush could flaunt before the November election.

“Are Bush and (Secretary of State James) Baker going to want to extract a quid pro quo for the loan guarantees by forcing Israel to take positions it doesn’t want to take regarding Palestinian autonomy?” Smith asked. “That way Bush can claim a new victory in foreign policy.”

Smith, however, answered his own rhetorical question. “Rabin may have secured the loan guarantees,” he said, “but he won’t roll over and play dead for George Bush.”

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