Behind warm US-Israeli relations lie thorny issues of military aid
Israel's Prime Minister Menachem Begin is expected to get a warm reception from the Reagan administration when he arrives here for a visit next week. Relations between the two nations have improved substantially since the tension produced a year ago by Israel's invasion of Lebanon.Skip to next paragraph
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But there are a few clouds gathering on the horizon which could eventually create new tensions between the United States and Israel. They will be of concern not only to the American government, but also to the American taxpayer:
* One is the growing cost of trying to maintain Israel on a war footing against an array of Arab nations. A much-censored, much-talked-about, but little-read report by the General Accounting Office (GAO), a congressional watchdog agency, predicts that Israel may face difficulties in paying its financial debts to the US in coming years unless it obtains additional amounts of grant aid.
According to the GAO report, the State Department disagreed with that assessment and does not see the development of a severe debt problem. The Agency for International Development went one step further and reported that there is cause for optimism about Israel's balance of payments prospects, the GAO said.
* A smaller but significant cloud of concern is gathering around Israel's plans to build a new fighter plane, the Lion, or ''Lavi,'' in the Hebrew. US Defense Department officials say that it would be much more economical for the Israelis to buy or coproduce an American fighter than it would be for them to try to develop another of their own. But the Israelis are obviously interested in cutting their military dependence on the United States, strengthening their own aircraft and high-technology industries, and creating the new jobs that would go along with the production of a new fighter plane.
At this point, the Lavi is mostly a matter for debate among specialists in the Defense Department, the American aircraft industry, and Congress. But at some point, specialists say, it is likely to be the subject of congressional hearings. As the GAO report on US assistance to Israel points out, Israel will be ''significantly dependent on US technology and financing for major portions of the aircraft.'' Israel will need US approval for planned sales of the Lavi to other nations because of the American parts and technology that are to be used in the plane. Nevertheless, the GAO says that the Israelis are expected to be able to make the Lavi competitive with US aircraft producers and exporters.
The GAO report says that some US officials ''recognize the domestic, political, and economic repercussions for the United States of aiding a foreign country's aircraft program,'' espcially since the US govermment does not provide the same assistance to US firms. The Northrop Corporation, for example, developed the F-20 fighter specifically for export using its own funding. It has subsequently had trouble marketing the F-20.
''Our only problem with the Lavi deal is that Northrop was required to fund every last nickel of the F-20 with our own corporate assets,'' said a Northrop official. ''Now is the US government going to roll over and play dead when Israel says, 'Let's develop a competitor'?''
What appears to be most disturbing to the GAO is that Israel wants US foreign military sales credits to be spent inside Israel for the Lavi program. Normally, such credits are used for purchases in the United States. The GAO is concerned that preferential treatment given to Israel in many instances could set precedents for other US aid recipients who would then request similar treatment.
According to the GAO, the Israelis originally wanted to make the Lavi a low-cost, low-technology fighter to replace its aging A-4 and Kfir aircraft. But the GAO says that the Israelis later decided to make it a ''very advanced fighter,'' and its ''fly away'' price has now more than doubled, from an original estimate of $7 million per unit to the current estimate of more than $ 15 million.
The GAO said that the Israelis gave as a reason for the advanced version the US decision to sell advanced fighters to Arab nations, thus ''threatening to erode Israel's qualitative edge over the Arabs.''
One of the most controversial parts of the GAO report relates to the economic impact of Israel's invasion of Lebanon. Israeli officials argue that the cost of the Lebanon campaign is being financed by domestic Israeli sources. But in one censored portion of its report, the GAO asserts that there is ''a substantial foreign-exchange component'' related to the Lebanon campaign which increases Israel's balance-of-payments deficit. This in turn, could have an effect on Israel's requests for economic support from the US, GAO says.
One of the most heavily censored portions of the report shows how US defense officials have disagreed with Israel's assessment of the Arab threat to Israel. According to an uncensored draft of the GAO report obtained by this newspaper, an assessment by the US Joint Chiefs of Staff concludes that Israel has sufficient forces to defend against any likely Arab offensive. The report says that the Israelis conclude, on the other hand, that their forces are ''just barely sufficient.'' The Israelis base their plans on a ''total Arab threat,'' which the Joint Chiefs believe is unlikely to be brought to bear against Israel.
Defense Department officials at the working level are said to believe that Israel can make do with less than the level of US military aid being proposed.