New law promises Israel the aid to repay US loans

Has Congress, in effect, forgiven Israel the $9 billion in debt it owes the United States? There is a debate in Washington as to exactly what Congress intended when, with barely any public discussion, it passed a law stating: ''Congress declares that it is the policy and intention of the United States that the funds provided in annual appropriations for the Economic Support Fund which are allocated to Israel shall not be less than the annual debt repayment (interest and principal) from Israel to the United States government in recognition that such a principle serves United States interests in the region.''

The measure, sponsored originally by Democratic Sens. Alan Cranston of California and Joseph R. Biden of Delaware, was appended to the continuing resolution that provides funds for this budget year. Congress approved this resolution Oct. 9, shortly before it adjourned.

David Sadd, executive director of the National Association of Arab Americans, says the action is ''tantamount to cancellation of Israel's debts.''

A member of Senator Cranston's staff, however, held: ''We are not in the business of canceling international loans. It is tremendously misleading to say so.''

The provision says that the US will provide Israel at least enough money to service US loans to Israel. These repayments stretch decades into the future, but they are heaviest in the next few years. This year, for the first time, all US aid to Israel consists of pure grants, rather than loans.

From the standpoint of the backers of the measure, most of whom refused to be quoted by name, the provision is part of the process of helping Israel out of an economic crisis without too great a cut in that country's standard of living.

On top of a massive balance-of-payments deficit and rampant inflation, Israel faces large service payments on the debts piled up in the 1973 war against Egypt and Syria. A 10-year grace period on the principal of some of these loans is now past.

For a time last week there was a debate among officials as to the nature of the debt provision. The Reagan administration, although not quarreling with the level of aid implied by the measure, would have preferred passage of a ''sense-of-the-Congress resolution'' that it could more easily disregard if it wished and did not set a precedent for other nations in debt to the US.

Indeed, a State Department official said the department's lawyers, after reading the language, interpreted it as ''nonbinding.'' (He had earlier said it was ''binding.'')

On Capitol Hill, however, staff members involved with the bill, though admitting to some ambiguity in it, said it was binding.

They say the administration must now submit to Congress each year an appropriation for Israel at least equal to Israel's debt-servicing charges. That would be at least $1.1 billion in Economic Support Funds (foreign aid) for fiscal 1985, since Israel will owe about that much in that year. This is close to the $1.2 billion granted in the current fiscal year, ending next Sept. 30.

''I feel they (administration officials) are obliged to (obey the bill), and I would like to see them taken to court if they don't,'' a Cranston staff member said.

Another congressional staff member commented on the provision: ''It does not say you (administration officials) cannot pay your own salaries unless you submit a budget with the aid included. But there is a strong moral force behind it.''

In theory, no Congress can oblige a future Congress to any action. But supporters of the measure say its sponsors intended to make it as binding as possible in spirit.

''Congress is obligating itself,'' said Stephen Silberfarb, a legislative aide at the American Israel Public Affairs Committee. ''It is binding.'' That group, which supports Israel, lobbied for the measure.

This provision, supporters say, ensures that Israel will not have to pay more to the US than it receives in foreign aid. (Israel will be getting another $1.4 billion grant in military assistance, however.) ''That would not make sense,'' said Mr. Silberfarb.

US aid to Israel has in recent years exceeded debt repayments anyway, supporters add.

Israel's backers also note that outright cancellation of the nation's debts would require an appropriation of Congress. Of course, it would be more difficult to get a $9 billion appropriation passed than the $2.6 billion included in the continuing resolution.

On the other side, Mr. Sadd of the National Association of Arab-Americans, commented: ''It is rather remarkable that something so dramatic could happen without public debate and knowledge.''

In a telephone interview, he charged that a ''couple of members of Congress in concert with the Israeli lobby'' were able to get this measure passed through a conference on the continuing resolution without most members of Congress or key officials in the administration knowing what was being done.

''This says to Israel, 'The United States Treasury is at your disposal,' '' he said.

Mr. Sadd criticized particularly Rep. Clarence D. Long Jr. (D) of Maryland, chairman of the foreign operations subcomittee of the House Appropriations Committee, as ''one of Israel's most powerful friends.'' He said that 30 percent of the members of this subcommittee, which first considers aid to Israel, are Jewish and that the rest come from constituencies where Jewish voters are important.

Further, he charged that Mr. Long gets some 75 percent of his campaign funds from pro-Israel political-action committees or Jewish supporters.

Michael Granoff, Congressman Long's representative on the subcommittee, responded by saying that it was ''a dangerous thing'' to say people support Israel because they are Jewish. He said it smacks of accusing them of ''dual loyalties.''

Most contributions to Long's campaign funds are from individuals, he said. ''When we get individual contributions, we don't ask people their religion.''

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