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Israel counts on emergency aid from US; Congress expected to OK extra funds, but push for economic reform

By Lucia MouatStaff writer of The Christian Science Monitor / December 3, 1984


Beset by soaring inflation, falling revenues, and rising unemployment, Israel is expected to reach out for a special emergency stipend this year and a major increase in aid next year from its chief ally and financial supporter - the United States.

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And there are few signs that the Israeli government will have any trouble getting the additional help it seeks from a new Congress.

The Reagan administration is on record as saying any increase would have to be carefully considered in the context of Israel's internal plans for economic reform. And it does want assurances that more US aid would find constructive use and not simply perpetuate the current crisis.

''By pouring in huge amounts you can make reform even more difficult,'' one administration official notes.

But the administration has been weighing the idea of a 50 percent increase in general US foreign aid, and Secretary of State George P. Shultz has described Washington's commitment to Israel's security and well being as ''ironclad.''

Also, the administration, which this fall has been discussing long-range ways to increase Israel's economic growth and trade through a new joint economic development group, clearly does not want to destabilize Israel's new unity government headed by Shimon Peres. President Reagan recently promised emergency help in the event of any Israeli balance-of-payments crisis.

Congress, which in recent years has increased appropriations for Israel beyond administration requests, appears even less inclined than the executive branch to set any conditions on a hike in aid.

A key congressional source says he senses no such ''appetite'' on Capitol Hill. ''I see Congress playing its traditional role in being very sympathetic and supportive, and resisting any tendency to dictate. It recognizes that Israel is a modern, sophisticated democracy that knows its own problems.''

Indeed, Congress, in response to Israel's pressing economic problems (which include heavy military expenses and overseas debts of $23 billion - as much as Israel's annual budget), has recently been liberalizing the terms of its help.

This year, for the first time, US aid to Israel was given entirely in grants rather than as a mix of gifts and loans. And to help with Tel Aviv's cash flow and balance-of-payments problems, the entire chunk of economic aid - $1.2 billion for fiscal 1985 - was given in advance to Israel last month.

Congress also recently passed a resolution which, while not binding, calls for annual US economic aid to Israel at least high enough to cover Israel's yearly debt repayment to Washington. Israel owes the US about $9.5 billion.

Although losing a key ally in the recent election defeat of Rep. Clarence Long (D) of Maryland, chairman of the House subcommittee responsible for foreign aid, pro-Israel political groups in Washington insist the new Congress gives them no cause for concern.

''It looks as much or even more pro-Israel than the last one,'' says one Israeli supporter, who asked not to be identified.