Israel Should Withdraw Loan Guarantee Request

ISRAEL should withdraw its request for $10 billion in loan guarantees and resort to other sources to finance the absorption of Soviet Jews. At stake is the United States-Israel special relationship - which could be irreparably damaged as a result of misguided policies in Washington and Jerusalem.

I, for one, believe the Shamir government's building of "political" settlements in densely populated Arab areas is counterproductive and could not possibly serve Israel's national security interests. Freezing the building of all settlements to secure the loan, however, is a dangerous precedent that could backfire against both Israel and the US.

There is no question Israel needs funds for the absorption of hundreds of thousands of Jewish immigrants from Russia. How many might eventually immigrate is directly affected by the quality and the speed of their absorption. Israel should not look to the US as the exclusive source of money it needs. It is ironic that while Israel insists upon its right to act freely in matters of national concern it has allowed itself to become dependent economically. I question not only the wisdom of continued economic dependency but the assumption that without US guarantees a historic opportunity to save Soviet Jews will be lost.

Between 1950 and 1952, nearly 300,000 Jews flocked into Israel mostly from Arab countries and Eastern Europe. At that time, Israel's financial means were considerably more meager than they are today. For nearly two years, my family of 10 lived in a single tent, situated in an old British military camp, awaiting permanent housing. Three times a day we went to a central kitchen to receive our meals. We had not experienced in our country of origin, (in my case, Iraq), the same hardships, scarcity of food, a nd anti-Semitism that Soviet Jews experience today. We were happy to be free in our homeland. Israel rose to the occasion. With perseverance and the pioneering spirit of its people, Israel won a "great battle."

Accepting George Bush's conditions for the loan guarantees is bad - a precedent bound to infect US-Israel relations with a virus called political linkage. As long as Israel continues to so depend on the US for financial help what will stop this or any administration from using the annual $3 or $4 billion in assistance to Israel to extract concessions?

Should Israel accept President Bush's terms under duress it would foster resentment and decrease the Israelis' confidence in the US at a crucial time in the peace negotiations. Also, with a severe recession in the US, the demand for loan guarantees raises the specter of anti-Israel sentiment resulting from misleading information about the real cost to US taxpayers. Worse, by accepting the linkage, Israel would be acquiescing to US dictation of certain crucial terms in the negotiating process with long te rm results.

The US, whose declared policy is not to impose solutions to resolve the Arab-Israeli conflict, is doing just that, giving further rise to Arab expectations for more substantive concessions. Exerting such pressure on the eve of Israel's general election, the US is playing directly into the hands of the hard core right-wing. This makes it impossible to reach a consensus on compromises critical for peace. Bush should know that although a Labor government headed by Yitzhak Rabin objects to the building of "p olitical settlements," Mr. Rabin advocates the building of new and expanding existing settlements to safeguard Jewish rights and Israel's security.

Israel, desperate for money, might accept a compromise proposal and swallow Bush's bitter pill. That would be to the detriment of US-Israeli special relations.

Israel must turn anew to its own resources. Top American and Israeli economic advisers have recommended that Israel implement an austerity program and economic reforms: privatization of the government's banks, and chemical and military industries; sale of some of the government's huge land holdings and removal of archaic regulations and inflated bureaucracy that inhibit foreign investments; and liberalization of capital investments and provision of tax incentives. Israel also could make a historic plea t o Jewish and non-Jewish friends and supporters world-wide to make a financial sacrifice and join a once-in-a-lifetime crusade to bring Russian Jews home.

The loan guarantee episode has created confrontation on an issue that transcends money. It may have already scarred the US-Israel special relationship. Israel should withdraw its request for loan guarantees not only to stave off further deterioration but also to provide a face-saving formula which both countries need in their election year.

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