Following the 1967 Arab-Israeli war, a formula for peace was accepted by the parties and supported by the United States. It provided that territories conquered by Israel, including the West Bank and Gaza, would be relinquished in return for peace and recognition.
In recent years the Arab world and the Palestinians have been moving toward acceptance of Israel, but the present Israeli government, by its aggressive policy of taking control of West Bank and Gaza lands and settling them with Israelis, is trying to ensure that Israel can never be forced to deliver its side of the bargain. Americans should be aware of how this settlements program functions and the degree to which our government assists its success.
The most recent of many land-taking techniques has increased the amount of West Bank and Gaza land under Israeli control from approximately 35 percent to an estimated 65 percent. It is the use of the old Turkish Land Code to claim for the state uninhabited lands which lie beyond the sound of human voice from the nearest village. The proof of ownership required of Palestinian claimants is almost impossible to satisfy.
Measures for inducing Jewish settlement of this land include its sale to Israeli developers for 5 percent of fair value, and grants and interest-free and nonindexed loans to home purchasers of up to $30,000. (At 140 percent annual inflation, the principal of a nonindexed loan, after six years, is less than 1 percent of what a fully indexed loan would be.) Further benefits (the conversion of loans to grants) are lost if#the ''settler'' leaves before five yuafs.
Other inducements include larger flats, immediate telephone service, child-care centers. I recently asked a young couple with a printing business why they moved from Tel Aviv to the West Bank. ''Very simple,'' was the reply. ''No taxes.''
Commentator 'El'azar Lebin observed recently in the newspaper Ha'aretz, ''The subsidy is so heavy and massive that it seems that only fools will not build their new homes here (the West Bank).''
The extraordinary intensity of the housing crisis in Israel assists the program. The government has no reason to spend money on housing in Israel when its objective is to get people to move to the West Bank.
World opinion holds that the most promising solution to the 60-year conflict over Palestine is to let the West Bank and Gaza become a Palestinian homeland where Palestinian culture can continue and with which 3 million dispersed Palestinians can identify. These territories represent only 20 percent of the contested land of Palestine. The 1.3 million Palestinians living there constitute 98 percent of the territories' population. The Israeli ''settler'' population currently is only 2 percent of the total. But, with the inducements described above, it is poised to explode.
Four US administrations prior to the Reagan administration termed the settlements ''illegal.'' President Reagan's Sept. 1 peace plan proposed a settlement ''freeze,''and the President stated that ''further settlement activity is in no way necessary for the security of Israel.'' Israel's response was additional settlements.
Despite Israel's rejection of the President's proposal, Congress improved the administration's aid package to Israel by $510 million (by changing $510 million of proposed loans to grants).
It is always stipulated that US aid will not be used to fund projects on the West Bank, but, since cash is fungible, such assurances are easily avoided.
It is not as if the Congress has not had the opportunity to focus on the relation between US aid and the settlements. Sen. Adlai Stevenson III, well informed on Middle East issues, sought in 1980 to have $150 million of aid - ''a conservative estimate of what the Israeli government is spending annually on its settlement program'' - withheld until Israel's settlement policy was more satisfactory to the President. Only six senators supported Stevenson.
It has been recently reported, and not denied, that Mr. Reagan himself has never discussed the settlements issue with Mr. Begin.
Former Israeli Supreme Court Justice Haim Cohen said, ''We hold (the West Bank) as trustees only. It is elementary knowledge that a trustee who takes for himself from the trust property is stealing in one of the ugliest ways.''
All the leading nations of the world consider Israel's settlements policy damaging to the peace process. The policy is highly controversial even within Israel and the American Jewish community. Americans profess to support a just peace for both the Israeli and Palestinian people, yet our leaders and elected representatives are unwilling to address this vital aspect of the problem. If they continue to lack resolve, they encourage more decades of strife and human suffering, and wars even more destructive than in the past.