AFTER a four month time-out, the Bush administration and the Shamir government are tussling again over the issue of loan guarantees. The administration has softened its condition of a freeze on settlement-building in the occupied territories by allowing the completion of ongoing construction, if the terms of the loan-guarantee proposal are substantially scaled back from from the original $10 billion over 5 years.
The signals from the Israeli political scene are confusing and not very promising. Prime Minister Yitzhak Shamir and other Cabinet members have claimed that the government would reject conditional loans - although the government is now involved in negotiations concerning such conditions. Recently, Mr. Shamir has suggested that Israel need no longer feel bound by the Camp David agreements because of the "changes" that have taken place since 1978.
One of his aides has explained that, among other things, he was referring to the vast increase in the number of Jewish settlers residing in the occupied territories. The past few weeks Israeli sources have stated that, during 1991, settlement building in the occupied territories expanded faster than has been officially admitted. These factors seem to confirm the government's rejection of the territory-for-peace principle.
Yet Israel badly needs external financial help, and Shamir has to nourish relations with the United States. He has promised not to use American loans for housing construction in the occupied territories. That, however, is not a concession. First, it has been an accepted condition for regular American foreign aid to Israel. Second, the real problem is that American grants or loans, even though they are not used directly for that purpose, still allow Israeli authorities to invest other funds in Jewish colo nization of the occupied territories - investments urgently needed in Israel proper.
While the outcome of the loan guarantees tug-of-war is as yet undecided, the US administration has again been accused of turning against Israel because it continues to link the guarantees to the "peace process." It has also been accused of fundamentally deviating from the policies of previous administrations. But these accusations are unfounded.
Consider the following:
* The Bush administration, like its predecessors, is committed to the security of the Jewish state. In spite of serious budgetary problems and the public's general and increasing dislike of foreign aid programs, it has not tried to reduce military (or economic) aid to Jerusalem. The president has heeded Israeli worries about arms sales to Arab states more than predecessors like Ronald Reagan or Jimmy Carter. He even took the unprecedented step of sending military personnel to man Patriot installations de fending Israel against Iraqi Scud attacks.
* Ever since Security Council Resolution 242 was passed in November 1967, the US has adhered to the territory-for-peace principle imbedded in it. American presidents have regularly criticized Israeli settlement policies as an obstacle to peace.
* No American administration has accepted the unilateral annexation of East Jerusalem by Israel. Perhaps President Reagan came close, but even he discouraged proposals to move the American embassy to Jerusalem. The official position has consistently been that Jerusalem should remain undivided but that its final status should be defined through negotiations.
* In the 1970s, Palestinian nationhood and the Palestinian right to self-determination were widely recognized internationally. The US hesitantly came to acknowledge "legitimate" and even "political" Palestinian rights. No administration, however, has backed the establishment of an independent Palestinian state next to Israel. The Bush administration squarely remains within this tradition when it advocates Palestinian self-government in the West Bank and Gaza in a manner acceptable to Israelis, Palestinia ns, and Jordanians.
* All American administrations have abided by the rules set by Secretary of State Henry Kissinger and Prime Minister Yitzhak Rabin in 1975, that the US would not recognize or negotiate with the Palestinian Liberation Organization before that organization had acknowledged Israel's right to exist and accepted resolutions 242 and 338.
In December 1988, the Reagan administration that decided the PLO had complied with these conditions and opened a dialogue with it. The Bush administration suspended the talks when it became convinced that the PLO was backtracking on its commitments. On the other hand, ever since the Kissinger-Rabin agreement of 1975, all administrations have sought to maintain indirect, informal contacts with the PLO, realizing the organization's influence and the need for Palestinian negotiating partners.
And yet a widespread impression of radical policy change persists. What is causing it? The breakdown of the Soviet empire and the creation of an American-Arab military coalition in the war against the Iraqi regime convinced the Bush administration of unprecedented opportunities to implement long-existing policy principles.
Whether the Bush team will pursue its activism in the face of a tough re-election campaign, huge domestic problems, and obstruction of the "peace process" by various Middle Eastern partners is uncertain. The outcome of the loan-guarantees struggle may present one important clue.