GEORGE BUSH'S tough line on loan guarantees to Israel may paradoxically lead to an Israeli backlash that could reelect Prime Minister Yitzhak Shamir - precisely the opposite of what President Bush wants. The best approach for the United States is to tone down the rhetoric and let Israel's democracy function without the rancor of US-Israel bickering.
In internal deliberations earlier this month, Mr. Shamir's Likud Party compiled its Knesset list for the June 23 general elections. Shamir, Defense Minister Moshe Arens, and Housing Minister Ariel Sharon forged a hard-line alliance that delivered a severe blow to the more moderate foreign minister David Levy's camp and the free-market-oriented Liberal faction within the Likud.
While the long-term meaning of this development is unclear, the Likud has clearly chosen to present a right-wing slate to the Israeli public.
Shamir's rightward turn could, as always, signal a short-term tactic or a longer-term strategy for the campaign. In the former case, Shamir - having consolidated his authority and presented a conservative slate to the electorate - could choose to display flexibility on the peace process and settlements. Under this scenario, Shamir would vigorously fight for the center of the political landscape with Labor's Yitzhak Rabin.
In the latter case, Shamir could decide that his best electoral strategy is to shore up Likud's support on the right and run against Washington. His concept would be to reduce support for smaller right-wing parties so that the Likud would be able to forge a more stable coalition government with its traditional religious partners.
Shamir's calculus may well be affected by recent developments in Washington. Bush's rejection of a congressional compromise on loan guarantees coupled with Secretary of State James Baker III's harsh tone toward Israel in congressional hearings on that issue has already led to accusations that the Bush administration is actively working for Shamir's ouster.
Reporting out of Israel indicates that the predominant view among Israelis is that leaks about alleged unauthorized Israeli arms transfers are part and parcel of the effort to unseat Shamir. These suspicions have only been confirmed by accusations that Mr. Baker and the administration have crudely written off Jewish electoral support in this year's presidential election.
While feigning disinterest in internal Israeli political developments, the administration and Arab delegations to the Arab-Israeli peace talks have taken a position clearly designed to foster Mr. Rabin's candidacy. The calculus behind the strategy is that if the Israeli public comes to understand that reelecting the Likud will only bring economic setbacks, deterioration in US-Israeli relations, and stalemate in the peace process, they will vote for Labor.
This could happen. A more assertive Labor Party, a new Soviet Jewish party attracting votes from the economically desperate, a prospective breakaway Liberal faction - all provide possibilities for a Likud defeat.
BUT the tone which has marked the US approach to Israel in recent weeks could also backfire. If Israelis realize that the US intends to use the full weight of its economic and political influence to force Israel to capitulate on key issues affecting security, they may prefer to reelect the tough Likud leadership they know and hope for the best in the American elections this November.
The Bush administration's demand for a total freeze of new Israeli settlements if Israel is to receive loan guarantees may constitute just such an issue.
If the Bush administration remains firm on the principle of no new settlements outside of Israel's June 1967 borders, it will have an impact on the political debate in Israel - but this impact could shape the debate in a manner which the US will not appreciate.
It may not only lead the Likud to run against Washington, but force the Labor Party to assert positions on settlement activity that will make agreement with the US difficult even if Labor should be elected. A Rabin-led Labor Party cannot be expected to abandon what it views as Israel's legitimate right to settle throughout greater Jerusalem or in the Golan Heights
ln 1977, the last time Rabin ran for prime minister, the American administration tried to influence Israel's political process - and failed miserably. It would be best for all concerned to remember the past, tone down the rhetoric, and let Israel's democracy work on its own.