Aid to Israel—Again

By Dennis J. Wamsted

The unprecedented debate concerning aid to Israel launched by Sen. Robert Dole (R-KS) in January continues to roil Congress. The Kansas Republican's proposal was blasted by a bipartisan group of 73 senators, who urged the administration in a letter not to reduce aid to Israel or Egypt. However, Dole's plan has garnered several influential proponents, including Sen. Robert Byrd (D-WV), the powerful chairman of the Senate Appropriations Committee, and Secretary of State James Baker.

Byrd's Backing

The West Virginian outlined in a speech on the Senate floor last February his support for Dole's proposal to raise money for Eastern Europe by cutting five percent from all of the earmarked US foreign aid funds (see the March 1990 Washington Report for details). "No foreign country has earned the right to our money or resources," Byrd said. "And no foreign country can assume it has an American entitlement program.

"Some countries, certainly the largest of our historic aid recipients [Israel is the largest single recipient of US foreign aid], can probably take cuts substantially larger than five percent. Somewhere between 10 percent and 20 percent would be more realistic." While saying that he was not "singling out any nation," Byrd added: "No one, including Israel, is exempt."

Overall, it is time for a "reformation of our foreign assistance programs," the West Virginia Democrat continued, to provide more aid for the emerging democracies in formerly communist Eastern Europe.

Byrd, formerly the Senate majority leader and one of the chamber's most powerful senators, also warned his colleagues and the administration that he would not support significant increases in the foreign aid budget. "The size of the foreign aid budget is not going to grow as the result of the so-called peace dividend," he said. "I'm saying we should not increase the size of the pie."

The West Virginian's comments carry particular weight because of his status as chairman of the Senate Appropriations Committee. In the past, Byrd has generally respected the wishes of the panel's 13 subcommittee chairmen, but his newly articulated position will likely make it harder for the pro-Israel lobby and its congressional supporters to boost aid to Israel this year. Specifically, Byrd—who made it clear when he relinquished his position as majority leader that his overriding goal as chairman of the Appropriations Committee would be to benefit his home state—warned that it would be inappropriate for foreign aid to "grow out of proportion to our domestic programs. Czechoslovakia needs anew road system," he continued, "but so does the United States."

State's Statement

Unwilling to challenge the pro-Israel lobby, the State Department has generally shied away from proposing cuts in aid to either Israel or Egypt. But Secretary of State Baker shattered this cautionary attitude recently by indicating his support of across-the-board cuts in the US foreign aid budget.

Baker, testifying before the House Appropriations foreign operations subcommittee that is chaired by Rep. David Obey (D-WI), proposed "shaving" aid to the largest recipients of US aid in a "non-discriminatory manner." Baker declined to specify a specific percentage, but he indicated that Dole's proposed five percent reduction would be acceptable if it were applied across-the-board.

Congressional Reaction

Notwithstanding this high-powered Democratic support for Republican Dole's proposal, a significant reduction in aid to Israel this year remains problematic. Indeed, shortly after Sen. Dole proposed his plan, a group of 73 senators wrote President Bush calling on him not to cut aid to Israel or Egypt this year. Any reduction in aid would "send the wrong signals to the most extreme and violent factions in the area," the group wrote in a letter organized by Sen. Carl Levin (D-MI), who received $116,000 from pro-Israel PACs in 1989 for his difficult re-election campaign this fall.

"We should reaffirm the support of the US for upholding our foreign assistance commitments to Israel and Egypt," the letter said. "Budgetary realities force us to make difficult choices, but retrenching our commitment to assistance to Israel and Egypt would not be a wise choice. We urge you to oppose any such suggestion."

New Schemes

While a reduction in aid may be unlikely, it is also unlikely that Israel's congressional supporters will be able to boost its foreign aid funding this year. Given this reality, Sens. Bob Kasten (R-WI) and Patrick Leahy (D-VT), introduced legislation (S. 2119) earlier this year to provide $400 million in loan guarantees for Israel. According to the Israeli government, the funds, which were initially requested by Finance Minister Shimon Peres last September, would be used to finance the construction of housing for the thousands of Soviet immigrants expected to move to Israel in the coming months.

The legislation introduced by Kasten and Leahy, who are the chairman and ranking minority member of the Senate Appropriations foreign operations subcommittee, respectively, would give Israel the $400 million under the terms of the Agency for International Development's (AID) Housing Insurance Guaranty Program. This largely unknown program guarantees 100 percent of the principal and interest on loans secured by foreign governments through commercial banks to pay for housing construction.

As with many of the other aspects of the US foreign aid program, the Senate proposal would earmark special benefits for Israel. To begin with, the $400 million would be by far the largest amount ever guaranteed under the program's auspices. In fact, the proposal is so large that Congress would be required to alter three existing program limits:

a $100 million annual cap on the entire program;
a $25 million annual limitation on the amount of guarantees that can be approved for any one country; and
a $2.16 billion cap on the total amount of guarantees that can be issued.

In addition, the proposal would waive the management fees normally charged foreign governments that participate in the program. The program's standard fees are one percent of the total amount of the loans, paid up front, along with an annual fee of 0.5 percent. All told, this will save Israel $4 million initially and roughly $2 million in each subsequent year. This benefit may hurt other participants, however, since they are likely to be socked with higher fees to recover the costs not charged to Israel.

The Kasten-Leahy proposal would also exempt the Israelis from AID oversight, which could enable the Israeli government to build the new housing in the occupied territories without fear of US retribution.

The Outlook

Congressional observers believe that this measure is almost certain to pass, and that it will be attached to other pressing legislation such as the standard mid-fiscal year supplemental appropriation bill, to preclude a presidential veto threat. Although the funding proposal will not require the Treasury to pay the $400 million up front, it remains to be seen how much this measure will ultimately cost the United States.

FACTS FOR YOUR FILES:

Senators not signing Carl Levin's (D-MI) letter to President Bush regarding aid to Israel were few and far between. All told, 73 senators signed the January 30 letter that urged Bush not to cut aid to Israel. Interestingly enough, however, nine of the senators running for reelection this fall did not sign the letter, demonstrating a degree of independence from the pro-Israel lobby that is rarely seen during election years. Those that did not sign the letter are listed below in alphabetical order by party.

DEMOCRATS

Dale Bumpers (AR) Robert Byrd (WV)

Ernest Hollings (SC) Herbert Kohl (WI)

Patrick Leahy (VT) Sam Nunn (GA)*

David Pryor (AR)*

Terry Sanford (NC)

REPUBLICANS

William Armstrong (CO)

John Chafee (RI)

Robert Dole (KS)

Pete Domenici (NM)*

Jake Garn (UT)

Mark Hatfield (OR)*

Jesse Helms (NC)*

James Jeffords (VT)

Nancy Kassebaum (KS)*

Richard Lugar (IN)

James McClure (ID) **

Frank Murkowski (AK)

William Roth (DE)

Warren Rudman (NH)

Alan Simpson (WY)*

Ted Stevens (AK)*

Steve Symms (ID)

Strom Thurmond (SC)*

Malcolm Wallop (WY)

* indicates that the senator is up for re-election this year.

** indicates that the senator has decided not to run for re-election this fall.

Dennis J. Wamsted is a free-lance writer specializing in Mideast affairs and the US Congress.