Switching Sides on Lavi & FSX

By Dennis J. Wamsted

Full Circle For Levine

Rep. Mel Levine (D-CA), a staunchly pro-Israel member of the House Foreign Affairs Committee, pushed hard to maintain US funding for Israel's ill-fated Lavi jet fighter development program in the mid-1980s. The California Democrat remained a strong supporter of the Israeli program even though it cost the US government billions of dollars and cheaper, equally capable alternatives were already available in the US.

Ironically, Levine is now spearheading a drive in Congress to force the Japanese to purchase existing US-manufactured F-16 jet fighters, instead of coproducing a more advanced version in Japan. Notwithstanding the importance of the US-Japanese relationship, or perhaps because of the still widespread fear among congressmen of the influence of the pro-Israel lobby, Levine's policy reversal has gone largely unnoticed.

"We must start treating our industrial competitiveness as a critical component of the national security of our nation," Levine testified before a recent hearing of the House energy and commerce subcommittee on commerce, consumer protection, and competitiveness. "This agreement is flawed" the California Democrat said. "The FSX [Fighter Support Experimental] arrangement the administration is proposing is an excellent example of how our trade and defense policies are often at odds, leading to poor results in both ... We cannot, of course, prevent Japan from becoming a competitor in aerospace, but I do not see why we have to subsidize the development of our own competition."

Subsidizing the competition, however, is exactly what Levine wanted the US to do when he repeatedly urged Congress and the Reagan administration to support the Israeli Lavi research and development program. Since the needs of the Israeli air force were limited to about 300 planes, Israel would have been forced to sell the Lavi in overseas markets to lower its overall unit costs if production had continued. The most likely competitor: the F-16 manufactured by General Dynamics.

Nielson Speaks Out

The only member of Congress to question Levine publicly about his reversal was Rep. Howard Nielson (R-UT). Nielson, a Mormon who serves on the House Energy and Commerce and Government Operations committees, has never been deeply involved in Middle Eastern issues. However, the Utah Republican is well-respected on Capitol Hill, and is obviously not cowed by the influence exerted in Congress by the pro-Israel lobby. During the question and answer period at Levine's appearance before the Energy and Commerce Committee, Nielson asked the California Democrat how the proposed FSX deal differed from earlier US support for Israel's Lavi development pro-grain. Levine responded lamely that American support for the Israeli program did not worsen the bilateral trade picture between the two countries, as would US support for the FSX proposal.

Much like Levine, Sen. John Danforth (R-MO) has come out publicly against the proposed Japanese-US coproduction agreement. Indeed, the Missouri Republican has actively opposed the plan for more than two years, when he first wrote then Secretary of the Treasury James Baker to voice his concerns about the deal. "Here is a case where the US product is better and cheaper than any reasonable estimate indigenous Japanese production," he wrote. According to estimates produce, the senator's office then, Japan would have to spend at least $10 billion to manufacture the plane domestically, while buying the same number of aircraft from the US would cost only $4.5 billion.

Danforth's opposition to the coproduction deal remains strong, and for good reason. If the Japanese are forced to purchase the planes directly from the US, the company that would benefit the most would likely be Missouri-based General Dynamics.

(The coproduction agreement with Japan, though not potentially as beneficial to General Dynamics, would nevertheless generate an estimated $500 million for General Dynamics as well as a share in future spin-offs.) Interestingly, although continuation of the Lavi development program would also have diverted jobs and profits away from General Dynamics in Missouri, Danforth remained conspicuously silent while the US funneled billions of dollars to Israel for the Lavi program.

Obey's Foreign Aid Plan

A plan floated by Rep. David Obey (D-WI), the influential chairman of the House Appropriations foreign operations subcommittee, would slice roughly $1.4 billion from the $14.6 billion foreign aid request submitted to Congress earlier this year by President Bush. The foreign aid total for fiscal year 1990 under Obey's tentative "chairman's mark" would be $13.3 billion, a full $1 billion less than the current fiscal year's $14.3 billion aid figures.

The plan was criticized by Secretary of State James Baker during a mid-March hearing before Obey's subcom mittee. "I think we ought to cooperate to try and get the largest amount we can, not start out by saying we're going to take a big bath here," the secretary told Obey. Rather than conceding prior to negotiations, Baker suggested, "you ought to go in with a [budget recommendation] that gives you some basis from which to move down. " But Obey was adamant. "The Congress, in my judgment, is not going to raise foreign aid in the context of making some of these other very large reductions on the domestic side of the budget," the Wisconsin Democrat told Baker.

Aid Inequality

As outlined by Obey, the plan would sharply cut funding for both the military and economic assistance accounts—the two single largest components of the foreign aid budget. Obey proposed spending $4.4 billion for military assistance, down slightly from the current level but fully 14 percent less than Bush's budget request. Similarly, the Economic Support Fund (ESF) would be trimmed significantly, failing to just $2.9 billion or 14 percent less than the amount requested by President Bush. Other components of Obey's proposal include $2.9 billion for bilateral assistance administered through US AID programs, $1.4 billion for aid administered by international banks, $500,000 for US Export-import Bank loans, and miscellaneous programs bringing the total to $13.3 billion.

However, the cuts proposed by Obey would not be felt equally by all US aid recipients. In fact, Obey assumed that aid to Israel and Egypt would remain at the proposed levels. Or, in other words, Israel alone would receive more than 40 percent of all US economic and military assistance under the terms of Obey's proposal. Combined, Israel and Egypt would account for about 70 percent of the two budget accounts in Obey's plan. Clearly, some aid recipients are more equal than others, even in the eyes of the usually fair-minded foreign operations chairman.

Congress Questions Egyptian Aid

Notwithstanding Obey's assumption that Congress would fund President Bush's full request of just over $2 billion for aid to Egypt in fiscal 1990, a number of congressmen are beginning to question the efficacy of the huge US aid program. In particular, Rep. Lee Hamilton (D-IN), the powerful chair of the House Foreign Affairs Europe and the Middle East subcommittee, sharply criticized the Egyptian government recently, questioning its willingness to enact economic reforms and the wisdom of continued US investment there.

Even more bad news lurks just several months away for the Egyptian government, which is deeply in arrears on its huge $10 billion debt—including at least $4.5 billion in past weapons purchases—to the US. According to US law, if Egypt is more than a year in arrears on its debt payments by the end of June, the Bush administration will be forced to suspend all aid in July. And, in fact, the Bush administration is already withholding $230 million in cash aid earmarked for Egypt in an effort to pressure the government into enacting economic reforms.

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