The Busy Month of June

By Dennis J. Wamsted

Legislators in both chambers of Congress are working on a host of bills related to the Middle East. The House and Senate ended two years of bitter debate and approved a four-year extension of the Export Administration Act (EAA). The bill's passage constituted a small victory for the Administration and its Middle East policies. The State Department convinced Senator Alan Dixon (D-IL) and Representative Howard Berman (D-CA) to withdraw an amendment they had sponsored to place Iraq back on the EAA's "terrorist list." The Administration had voiced concern that such a move would damage growing political and economic ties between the U.S. and Iraq. Consequently, the administration lobbied hard, and successfully, to defeat the proposal.

After the June 14 hijacking of a TWA jetliner, several bills were introduced in both houses dealing with air piracy and methods of guaranteeing the safety of U.S. citizens traveling abroad. (At this writing, however, the legislative future of those bills remains cloudy.) On June 27, Congress reauthorized for four years the United States' Strategic Petroleum Reserve and the country's participation in the International Energy Agency.

Despite the importance of all of those issues, much attention was focused on two other subjects throughout June: The Administration's public effort to provide first military, and then economic, aid to Jordan, and a behind-the-scenes congressional effort to increase aid to Israel.

The Reagan Administration's plan to sell a package of advanced weaponry—including 40 jet fighters, either F-16s or F-20s, and several types of offensive and defensive missiles—to the Kingdom of Jordan was derailed in June before it was even officially announced. On June 4, Senators John Heinz (R-PA) and Edward Kennedy (D-MA) introduced a resolution, with 67 cosponsors, opposing an arms sale to Jordan under present conditions. By mid-month five other senators had added their signature to the resolution—which states, in part, that arms sales to Arab countries "jeopardize both the security of Israel and progress toward peace in the Middle East." Facing such determined resistance, the Administration decided, once again, to postpone action on the sale for the indefinite future.

Instead, the Administration opted for an economic package totaling $250 million. As originally proposed, $100 million of the total would have been in the form of direct cash assistance, $100 million in commodity aid and $50 million in direct project aid. Additionally, the package was to be disbursed over a period of 15 months. Although the Senate approved the Administration's request by voice vote on June 20—attaching it to an omnibus supplemental appropriations bill for fiscal year 1985—its version differed substantially from the Administration's original proposal.

Under an amendment proposed by Senators Robert Kasten (R-WI) and Daniel Inouye (D-HI) the funds will be disbursed over a 27-month period. In addition, the Senate Foreign Relations Committee struck down the Administration's request to send cash assistance to Jordan, stipulating that $160 million of the $250 million package be spent on specific projects and the remaining $90 million on commodity imports from the United States. Senator Joseph Biden (D-DE) said the committee rejected the idea of a cash transfer because the United States would be unable to control how the monies were spent. Biden himself worried that the Jordanians might use the aid to pay for weapons purchased from the Soviet Union.

A piece of good news for the Administration was that the Senate rejected an amendment offered by Senator Dennis DeConcini (D-AZ) declaring that it was the sense of the Senate that Jordan had to sign a peace treaty with Israel before it could receive U.S. military aid. This was defeated handily, 84-9, and the somewhat less restrictive alternative amendment was adopted that it shall be "the policy of the Congress to consider a Jordanian request for major defense articles upon the commencement of direct peace negotiations between Israel and Jordan."

The next hurdle for the Jordan aid package will come sometime around July 10 when a House-Senate conference will meet to resolve differences between the two chambers on the $14 billion supplemental appropriations bill. A potentially troublesome fact is that the aid package was not included in the original House bill. Indeed, one House Appropriations Committee member, Vic Fazio (D-CA), said outright that the package could prove controversial because it had not been considered by the full House. A Fazio aide commented that the Congressman was also "sensitive" to Israeli concerns that such aid will serve to strengthen a country with which Israel is technically still at war.

In an unrelated development, a quiet effort is underway on Capitol Hill to gain support for a significant restructuring of Israel's debt burden with the United States. This effort is being led by Senators Inouye (the ranking Democrat on the Senate Appropriations Committee) and Kasten (chairman of the Senate Appropriations Subcommittee on Foreign Operations, the body dealing specifically with questions regarding the levels of U.S. foreign aid). They plan to introduce a measure in the Senate to reduce the average interest rate on Israel's outstanding U.S. loans from the current, market rate of 12 percent to a virtually concessionary five percent. Such a reduction, which Inouye says he will propose in an amendment to the fiscal 1986 federal budget, would cost the U.S. taxpayer at least $3.9 billion—the present value of the interest that would be lost through restructuring of Israel's existing loans to the U.S. According to some reports, this proposal would save the Israeli government $500 million immediately and nearly $8.5 billion over the full repayment period.

One of Inouye's aides said the interest-reduction proposal was "in the works," and would probably be introduced sometime in July. Although Inouye had said earlier that he would introduce it as part of the 1985 supplemental appropriation that the Senate adopted in late June, he subsequently decided, according to the Senator's aide, not to offer an amendment at that time so that more "homework" could be done on the Israeli government's efforts to halt the country's economic slide. A "Dear Colleague" letter asking for support when the measure is introduced and signed by Inouye, Kasten, Biden, Alan Cranston (D-CA), Rudy Boschwitz (R-MN) and Alfonse D'Amato (R-NY) is currently making the rounds in the Senate.

Although many congressmen were out of town at this writing, congressional sources indicated that the recently announced Israeli austerity measures probably would convince wavering Senate supporters that Israel is committed to economic reform; thereby improving the chances that the measure will be adopted.

A number of Israel supporters both in and out of Congress, however, are worried that such a massive amount of aid—in addition to the already large sums currently received by Israel—could backfire and seriously damage Israel's long-term interests in the United States. Even Inouye's aide implied that this concern was one of the reasons the measure had not, as yet, been introduced. Specifically, the aide said, "Public opinion would not approve a blank check—even for Israel." Inouye himself has said he believes the amendment's chances for survival are "grim," and that its disapproval would not disappoint him unduly. Indeed, Inouye has hinted that his plan's rejection might allow him and his supporters to restructure the amendment in order to grant Israel the proposed lower interest rate for just one year.

Such tactics—of introducing a measure with no real chance of being adopted and then "compromising"—have been used previously with a great deal of success by the Israeli government and pro-Israel supporters in Congress. For example, when the Israeli government persuaded the United States to break with historical practice and allow it to use some of its foreign military sales (FMS) credits to buy Israeli—instead of American—products for the production of its Merkava battle tank, Israeli government officials said they understood it was a one-time exception. Nevertheless, Israeli officials turned right around and used the Merkava "exception" as justification for the United States to allow Israel to use an even larger portion of its FMS credits for the production of its new Lavi jet fighter.

These past experiences have provided fertile ground for present speculation on the Hill that Inouye is hoping for a similar outcome with his interest rate reduction proposal. Now that he has asked for the "sky," he can "compromise" and still add to the effective aid that the U.S. Treasury annually provides to Israel.

Dennis J. Wamsted, of Washington, D.C., has lived and studied in the Middle East and writes frequently on it.