Middle East and Aid to Israel May Dominate Fall Debates

By Dennis J. Wamsted

Capitol Hill is relatively quiet this month, as Congress is in the midst of its traditional month-long August recess. But all that will change once Congress returns to Washington following the Labor Day holiday in early September.

Although the congressional agenda remains unsettled, Middle East issues may well dominate the fall's political debates. The reason: Israel's expected request for $10 billion in US loan guarantees to pay for the resettlement of Soviet Jews.

The $10 Billion Question

As part of the supplemental aid package approved by Congress following the Gulf war with Iraq, the US earmarked an additional $650 million in aid for Israel, ostensibly to offset that country's war-related expenditures. These supplemental funds will be added to the now-standard Israeli foreign aid request—some $3 billion in economic and military aid—that is now working its way through Congress. In short, before Congress adjourns this fall it will have approved almost $3.7 billion in cash grants to Israel for fiscal year 1992, which begins October 1, 1991.

But that's not all. Since the beginning of the year Israeli leaders have been planning to ask the US for even more money—some $10 billion in loan guarantees to offset the cost of resettling Soviet Jews in Israel.

While long planned, Israeli officials agreed in the spring to postpone officially requesting the aid until September. But the delay has not dimmed Israel's expectations. Indeed, it may have heightened them. According to a report carried by the Reuters news service in May, Israel's Ambassador to the US Zalman Shoval was calling the as yet unofficial aid request a "debt to normalize Jewish history."

Shoval added: "We are going to ask the United States government and Congress and we're going to do that very soon, in September, for additional immigrant absorption guarantees of up to an amount of about $10 billion over the next five years—2 billion every year."

Congressional Outlook

In years past, such a request might not have even sparked a debate, given the traditional unwillingness of many congress members to vote against Israel for fear of tangling with the American Israel Public Affairs Committee (AIPAC), the principal pro-Israel group on Capitol Hill and one of the most feared lobbies in Washington. But these are not normal times. The US budget is stretched thin and the country is only now beginning to recover from the 1990-91 recession. Perhaps most importantly, a number of congress members are finally beginning to question openly the need to send billions of dollars overseas when there are so many unmet needs here.

These concerns were first raised last spring by Rep. Tim Valentine (D-NC) and a number of other congress members concerned about the level of aid being earmarked for Israel. During consideration of the supplemental package, Valentine proposed removing the entire $650 million in additional aid for Israel from the $15.8 billion worldwide foreign aid bill. He argued that the US could not afford such largess "at a time when we are struggling under the weight of a recession. . . . " We do not have the funds for this aid, Valentine continued. "We simply cannot afford to continue to support the economies of other nations when our own economy is stagnant."

Valentine's proposal was defeated, but 23 other representatives sided with the North Carolina Democrat in publicly opposing additional aid to Israel.

The Settlements

Perhaps even more important than Valentine's proposal were the comments offered by Rep. David Obey (D-WI) concerning the aid package. Obey, the chairman of the Appropriations Committee's Foreign Operations Panel and one of the more respected members in the House, particularly concerning Middle East affairs, raised the subject of settlements in the occupied territories.

Speaking on the House floor, Obey stated that "Israel has an obligation ... to see that every Soviet Jew that is resettled in Israel is resettled in an area which does not inflame the region ... I do not believe those additional refugees ought to be settled in what is now referred to as the occupied territories in the West Bank and Gaza."

Similar concerns were voiced by Rep. John Bryant (D-TX) and others during House consideration of the foreign aid authorization legislation in late June. (See "Jews and Israel" on page 69 of this issue for a profile on Rep. Bryant.) During that debate, Bryant, who is not a member of the House Foreign Affairs Committee, offered an amendment to cut the $3 billion aid package to Israel by $82.5 million—the amount he said Israel was spending to expand existing and build new settlements in the occupied territories.

Bryant was particularly critical of Israel's rush over the past several months to seize significant new tracts of Palestinian lands in the occupied territories, some 20,000 acres in only a month's time—just as Secretary of State James Baker was shuttling between the US, Israel and the rest of the region in an attempt to prod the peace process forward. "The Likud government's provocative announcement of more settlements on the day Secretary Baker arrived on a peace mission spoke louder than I possibly can in this regard," Bryant continued.

Brought to a vote, Bryant's proposal—like Valentine's—was defeated. But this time, 42 other members had the courage to buck AIPAC and the pro-Israel lobby to voice their displeasure with Israel's settlement policy. .

Loan Legalese

Beyond the unease with Israel's current settlement policy, there is another issue that could sway Congress as it weighs Israel's loan guarantee request: money. In the past, loan guarantees, which do not technically require the US to pay out the money at the time they are given, were a relatively easy way to offer a country such as Israel additional aid. The US guarantee would enable Israel or another country to negotiate a favorable interest rate from a commercial bank, which could afford to overlook the potential for a loan default because of the US guarantee. In short, this arrangement offered significant economic advantages to the recipient, but it exposed the US Treasury to substantial risk.

A similar situation in the savings and loan industry, where the US guaranteed S&L deposits while exerting only token regulatory oversight, will cost the Treasury, meaning the US taxpayer, billions of dollars to rectify. This has also changed the US approach to loan guarantee programs. After Oct. 1, all loan guarantees extended by the US government, whether to domestic S&Ls or foreign countries, will have to be backed by some actual appropriated funds. The exact amount of the required appropriation will depend on the government's assessment of the likelihood of a default by the recipient.

The fact that the guarantees are no longer without immediate cost could significantly alter this fall's debate.

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

SIDEBAR

House Members Who Supported the Bryant Amendment to Put Strings on Aid to Israel

During consideration of the fiscal 1992-1993 foreign aid authorization bill on the House floor in June, Rep. John Bryant (D-TX) offered an amendment to reduce economic aid to Israel by $82.5 million unless the Israeli government could prove that it was not spending that money to build new or expand existing settlements in the occupied West Bank and Gaza Strip.

Although Bryant's measure was overwhelmingly rejected following intense lobbying by the American Israel Public Affairs Committee (AIPAQ, the principal pro-Israel lobby on Capitol Hill, 42 members sided with Bryant. These members are listed below in alphabetical order by party.

DEMOCRATS

Neil Abercrombie, HI, Charles Bennett, FL, David Bonior, MI, Rick Boucher, VA, John Bryant, TX, John Conyers, MI, Peter DeFazio, OR, Ronald Dellums, CA, John Dingell, MI, Mervyn Dymally, CA, William Ford, MI, Charles Hayes, IL, Carroll Hubbard, KY, William Lipinski, IL, Jill Long, IN, Romano Mazzoli, KY, Frank McCloskey, IN, G.V. Sonny Montgomery, MS, James Moran, VA, Austin Murphy, PA, Mary Rose Oakar, OH

Glenn Poshard, IL, Donald Pease, OH, Timothy Penny, MN, Nick Rahall, WV, Richard Ray, GA, Bernard Sanders, VT (Independent), Gus Savage, IL, Gene Taylor, MS, James Traficant, OH, Bruce Vento, MN, Craig Washington, TX, Maxine Waters, CA

REPUBLICANS

William Dickinson, AL, James Hansen, UT, Alex McMillan, NC, Clarence Miller, OH, Thomas Petri, WI,

Frank Riggs, CA, Dana Rohrabacher, CA, Toby Roth, WI, Gerald Solomon, NY, Bob Stump, AZ