 |
November 1991, Page 15 Congress
Bush Sweeps the Field in Loan Guarantee Confrontation
By Dennis J. WamstedThe debate over providing upward of $10 billion in housing loan guarantees to Israel has been postponed at least until early February. The delay, which was requested by President Bush in early September because of concerns that the loan might scuttle a planned Arab-Israeli peace conference this fall, is a major defeat for the pro-Israel lobby and its congressional supporters. Although Israel's congressional supporters are loath to admit it, the delay for the first time has linked US aid to Israeli policies, in this case the Israeli government's expressed intent to continue building settlements in the occupied territories. As Secretary of State James Baker was quoted by Reuters during a trip to Syria: "We have a right to know and a right to ask how that aid and those guarantees will be used and, of course, we would expect to ask." Similarly, President Bush, in announcing his delay request, was quoted as saying: "We're interested in absorption aid ... and this debate will take place later on. It should take place, but this is not the time." That time will come in early February when Congress returns to Washington, DC for the second session of the 102nd Congress. While Congress may take up the request promptly in February, there also is a chance that consideration of the loan guarantees will slip until later in the year, since, generally, few bills are passed during the early weeks of a new congressional session.
Surprising SupportPresident Bush's request was well received on Capitol Hill, despite traditional congressional unwillingness to cross the American Israel Public Affairs Committee (AIPAC) and other elements of Israel's US lobby. While not saying they would oppose the guarantees themselves, a number of influential congressmen backed Bush's request publicly. In particular, Sen. Patrick Leahy (D-VT), chairman of the Senate Appropriations foreign operations subcommittee, and Rep. David Obey (D-WI), chair of the House Appropriations foreign operations subcommittee, both backed the president's request. Leahy's and Obey's panels control the US foreign aid program. In addition, newly elected House Majority Whip David Bonior (D-MI) also supported the president's request. Leahy's support was particularly important, since two of Israel's most vocal supporters, Sens. Daniel Inouye (D-HI) and Robert Kasten (R-WI), initially said they would attach an amendment backing the loan guarantees to the foreign aid appropriations legislation. To thwart their plan, Leahy quashed any further committee action on the bill for the year.
A CounterproposalAt the same time, Leahy floated a proposal of his own that may resurface next year when Congress finally debates the loan guarantees. Instead of simply giving Israel the guarantees, as the US now does with all of the $3 billion plus in foreign aid earmarked for the Jewish state, Leahy proposed attaching a key condition to this new aid: for every dollar spent by Israel on new settlements in the occupied territories, as determined by the State Department, the US would reduce its guarantees by an equal amount.
An Inability Worth NotingThe inability of the pro-Israel lobby, working with Kasten, Inouye and others, to force the guarantees on a reluctant president is worth noting. For much of September, Kasten and Inouye said they had secured the support of more than 70 senators for a proposal to provide the guarantees to Israel immediately. But the two never introduced their proposal, raising questions about how firm their support was in the first place. A favorite tactic of the pro-Israel lobby has been to round up signatures of support from senators and representatives on letters to the president in an effort to sway public opinion and to force the administration to support their position. The failure of this approach during the current debate will undercut its effectiveness in future policy disputes.
Debt-for-Oil Swap?Four powerful congressmen have reiterated their support for a debt-for-oil swap with Saudi Arabia. The proposal, first floated in May, calls for writing off the final $3 billion in debt owed to the US by Saudi Arabia in exchange for crude oil. That crude would be used to fill the US Strategic Petroleum Reserve, which now holds roughly 750 million barrels of oil, to the one billion barrel level. The proposal is supported by House Majority Leader Richard Gephardt (D-MO); Rep. John Dingell (D-Ml)' the chairman of the House Energy and Commerce Committee; Rep. Leon Panetta (D-CA), the chairman of the House Budget Committee; and Rep. Philip Sharp (D-IN), the chairman of the Energy and Commerce energy and power subcommittee. The four restated their support for the novel trade in a Sept. 25 letter to President Bush, arguing that the swap would benefit the US economy by insulating the nation from the effects of rapid increases in oil prices, as occurred last fall following the Iraqi invasion of Kuwait. "You remember how unwilling you were to use the Reserve in the fall of 1990, apparently on the basis that there may not be 'enough' in the Reserve," the four wrote Bush. "Had the Reserve been used aggressively—similar to the way that the Federal Reserve Bank fights financial crises—it might have been possible to stem the increase in oil prices, which peaked at over $42 a barrel, and to soften the recession we are now in, " they added. "Your principal economic advisers, as well as you, have stated that the abnormally high oil prices played a significant role in starting and/or aggravating this recession," the four continued. "Filling the Reserve quickly, now that we have an opportunity to do it, in a way that could help both of our countries, is the best way to ensure that we are not in that position again. "Finally, we would argue that an agreement to repay part of the Desert Shield debt in oil would not only make good energy policy, but also be better for the US than to further postpone reaching a definitive plan for repaying the Saudi debt." The initial proposal by the four House members noted that Saudi Arabia currently had at least 300,000 barrels per day of excess capacity that could be used to fill the SPR. Further, the four said, the oil put into the Reserve would not depress world oil prices—a key concern for the Kingdom. The proposal initially was rejected by the administration on June 11, when National Security Adviser Brent Scowcroft told the congressmen that the debt-for-oil swap would not be necessary "since the Saudis had agreed to repay the US fully in cash by July 1st, " according to the congressmen's letter to Bush. " More than two months have passed and Saudi Arabia has yet to pay its final $3 billion installment according to the current DOD [Department of Defense] report," the four noted. "We still believe that an arrangement like the one we suggested to you in May ... could be structured to be in the interest of both of our countries. . . . " Dennis J. Wamsted is a free-lance writer specializing in the US Congress and Middle East affairs. SIDEBAR
EDEN PostponedAn innovative proposal to boost environmental protection efforts in the Middle East has been removed from the foreign aid authorization bill pending in Congress. The proposal, which grew out of concern in the Senate about the impact of the Desert Storm operation against Iraq, would have authorized the US to spend $10 million annually on environmental planning and restoration efforts in the Gulf and throughout the Middle East. Although removed during House Senate negotiations, the proposal may resurface next year, since the conference committee indicated its support for the idea. "The committee ... supports the objectives of the Senate amendment and believes that more attention should be focused on the environmental problems of the Middle East and that more funding should be devoted to projects to deal with environmental problems in the region," the House-Senate negotiators wrote in their report. "The committee ... also believes that a study should be made and hearings held to explore how this issue can be dealt with on a regional basis as suggested by the Senate [proposal]." The Senate plan, officially dubbed the Middle East Environmental Defense Network (Project EDEN), was added to the Senate foreign aid bill during floor consideration of the legislation in late July. The proposal was introduced by Sen. Robert Kasten (D-WI), a strong supporter of environmental projects, and was cosponsored by a number of other senators, including Sen. Quentin Burdick (D-ND), the chairman of the Environment and Public Works Committee. The ambitious proposal would have:
—DJW |