Loan Guarantees for Israel Can Entrap Democratic Candidate in 1992

By George Moses

It's a political axiom that Americans do not base their votes on foreign policy issues. US guarantees of $10 billion in Israeli loans could prove to be an exception, however, in the congressional and presidential campaigns of 1992.

In September, when Israel called it "absorption aid,'' President Bush and most congress members committed themselves to help resettle Soviet Jews in Israel. To cement a further commitment to $2 billion in guarantees for each of the next five years, the strategy of Israel's friends in Congress was to move for quick approval before opponents could marshall significant resistance.

Unfortunately for the American Israel Public Affairs Committee (AIPAC), President George Bush "went public" in requesting a 120-day delay in congressional action on the request in order to link it to the peace process. During the first days of that delay, the truth about the money's intended use leaked out. A member of the Knesset told the public that Israel was budgeting $2 billion during the coming year for Jewish settlements in the occupied territories, a statement confirmed by Israel's central bank.

Thus it became clear that what Israeli Prime Minister Yitzhak Shamir's government has in mind when it talks about "absorption aid" is aid for absorption of more Palestinian land. This revelation came hard on the heels of Shamir's statement that "the Green Line between Israel proper and the occupied territories no longer exists." Although there was little press reaction to these facts, private congressional reaction was swift and negative.

Since then, a number of congressmen have quietly made clear that previous commitments they may have made to support "absorption aid" do not necessarily extend to a commitment to support the $10 billion package. The White House, repeatedly and very publicly, is saying the same thing. Taken together, these factors give the president latitude to cut the Israeli request down to a much more modest scale in January. He has a number of reasons to do so.

Even among potential foreign aid recipients, friction between the haves and have-nots is growing. Candidates and the public have heard the pleas for economic help from the Soviet Union and Eastern Europe. The scale of the help being asked has caused a serious political panic, of which the plan to take $1 billion from the defense budget for aid to the Soviet Union was the first casualty. The amounts of money being discussed to help these obviously needy claimants are multiples of the present foreign aid budget, but American help on that scale would be swimming against the anti-foreign aid public opinion tide. On the other hand, millions of Americans with ethnic roots in Eastern Europe do not want to hear that nothing can be done.

More important elements in both administration and congressional calculations are the public budget disasters proliferating throughout America. Every day newspapers across the country report reductions in school spending, police layoffs, deferred maintenance on roads and bridges and limitations on other municipal services. Several cities have gone so far as to put themselves into receivership. The city of Philadelphia has a credit rating so bad that it was recently forced to borrow money at an interest rate of 27 percent.

Thus characterizations of the loan guarantees as a glaring misallocation of resources in the face of unmet domestic requirements fall on fertile ground. Prompted in part by financing of the Budget Priorities Project (available through this magazine), Rep. James Traficant has introduced a resolution to prohibit the US government from guaranteeing loans to foreign borrowers unless it also guarantees the borrowings of all American states and cities. Such a resolution, unimaginable just six months ago, now presents a serious obstacle to AIPAC's campaign to slip the guarantees through Congress without debate and without an up or down vote if possible.

The way the fight on loan guarantees plays out will depend on the ability of opponents of the loan guarantees to keep that subject high on the political agenda. More and more political groups have joined this fight and, so long as the White House continues to provide leadership on the subject, the effect on Congress will be substantial.

The White House has a strong political incentive to keep its eye on proponents of the guarantees. If the ghost of Lee Atwater had come back to lay a political trap for Republicans to spring on Democrats it could not have been more artfully crafted. The very essence of the trap is the Democrats' own dilemma.

As things now stand, what underpins public support for George Bush is his handling of American foreign policy. (Mario Cuomo has described Bush's platform as consisting entirely of the statement "I won the war and the other guy's a jerk.") Obviously, Democratic strategy is to shift the debate to Bush's domestic policy agenda, on which they believe he is vulnerable. Polls tend to bear them out. As discussion of the recession expands, Bush's extraordinarily high approval ratings of last spring and summer decline.

As a result of these decisions by Democratic strategists, the theme of individual Democratic presidential campaigns is that America should see to the needs of its own citizens before sending more aid abroad. Israel's request for an additional $10 billion in aid could not come into a worse political setting for such presidential candidates as Tom Harkin, Douglas Wilder and Mario Cuomo. They will have to reconcile their heavy dependence on the Israel lobby for campaign funding, along with their on-the-record support for a major increase in aid to Israel, with their own rhetoric on the need to do more at home while reducing the deficit and not raising taxes.

That explanation had better be good. The message for next November's election seems crystal clear today: voters across the country are mad as hell and they aren't going to take it anymore. There are free "Thornburgh for Senator" buttons available for anyone who doesn't believe this is true.

By fighting a Bush recommendation for an " absorption aid" package substantially smaller than $10 billion, Democratic candidates elevate a major foreign policy issue that has the capacity to draw public attention away from domestic problems. Debate on the guarantees will only highlight the obvious inconsistencies of Democratic candidates who demand that more be done for Americans while also supporting more foreign aid for Israel, and a particularly recalcitrant Israeli government, during a domestic budget crisis The greater the public awareness of this conflict, the more damage it poses for Democrats running for office next November. And the louder candidates protest, the tighter the political bind.

For Americans opposed to the guarantees, the question to candidates is easy: are you for apartments in the West Bank or apartments on the West Side? For politicians who used to profit politically from being Shamir's robots on this issue, it will be an uncomfortable question indeed.

George Moses is a legislative and economic consultant based in Washington, DC.