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INA FRIEDMAN
Special to The Jewish News
T
he next time Secretary
of State James Baker
uses his testimony
before Congress to send a
message of prime impor-
tance to Israelis, perhaps he
should consult Israel's
weatherman and political
calendar first.
For the Middle East was in
the throes of a major storm
again last week, and with
whole chunks of Israel cut
off by flooding or snow, de-
velopments in Washington
were the last thing on
people's minds. Other than
the weather, the only real
competition for the attention
of house-bound Israelis was
internal political develop-
ments, as the Likud set to
electing and then ranking
the members of its Knesset
slate.
The results of these elec-
tions have little affect on
real life in Israel. Yet the
wheeling and dealing, back-
biting, and rank betrayals
that surround them hold a
fascination for Israelis
(rather like watching a local
and live rendition of
"Dallas").
So it was that between the
harshness of the elements
and the brutality of intra-
party politics, even the force
with which Mr. Baker threw
down the gauntlet on the
$10 billion in loan guar-
antees was all but lost on the
Israeli public.
One reason for the seem-
ing calm with which the sec-
retary's bombshell went
$10 Billion Guarantee:
How Crucial Is It?
Israelis are confused as to whether the
U.S. aid is more symbolic than economic.
down was Prime Minister
Shamir's retreat into silence
— at least as his initial re-
sponse to the blunt, either/or
terms the Baker deal and
the show of diehard deter-
mination by President Bush
(who implied he would
rather lose the election than
give an inch on the set-
tlements).
Another was the confusion
that has been sown around
the issue by the Israeli
government itself. While Fi-
nance Ministry officials
were working valiantly to
persuade Washington that
only the guarantees could
save Israel from terrible
turmoil, Finance Minister
Yitzhak Moda'i was pooh-
poohing their value at home.
And while Mr. Moda'i was
gamely insisting that the
guarantees would do no
more than slightly improve
the interest rates on future
loans, another pillar of the
Israeli financial estab-
lishment, Bank of Israel
Governor Jacob Frenkel,
was warning darkly that
without them Israel had
little hope of mobilizing
loans at all.
Even the oft-quoted figure
of $10 billion has proved to
be misleading. As the press
is now taking pains to point
out, the real sum Israel will
need to absorb a projected
1,200,000 immigrants over
the next five years is actu-
ally $60 billion, to be in-
vested in housing, social
services, the infrastructure,
and the creation of jobs.
After deducting the $25
billion to be provided by
Israel's citizens themselves,
The greatest wrath
was reserved for
Mr. Baker's pointed
reference to
Israel's "current
government."
the remaining $35 billion is
slated to be mobilized in the
form of foreign investments
($10 billion), loans from
banks and other govern-
ments ($15 billion), and a
final $10 billion garnered on
the basis of the American
guarantees.
Read in this way, the fig-
ures would appear to justify
Mr. Moda'i's belittling of the
guarantees, since they
would account for a mere 12
to 15 percent of the capital
Israel must raise.
The problem, however, as
other experts see it, is that
busy bankers and investors
have not exactly cleared
their calendars to keep
abreast of the mounting po-
litical, economic, and hu-
manitarian arguments sur-
rounding this issue. They
tend to view the guarantees
in rather straightforward
terms as a testament by the
American government that
Israel — though plagued by
terrorism, threatened by
war, and living beyond its
means — is a safe repository
for their capital. Thus, with
the guarantees, Israel would
be (in the words of a U.S.
General Accounting Office
report) a "zero credit risk."
Without them, Jerusalem's
problem would not be how to
get relatively comfortable
credit terms but how to get
credit at all.
The Administration's de-
mand to choose between the
guarantees and continued
settlement in the occupied
territories was far from
unexpected in Israel. On the
contrary, the opposition, dip-
lomats, academics, jour-
nalists, even the military
have, in one way or another,
been forecasting it for years.
Nevertheless, once it had
been spelled out in no-
uncertain terms, the press
reacted viscerally, circling
the wagons and sending off a
volley of unanimously angry
columns, mostly from the
Right.
The greatest wrath was re-
served for Mr. Baker's
pointed reference, in the
course of his testimony, to
Israel's "current govern-
ment," which was read as a
crude signal to the Israeli
electorate that it would do
well, come June, to opt for
Yitzhak Rabin over Yitzhak
Shamir.
Mr. Rabin felt pressured to
divest himself of this
monkey quickly by declaring
that the Labor Party "does
not accept America's policy
since 1967 that Israel is for-
bidden to settle over the
Green Line."
True, he distinguished
between Labor's construc-
tion of settlements for
"security purposes" and the
Likud's flood of "political
settlements, most if not all of
which have no security
value." Yet he also warned
the Bush administration
that it would be making "a
great mistake" if it sup-
ported either view on this
matter.
"This is an internal Israeli
affair," Mr. Rabin pro-
nounced, "and we alone,
here, will determine our
fate." ❑
THE DETROIT JEWISH NEWS
35