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JAMES BESSER

Washington Correspondent

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FRIDAY, MARCH 27, 1992

IA 41

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With Loan Now Dead,
What Next For Israel?

W

ith Israel's request
for a loan guarantee
"dead," Jewish ac-
tivists in Washington
gritted their teeth this week
and began thinking about
the future. But not before
acknowledging that the
failure of a last-ditch effort
to salvage at least part of a
$10 billion package marked
a watershed — a new and
dangerous low in U.S.-Israel
relations.
Last week, President
Bush rejected a proposal
from key Congressional
leaders, saying it would
have allowed Israel to con-
tinue building settlements
in the territories.
Sen. Patrick Leahy, D-Vt.,
said after the meeting that
he was "very, very
discouraged" and that, for
now, the Israeli request was
"dead."
Pro-Israel leaders immedi-
ately began to look to the
future while assessing the
damage.
"The results of the loan
guarantee effort will change
the universe for Jewish ac-
tivism," said a leading pro-
Israel activist. "The
challenge for us now is to
learn from this experience
and adjust to these changing
realities; the worst thing we
can do is squander our time
trying to assign blame."
In the short term, the
results of the loan guarantee
battle will force pro-Israel
activists to emphasize rela-
tions with Congress as a
counterweight to the Bush
administration.
"If anything, I expect this

Editor Gary Rosenblatt con-
tributed to this report.

will generate resentment in
the Senate against the pres-
ident," said Malcolm
Hoenlein, director of the
Conference of Presidents of
Major American Jewish
Organizations, a group that
took the lead in mobilizing
unprecedented grass-roots
support for the loan guar-
antees. "What happened
will clarify that the fault
rests with the administra-
tion, not with Israel."
Rep. Charles Schumer,
D-N.Y., said Congress, once
sympathetic to the ad-
ministration's position, now
feels the White House has
gone too far in pressuring
Israel. "It's very clear that
the pro-Israel community

The apparent
failure of the loan
guarantee
compromise will
put enormous new
pressures on
American Jewish
fund-raising
organizations.

was willing to compromise
— and the administration
was not. They're the ones
with the hard line.
"For years, some people
counseled that we should try
to stay on the good side of
the president and the secre-
tary of state," he said.
"These people have had the
rug pulled out from under
them. The emphasis will
turn back to Congress,
which has always been the
main bulwark of Israel's
support."

Mr. Schumer argued that
pro-Israel groups should
take advantage of that shif-
ting sentiment by pushing
immediately for congres-
sional action on the Kasten-
Leahy compromise, despite
the promise of a presidential
veto.
But pro-Israel groups seem
wary about the prospects of
an all-out battle in Congress.
And other pro-Israel
stalwarts in Congress sug-
gest that today's political
climate would doom such
efforts.
"I just don't see it as real-
istic," said Rep. Larry
Smith, D-Fla., one of the
strongest pro-Israel voices in
Congress. "Foreign aid is
like a hot stove; nobody
wants to touch it. At this
moment of history, when
members of Congress are go-
ing back home and explain-
ing about their bounced
checks, do you honestly
think they'd vote for $10
billion? I don't think it's po-
litically realistic."
Reinforced congressional
support will also be pivotal
in insuring that shrapnel
from the loan guarantee ex-
plosion does not damage
Israel's basic $3.2 billion in
foreign aid, which will be
taken up by Congress in the
next few weeks.
The apparent defeat of the
loan guarantee effort may
open the door for legislators
who have long advocated
reductions in aid, or str-
ingent conditions on money
for the Jerusalem govern-
ment.
That danger has been ex-
acerbated by the harsh polit-
ical climate of 1992, with