A $12 Billion Question
Sharon wants a huge new aid package. Bush needs a viable Israeli-Palestinian peace process. Can they make a deal?
By Joshua Hammer
Feb. 10 issue — A sense of urgency filled the meeting at the Old Executive Office Building in Washington, D.C. For four hours, a team of high-ranking Israeli officials sat with their counterparts from the State Department last month, pleading for cash. Citing Israel's war-battered economy and mounting security costs, the visiting delegation asked for a whopping $4 billion in extra military assistance, plus $8 billion in commercial-loan guarantees.
THIS SUM WOULD be added to nearly $3 billion that Israel already receives each year, the biggest U.S. aid package provided to any country in the world. The Americans made no promises. But according to a senior government official involved in the talks, "The impression we got was a good one."
That unprecedented request could give the White House a powerful lever. The administration has put the peace process on hold for months while concentrating on the buildup to war with Iraq. Meanwhile the Israeli-Palestinian conflict has continued, disrupting America's ties with the Arab world and keeping the whole region precariously off balance. Washington intends to get the two sides talking again "on day one" after a war with Iraq, Deputy Defense Secretary Paul Wolfowitz said last month. He added that the administration will push Israel to accept at least a vague timetable for the establishment of a Palestinian state within five years and to "deal with" the Jewish settlements that are still springing up in the occupied territories. In return for the additional $12 billion grant-and-loan package, Washington could demand that Israel quickly freeze or even dismantle some of the West Bank and Gaza's 145 settlements. But will the Bush administration have the nerve?
LET'S MAKE A DEAL
The United States has used aid to Israel as leverage in the past. In 1991 the Israeli government, led at the time by Yitzhak Shamir, requested $10 billion in commercial-loan guarantees to finance the absorption of hundreds of thousands of new immigrants. The then President George H.W. Bush and Secretary of State James Baker demanded a settlement freeze in return. When Shamir refused, the loan guarantees were withheld—one factor in Shamir's defeat in elections the following year. Shamir's successor, Yitzhak Rabin, declared a settlement freeze and received the loan guarantees, along with a 10-year grace period to pay back the money. (The first payment of several hundred million dollars comes due this year.) The new Israeli leader went on to authorize talks with the Palestine Liberation Organization that ended in the 1993 Oslo peace accords.
Now the government is in the hands of the hawkish Ariel Sharon. His Likud Party won 38 seats last week in parliamentary elections, doubling its previous total, but still falling far short of the 61 necessary for a ruling majority. Sharon has said he wants to avoid a coalition with Israel's right-wing parties, which favor unrestricted settlement building in the West Bank and Gaza. Instead he prefers a "unity" government that would include the left-leaning Labor Party, which won 19 seats (its worst showing in history). As of late last week, though, Labor leader Amram Mitzna was refusing to join.
Even a unity government might not be enough to drag Sharon to the peace table. According to the activist group Peace Now, at least 35 new Jewish outposts sprang up in the West Bank during his first term as prime minister, when he shared power with Labor. "Sharon will oppose a sweeping freeze of settlements," predicts one Israeli official close to Sharon. "But there might be some limited—say six-month—freeze." For now, the Bush administration won't likely demand more. The White House budget team can't really consider Israel's $12 billion request until the bills come in for the showdown with Saddam. "You have everybody—the Turks, Jordanians and Egyptians—suggesting their assistance would be made easier if money was forthcoming," says one senior Bush official. "Then our folks are just beside themselves trying to figure out what is going to happen to the price of oil." When the dust clears, however, Bush will have to decide whether to follow his father's example—or continue writing Sharon a blank check.
With Dan Ephron in Jerusalem and Richard Wolffe in Washington