Gain U.S. Leverage on the Settlements : There is sympathy for a tougher U.S. position but no willingness to seem anti-Israel. Might an aid escrow fund work?

One year ago, Secretary of State James A. Baker III called on the Israeli government to “lay aside the vision of Greater Israel, stop settlement activity and reach out to the Palestinians as neighbors who deserve political rights.” The Bush Administration pressed the Shamir government to put forward a peace intiative and embraced the plan that emerged. Baker sought to lead Prime Minister Yitzhak Shamir into a process that would develop a life of its own and ultimately result in Israeli withdrawal from the West Bank and Gaza.

Shamir, a lifelong advocate of Greater Israel, has proved too agile. His new government, no longer saddled with a Labor partnership, has directly challenged the United States with a pledge to “strengthen, expand and develop” settlements in the West Bank and Gaza. It is against this policy that the United States must define its relationship to the new reality in Israel.

The issue of settlements is not merely one of many issues. It is the issue. It goes to the absolute core of the Israeli-Palestinian conflict: Who will ultimately possess the land? The new Israeli government, which rejects the land-for-peace formula of United Nations Resolution 242, is squarely set on de facto annexation of the West Bank territory that Israel has occupied since the 1967 war. This is a formula for a wider conflict with disastrous potential. What can the United States do?

Words will not be enough. The United States has long stated its opposition to settlements. The Carter Administration branded them illegal under international law. The Reagan Administration termed them an “obstacle to peace.” And the Bush Administration has consistently called on Israel to halt settlement activity. None of this has ever made much impression.

A few months ago, when Israel was seeking $400 million in housing loan guarantees, Baker announced that Administration support would require a settlement freeze. This linkage was a major departure. But the Administration quickly retreated when it became obvious that Congress would balk.

The President is well aware of the centrality of the settlement issue; for him, the question is one of political costs and benefits. The White House cannot win in Congress on any linkage of settlement to aid unless the President is willing to wage a major campaign. If this means fighting a unified American Jewish community, the President will not do it. There was not a major Jewish organization in the country that supported Baker’s effort to link settlements to aid.

In discussing this issue on Capitol Hill, it is clear that privately there is widespread sympathy for a tougher position but absolutely no willingness to take on the political firestorm that such a battle would entail. The truth is, it couldn’t be won. There are no forces in American politics that could prevail against the united opposition of American Jewish organizations on the issue of aid. The irony is that most American Jews do not favor the settlements; rather, they fear that linking settlements to aid might snowball into a broad erosion of America’s basic commitment to Israel.

To move forward, what is needed is a way of taking a forceful stand on settlements that is not--and will not be seen as--anti-Israel.

The President should seek from Congress the authority to establish an Israeli trust fund--an account held in trust for the people of Israel--and to put into it the appropriated monies that are equivalent to what Israel spends on the expansion of settlements. This would include both direct expenditures and hidden subsidies. The effort would not be to cut aid to Israel, but rather to set some aid aside until such time as the country adopts a permanent freeze on settlement expansion.

The President might also be authorized to make disbursements from the trust fund to support the scores of dedicated Israeli organizations outside the government that promote human rights, democratic values and Arab-Israeli communication.

There is no guarantee, of course, that even this measure would produce the desired impact, but it would be a major step forward in establishing American credibility in the eyes of both Israelis and Palestinians.

As it cannot happen without at least some support from the American Jewish community, the emerging question with respect to future American policy is: To what extent will American Jews distinguish support for Israel from support for the policies of the Shamir government?