When Two Allies Strongly Disagree : Washington cannot duck Shamir’s challenge

Prime Minister Yitzhak Shamir, campaigning among Israeli settlers on the West Bank, vows that “no power on Earth will stop” settlement building in the disputed territories. The particular power he has in mind is, of course, the United States. Shamir’s finance minister, Yitzhak Modai, sharpens the note of defiance by proclaiming that Jerusalem should forgo the housing loan guarantees it seeks from Washington if that would require freezing Israeli settlement activity. The challenge is unmistakable. Do the Israelis mean it, or is all this bold talk just rhetoric and bluff?

We should know in the next few weeks, after President Bush sends his ideas on the loan guarantees to Congress. Israel thinks it may have to borrow as much as $10 billion from commercial lenders over the next 5 years to help assimilate up to a million Jewish immigrants from the former Soviet Union. If Washington guarantees the loans, Israel can borrow at advantageous rates. If it must pay higher borrowing costs, it will likely face a host of new economic problems. Among them, a new government-funded study finds, would be a jump in the unemployment rate from 11% now to 16% over the next 4 years.

Let’s be clear: There’s plenty of humanitarian support in Washington for the housing loans. But there’s little support for the Israeli government’s feverish ideology-driven efforts to expand settlements in the West Bank and the Gaza Strip, where more than 100,000 Israelis now live and where, a spokesman for the settlers says, double that number could be living within a year.

For nearly a quarter-century Washington has correctly viewed the settlements as representing a de facto claim of sovereignty over areas whose final status is yet to be negotiated and thus erecting an impediment in any peace negotiations. But U.S. protests have done nothing to halt settlement expansion.

One compromise proposal being floated in Washington aims at reducing the loan guarantees by whatever amount Israel spends on settlements. However, we think Washington needs to stick to its guns: All loans must be conditioned on a settlements freeze.

Shamir and his even more right-wing colleagues make no secret of the primacy they give to expanding the settlements, however much hardship and economic misery this may create outside the settlement areas.

It’s time at last for Washington to make clear that it means what it has long said. The loan guarantees should be plainly tied to an unequivocal halt to Israeli settlement building and expansion. The Shamir government can then make its own choice, and assume the political and moral responsibility for its decision.