COLUMN RIGHT/ WILLIAM J. BENNETT / VIN WEBER : Israel Proves Deserving of U.S. Assistance : The new Labor government’s pledge to pursue peace merits housing loan guarantees.

Early in his Administration, Ronald Reagan made an important foreign-policy decision: Whenever the United States engaged in government-to-government negotiations with the Soviet Union, one of the first issues on the agenda would be the Soviet Union’s atrocious record on human rights--including its persecution of Soviet Jews. Realpolitik critics argued that while concern over human-rights considerations was all well and good, it was a real-world inconvenience that might “jeopardize” agreements in areas ranging from arms control to cultural exchanges. Reagan’s response was clear and courageous: Real-world moral considerations must remain a central feature of any U.S.-Soviet negotiations.

Today, the Soviet empire lies in ashes. Reagan’s policy has been vindicated. Basic political and human rights that we long sought have been realized, including the legal right of Soviet Jews to emigrate. Over the last two years the state of Israel has taken in 400,000 Soviet Jews, and as many as a million more may follow. In a century characterized by unspeakable acts of barbarism, inhumanity and persecution, this exodus is one of its brightest moments.

In normal times, under normal circumstances, the U.S. government would be ready, willing and proud to assist. Over the last few years, however, a policy dispute arose between the Shamir government and the Bush Administration over the development of Jewish settlements on the West Bank. The dispute grew increasingly bitter, forcing Israel to postpone a $10-billion request for U.S. loan guarantees to help build housing for the Jewish immigrants.

It is important to understand that the heart of this dispute was political, not economic. With the United States as co-signer, Israel (which has never defaulted on loans) could obtain lower interest rates. Withholding the loan guarantees was a way to put pressure on Israel to change its settlement policies. In the process, the rising level of mistrust led to the rockiest period in U.S.-Israeli relations since the 1956 Suez crisis. For those of us who are strong supporters of the state of Israel, this was a painful, troubling turn of events.

Today, objective political realities have changed--and with them have come new opportunities for reconciliation between the two nations. Yitzhak Rabin’s Labor Party won a victory that has returned it to power after 15 years. Rabin has said that he will halt settlements in the West Bank and Gaza territories that are not vital to Israeli security, end subsidies now offered to Israeli settlers in those territories and push for agreement this year on Palestinian autonomy in the disputed areas.

Since the Rabin government seems likely to pursue policies that are consistent with Administration aims, reciprocation on the part of the United States is now in order: The Bush Administration should immediately signify its willingness to seek Congress’ agreement and passage of the $10-billion loan guarantees this fiscal year.

This action is clearly in our national interest. It would show America’s willingness to wipe the slate clean of recent disputes and work with the new government in the traditional spirit of U.S.-Israeli friendship. And it would help the new government start off with real momentum toward prosperity and peace.

Progress on the loan guarantees would reaffirm our commitment to the cause of settling newly free, ex-Soviet Jews--a fundamental objective of every recent Administration. We would be writing the final sentence to one of the proudest chapters in the history of U.S. foreign policy.

Our action also would reinforce the point that the centerpiece of any successful Middle East peace effort remains a strong, vital, mutually supportive relationship between the United States and Israel.

Finally, in a year in which we increasingly hear the reckless appeals of the new isolationists, we can demonstrate that America is a global power that takes its international responsibilities seriously.

President Bush’s willingness to enter the tangled web of Middle East peace talks was an act of genuine political courage. But the search for peace must be based on irreducible political and moral realities. Among them is the fact that the United States and Israel share a common legacy, a common purpose and common strategic interests. Until there is a fundamental change in the nature of the Arab regimes--all of which are non-democratic, many of which are anti-Western--Israel will remain our only proven, reliable ally in the Middle East. The Administration should pursue a policy that reflects that reality.