Loans Should Be Conditional on Settlement Freeze


The Northern California Jewish Bulletin, October 4, 1991


It now looks as if President Bush has won his fight to delay for 120 days congressional action on Israel’s request for $10 billion in loan guarantees. But this is just delay. The real issue is whether Congress should make this in­crease in aid conditional on Israel’s halting or at least moderating its efforts to settle the West Bank.

            The Jewish Peace Lobby believes that it should. We ar­gue that:


  • The settlement policy, if unchecked, will undermine the possibility of resolving the Israeli-Arab conflict.
  • There is virtually no way of significantly affecting Likud settlement policy other than linking the settlement issue to aid flows.
  • If the linkage is made it will in fact result in a change in Likud policy; thus both the cause of peace and of ab­sorption of the Soviet Jews will be advanced.


            In short, we believe that the well-intentioned AIPAC campaign to protect Shamir from having to choose be­tween the loans and settlement expansion will, if success­ful, be harmful to Israel and to the prospects of peace.

            Settlement expansion is not neutral in relation to the peace process. It undermines the likelihood of success in three important ways:

            If there is continued rapid settlement activity, the situa­tion on the ground will change appreciably over time, making it ever more difficult to negotiate an Israeli with­drawal. And without some withdrawal, there is virtually zero likelihood of achieving a peace agreement.

            While Israel is rushing ahead with settlements, it will be very difficult for the Arab states to sustain fruitful ne­gotiations; rather these regimes, with their shaky claims to legitimacy, will face charges from fundamentalists and other opponents that they are participating in a charade that provides cover while Israel continues to tighten its control over the occupied territories. This may lead to ter­mination of the negotiations.

            So long as the Likud government is able to expand the number of settlers in the territories, it has an incentive to avoid progress in the negotiations. Thus, tactics of delay will be motivated by a continued Likud ability to “create facts” on the ground.

            Every U.S. administration has voiced its opposition to settlement of the territories. Some have viewed the settle­ments as illegal under the Geneva Conventions dealing with permissible activities of an occupying power; some have simply termed them “obstacles to peace.”

            Secretary of State James Baker called for a settlement freeze when he addressed the AIPAC convention two years age. Numerous U.N. resolutions have been critical of Israeli settlement activity as well. But none of this has made the slightest dent in Likud’s determination.

            American Jews who don’t want to face up to the prob­lem take refuge in the peace process itself. It is argued that linking aid to settlements is unnecessary because in the course of the peace process the issue of settlements will arise and Israel will agree to a freeze.

            Unfortunately, the experience of the Camp David nego­tiations does not offer a happy precedent. Despite strong objections from President Carter and his belief that Prime Minister Menachem Begin had agreed to an indefinite set­tlement freeze, all the United States could obtain from the Begin government was a three-month freeze on new settlements. And within a month of the signing of the accords, well before the peace treaty with Egypt had been signed, the Begin government decided to expand existing settlements.

            Recently, Foreign Minister David Levy stated that Israel would not even consid­er a halt to the building of settlements until that point in negotiations, at least three years from now, when Israel and the Palestinians turn to the question of fi­nal resolution of the conflict (after the transitional period of self-government).

            It would be wise to take this as a clear statement of Likud determination. If the United States does not use economic pressure, settlements will continue until the land for peace option is dead and buried.

            Other than linkage to foreign aid lev­els, no one has come up with a credible alternative policy of affecting the Likud policy.    

            A few months ago Israeli Ambassador Zalman Shoval predicted that Israel would have to choose between expanding settlements and the loan guarantees. If it turns out that his prediction, was correct and Israel is forced to make the choice, there is good reason to believe Israel will, in fact, alter its settlement policies.

            In deciding how to react, the Likud government knows that without the aid it will botch its responsibility to absorb the Soviet Jews. It also knows that both the immigrants and other Israelis will view this as a failure of the greatest mag­nitude at the next election.

            Several lines of objection are some­times maintained against these argu­ments. It is argued that the Soviet immi­gration has nothing to do with the Israeli­-Palestinian conflict and thus it is unfair to hold them hostage to Likud policy with respect to settlements.

            To this I answer in two ways. First, the issues are importantly linked. While most Soviet Jews are not settling in the territo­ries, the vast immigration is generating powerful economic pressures which com­bine with a government policy of subsi­dizing housing in the territories to draw large numbers of Israelis into the territo­ries. From a moral point of view it is un­tenable to allow the Likud government to use the influx of the Soviet Jews to ad­vance its policy of de facto annexation.

            Secondly, for those who view the loan guarantees for Soviet-Jewish absorption as “sacrosanct humanitarian aid,” there is an alternative. Rather than tying a settle­ment freeze to loan guarantees intended to assist Soviet Jews, assistance for the Soviet Jews could be unrestricted and, in­stead, conditions could be tied to the all-­purpose $1.2 billion grant of economic assistance Israel receives each year. This assistance comes out of the U.S. security assistance budget and is often (for coun­tries other than Israel) made dependent on political matters of concern to the United States.

            I have argued that by taking a strong stand, the United States will be able to both end the settlement policy and assist the Soviet Jews. But what if this is incor­rect? What if the Likud’s commitment to settlements is so great that it forfeits the aid? What then happens to the Soviet Jews? Do not the United States and American Jews have a responsibility to the Soviet Jews?

            I would argue that we do, and if, as unlikely as it is, the Israeli government rejects the aid and is thus unable to ab­sorb the Soviet Jews, then the United States should step forward and open its doors to the immigrants. No doubt the Soviet Jews themselves would applaud this outcome since; in any event, it has been regularly reported that most of them would prefer to come to the United States.

            The Soviet Jews are talented and high­ly educated. Israel’s loss would be Amer­ica’s gain. True, it would be a missed op­portunity of major proportions for Israel, but it is up to Israeli democracy to make these choices and to live with the conse­quences. The wrong course of action is for American Jews to pressure the U.S. government so that a right-wing Israeli government can continue its settlement policy regardless of how it affects the op­portunity for peace.

            Finally, American Jews should face up to this fact: If the Shamir government succeeds in both getting all the aid it wants and in pushing ahead with the set­tlements in the territories, it will have demonstrated its ability to face down the president. Having demonstrated its toughness, we can then fully expect a Likud victory at the next Israeli election. This may not trouble AIPAC, but it trou­bles the Jewish Peace Lobby—a lot.