Paying for Israel’s makeover

A VISIT BY A newly installed Israeli prime minister to the White House is nearly ritual, like a vassal king arriving for confirmation of his coronation. But when Prime Minister Ehud Olmert arrives in Washington this week, he also has some specific business to transact. After a long and not terribly passionate career in politics, he has arrived at a grand belief, and he wants American support -- including American cash -- to carry it out.

Olmert’s belief is that to remain a Jewish state, Israel cannot continue ruling over the Palestinians of the occupied West Bank. This is an old idea, but Olmert, a lifetime hard-liner, is a new and eager convert; he wants to act quickly. He would have Israel pull out of most of the West Bank, evacuating a third of the 250,000 settlers there. A dramatic move, to be sure, and one that will stir up plenty of controversy at home.

His conversion, though, goes just so far. He plans to keep the remaining settlements, which are close to Israel’s pre-1967 border, and to annex the parts of the West Bank where they stand. Some of the evacuated Israelis could be given new homes in the remaining settlements.

Because even moderate Palestinians are certain to reject this (and moderates are not in charge now anyway), Olmert expects to act unilaterally. Peace and Palestinian independence can wait; his priority is to reshape Israel’s borders. To help relocate settlers -- an operation that could cost from $10 billion to $50 billion, according to media guesstimates -- Olmert says he will ask the U.S. for funds.

At first glance, the request seems like the height of audacity. For years, Israel has ignored U.S. objections to settling on occupied land -- and now it wants American money to undo the damage? A yelped “Forget about it!” would be understandable. But it would also be a mistake. Providing funds, with some clear conditions, is smarter.

It’s true that the U.S. opposed settling Israelis in the West Bank from the moment the first settlement was announced, just a few months after Israel occupied that territory in 1967. At first the objections were voiced mainly by mid-level diplomats, often behind closed doors. By 1976, the U.S. ambassador to the United Nations, William Scranton, stated in a Security Council debate -- as public a forum as possible on Earth -- that settlements were “illegal under the [Fourth Geneva] Convention.”

Yet Washington’s aid to Israel arguably helped finance the settlement enterprise, whose true cost is a mystery. The Israeli government’s investment in settlements is hidden in myriad corners of its budget -- subsidized mortgages for settlers under the Housing Ministry, job perks for teachers under the Education Ministry, security costs in the classified defense budget. Lack of transparency is one reason Israel has been able to sink into this quagmire.

U.S. aid wasn’t earmarked for settlement building, but by paying for other government expenses, Washington made it easier for Israel to spend its own taxpayers’ cash on settlements. This is the principle of fungibility, which became famous in 1991-92, when President George H.W. Bush demanded a settlement freeze in return for U.S. loan guarantees to help Israel absorb Soviet Jewish immigrants.

Yet that episode stands out precisely because it was isolated. The number of settlers in the West Bank has more than doubled since the elder Bush left office. It would be disingenuous for Washington to squawk now about having been made a silent partner in settlement when it has raised no objection for most of the last 39 years. Better to invest in cleaning up the mess.

For if Olmert’s plan falls far short as a solution, it could be a positive first step. He is right that territorial division between Israelis and Palestinians is a “lifeline for Zionism” -- the only way Israel can maintain a Jewish majority and fulfill its own democratic ideals. The settlements he wishes to dismantle are the ones deepest in the West Bank; their presence and their defense cause daily conflict with the Palestinian population. Dismantling them would be a signal to both Israelis and Palestinians that disentanglement is possible. That justifies U.S. assistance.

But only if the way is left open for a real peace agreement. Settlements aren’t the only obstacle to this. The Hamas government in the Palestinian Authority is certainly another. But Olmert has not yet realized the full implications of his own big idea. To disentangle Israelis and Palestinians, more settlements will have to go eventually, though Olmert has yet to recognize this. It would be absurd to move settlers from the outlying settlements to the remaining settlements near the Green Line now -- only to force them to move again. And it would be absurd for the United States to invest in such a project.

The conditions of American aid, therefore, should include a commitment to relocating evacuated settlers within Israel proper and to halting expansion of those settlements that will remain for now. The conditions should also include a full, public accounting of Israeli government spending on settlements. Much of the Israeli public would welcome that transparency. If President Bush doesn’t give Olmert such a nuanced answer, Congress can when it is asked to vote on aid.