U.S. Offers Israel Little but Goodwill : Diplomacy: Euphoria over warmer relations fades with a growing list of disappointments.

With acid humor, a Foreign Ministry official remarked that Israeli bomber pilots are not the only ones who need a friend-or-foe code that would permit them to raid Iraq and not run afoul of patrolling American warplanes.

A similar code, he suggested, ought to be distributed to Israeli dignitaries on visits to Washington to make sure they can safely navigate the sometimes inhospitable halls of power there.

After a few weeks’ euphoria over the renewed warmth in relations with the Bush Administration because of common interests in the Persian Gulf crisis, observers here are reaching an uneasy conclusion that problems that have plagued the U.S.-Israel alliance are far from ended.

Defense Minister Moshe Arens returned earlier this week from a quick visit to Washington, and reviews of his mission were nearly unanimously negative. He came back with neither clear approval for Israeli plans to retaliate against Iraq for Scud missile strikes launched against Israel nor with firm commitments for military aid.

Differences over the issue of retaliation reflect divergent viewpoints on the wisdom of Israel’s participation in the Gulf War. But more telling in terms of general relations, observers say, are the delay of aid and a growing list of Israeli requests that Washington has put on hold. Some think Washington might later grant the requests only if Israel makes concessions in peace efforts with the Palestinians.

The Bush Administration and the government of Prime Minister Yitzhak Shamir have long been at odds over means of reaching peace in the Middle East. Shamir rejects talks with Palestinians that would lead to giving up the occupied West Bank and Gaza Strip. Before the war with Iraq broke out, Bush and Secretary of State James A. Baker III pushed for such talks.

“The goodwill between Washington and Jerusalem only goes as far as the current crisis,” said Harry Wall, head of the Israeli office of the Anti-Defamation League of B’nai B’rith. “The postwar period is a different matter, and there is certainly some question whether Washington has come around to Israel’s view of the peace process.”

An analyst in the newspaper Davar wrote: “The Americans by their behavior indicate that they will postpone the issue of economic assistance until after the war, when it will be possible to exact a political price from Israel.”

An expressed goal of Arens’ trip--to get up to $1 billion in military aid--appears to have foundered. U.S. officials say the equipment requested by Israel is needed by American forces in the Gulf and cannot be delivered right away. The United States has provided six Patriot antimissile batteries to protect Israeli cities but not the extra F-15 jet fighters and attack helicopters also requested by Israel.

From the Israeli point of view, the delay in the arms delivery comes atop a list of other disappointments: there is yet no clear word on future funding for joint production of the Arrow, an advanced antimissile system; the State Department has withheld permission for the purchase of a high-speed computer coveted by Israel, and a project to dredge Haifa harbor for military use is on hold.

Further, the issuance of U.S. guarantees for $400 million in loans to build housing for Soviet immigrants has been slowed by the State Department. The department is dissatisfied with information provided by Israel on the construction of settlements in the West Bank and Gaza Strip. The Bush Administration opposes use of American-backed funds for expansion of Israeli settlements in the occupied lands, viewing them as impediments to eventual compromise with the Palestinians.

Foreign Ministry officials complain that the State Department is asking for details on roads, sewage and other projects that predated last year’s approval of loan guarantees. “These requests are unjustified,” declared an official, who said, nevertheless, that Israel will provide the data.

In Washington on Thursday, Israeli Ambassador Zalman Shoval added his voice to the complaints, accusing the United States of giving Israel the “run-around” on the housing loan guarantees, according to the British news agency Reuters.

Shoval also complained in an interview that Israel has so far received no compensation for huge losses incurred as a result of the Gulf War and demanded that its needs be met, Reuters reported.

“Not being part of the (Gulf) coalition . . . we have not received one cent of aid in spite of the fact that we have had immense direct military costs . . . not to mention even the indirect economic costs, such as the loss of tourism,” Reuters quoted Shoval as saying.

As a result of his remarks, Shoval was summoned to the State Department on Thursday night by Baker.

“I think he was upset, yes, but they (the remarks) were certainly not meant to upset him,” Shoval told the Associated Press after the 30-minute meeting in Baker’s office.

Mistrust is likely to deepen with reports that the Housing Ministry plans to build 12,000 units in the West Bank in the next three years. Opposition Parliament members estimated that the government will spend $250 million to construct the houses. Baker has indicated that he opposes giving Israel money that frees up Israeli funds for expansion of settlements.

The issue may become critical later this year. The Israeli government says it will need billions of dollars in U.S. aid to provide shelter for Soviet immigrants. More than 200,000 of them arrived in the last year, and up to a million more are expected by the end of 1992.

Observers have begun to suspect that money for immigration will be conditioned on halting expansion of the settlements.

“The State Department seems to be saying Israel will have to choose between immigration and settlements,” Wall said. “This could be the beginning of a real game of hardball.”

Arens took up the question of retaliation against Iraq during his meetings with President Bush, Defense Secretary Dick Cheney and Baker. He declared that Israel cannot be expected to wait forever to strike back at Iraq.

“We’re in a state of war. We were attacked, and our action cannot be limited to defensive action alone,” he said on his return.

Privately, officials here say that Israeli military strikes at Iraq would likely take place only after the United States launched a ground war in Kuwait. At that point, Iraqi President Saddam Hussein might be tempted to step up his missile war on Israel and perhaps try to deliver chemical bombs. In self-defense, the officials explain, Israel would want to take charge of knocking out rocket launchers and to intercept any bombers heading for Israel.

There is no indication yet that the Bush Administration concurs, and Arens said Thursday that “there was room for improvement” in U.S.-Israeli military coordination.

Washington believes Israel’s participation poses the risk of widening the war to Jordan, which is sympathetic to Iraq and lies between the two countries.