New Israeli Settlements Form Biggest Obstacle to Peace, Baker Asserts : Diplomacy: The rare jab suggests U.S. may be ready to get tough with squabbling parties in the Mideast.

In a sharp jab at Israel, Secretary of State James A. Baker III told a key congressional panel Wednesday that the biggest impediment to peace in the Middle East is Israel’s continuing expansion of settlements in the occupied territories.

“It makes it tough,” Baker said with obvious exasperation, noting that each of his four recent diplomatic visits was greeted by the announcement of another Jewish settlement. “I don’t think there’s any bigger obstacle to peace than the settlement activity.”

Baker’s remarks were made before the House Appropriations subcommittee on foreign operations, which has authority over foreign aid allotments. Committee Chairman David R. Obey (D-Wis.), noting that the settlement policy “gets under my skin,” offered to hold up for several months a foreign aid bill that is expected to include $3 billion for Israel.

The United States has protested Israel’s settlement policy for more than 20 years, but Israeli officials have defended the settlements as essential to national security and refused to stop building housing on the occupied West Bank and Gaza Strip.

Baker’s unusually blunt criticism Wednesday and the response from lawmakers suggest that for the first time since the Gulf War supposedly provided a new opening for an Arab-Israel settlement, the United States may be willing to play hardball with the parties involved. The Administration has tried a tougher tack on a previous occasions, but it always backed off in the face of an angry reaction, particularly in Congress.

Baker criticized the Israeli settlement policy as he outlined for the subcommittee his unsuccessful efforts to arrange an international peace conference to address the Arab-Israeli issue, as well as talks between the Israelis and Palestinians.

“Nothing has made my job of trying to find Arab and Palestinian partners for Israel more difficult than being greeted by a new settlement every time I arrive (in Israel),” Baker testified. “It substantially weakens our hand in trying to establish a peace process.”

According to State Department figures provided by Obey, more than 200,000 Israeli settlers now reside in 20 locations in the West Bank, Gaza Strip and other lands seized during the Six-Day War in 1967, and the settlement population is growing by 10% annually.

Baker told the subcommittee that Israel has refused to consider stopping development of the settlements, even if Arab nations agree to end their 45-year boycott of the Jewish state or to formally recognize Israel’s right to exist.

“I decided we’re not going to get any change in settlement policy until we get the peace process going,” Baker said.

Obey said it is ironic that Israel is seeking funds from the United States to absorb a wave of Jews emigrating from the Soviet Union at the same time that it violates U.S. policy by using previous allocations to build housing in the occupied lands. Israel has argued that it has not used U.S. money for settlements in the territories.

Obey offered to postpone action on the pending foreign-aid bill until September to give the Administration more leverage over Israel in the peace process.

Despite his pessimism on the settlement issue, Baker was cautiously upbeat about prospects for bringing Arab states and Israel to an international peace conference co-sponsored by the United States and the Soviet Union.

He said the Administration will press ahead in hopes of overcoming remaining differences between Israel and Syria. The two nations disagree on several points, including the role of the United Nations and the question of whether the peace conference should meet only once or become a continuing body.

“I really do believe both sides are serious,” Baker said. “We’ve defined a workable pathway to negotiations that would enable Israel, Arab states and Palestinians to capture that chance and make a real break with the past in favor of peace.

“What remains to be seen is whether the parties are willing to seize this chance,” he said. “The United States is there, ready and willing to help them try, but we cannot create the political will to act if it does not exist in the region.”

On a related issue, Baker said that the United States intends to act in concert with other nations to isolate the regime of Iraqi President Saddam Hussein.

“We will never normalize relations with Iraq so long as Saddam Hussein remains in power,” Baker declared.

Meantime, California Rep. Mel Levine (D-Santa Monica) made public an internal State Department memo, dated Dec. 6, 1988, that outlined a U.S. government policy prohibiting arms sales to Iraq except for “protection of the head of state.”

Levine said the memo is “a smoking gun that raises serious questions about the Administration’s culpability in building up the Iraqi war machine” and “proves that it was official U.S. policy to protect Saddam Hussein.”

The text of the memo, however, indicates that the government’s primary concern at the time was to prevent a loosening of arms sales policy.

The memo noted that weapons could be sold to Iraq “only when they are to be utilized for protection of the head of state. Congress’ view toward Iraq has toughened as a result of Iraq’s use of gas against the Kurds and sanctions could be forthcoming. There does not appear to be any good reason to change our current policy which has been in force for several years.”