PERSPECTIVE ON ISRAEL : Bush Can Call Shamir’s Bluff : If the Likud ranks the freedom of Soviet Jews above negotiating a Mideast peace, invite them to emigrate here.

The fight is on in Washington. President Bush has called for Congress to hold off on Israel’s request for $10 billion in loan guarantees to facilitate absorption of Soviet Jews. AIPAC, the powerful lobby that represents many in the American Jewish community, is determined to push for early passage of the legislation--without conditions requiring that Israel halt settlement activity in the occupied territories. If AIPAC succeeds in this, Middle East peace negotiations will be doomed before they begin.

AIPAC--the American Israel Public Affairs Committee--argues that the settlement issue can be resolved in the negotiations. But the truth is the reverse: Failure to solve the settlement issue will destroy the negotiations--if they ever begin. The Arab states, with their shaky claims to legitimacy, will be accused by fundamentalists and other opponents of negotiations of giving Israel recognition at the conference table and of participating in a charade behind which Israel solidifies its de facto annexation of the territories.

Undoubtedly, both the Arab states and the Palestinians have told Secretary of State James A. Baker III that they will need a settlement freeze in order to stay in the negotiations, and Baker knows that the loan guarantees are the key to his ability to halt the settlement drive.

On this point, the Camp David experience is instructive. Even the forceful face-to-face involvement of an American President failed to produce more than a momentary halt to Israel’s construction of new settlements. Indeed, within 30 days of signing the accords, then-Prime Minister Menachem Begin decided, over American objections, to continue expanding existing settlements. The signing of the actual peace treaty with Egypt was still months away, and yet the Likud government was prepared to risk derailing it.

If there are negotiations on an overall Middle East peace, they will be long and difficult. Over the next five years, President Bush will be eyeball to eyeball with Prime Minister Shamir time and again. This cannot be avoided. Ever since Israel occupied the West Bank during the 1967 war, the United States has maintained that a peace settlement will require a significant Israeli withdrawal. Nothing has happened in the last 24 years to cast doubt on the soundness of that proposition. But ever since the 1920s, the revisionist wing of the Zionist movement, from Vladimir Jabotinsky to Menachem Begin and then to Yitzhak Shamir, has never wavered in its determination to extend Israel’s borders to include the West Bank. Shamir has been single-minded on this for more than 50 years, and he is prepared to wait out a second Bush Administration if he has to. From the standpoint of the Israeli right wing, with the reduction of the Arab capability to threaten Israel, the American problem is all that now blocks the way to “Greater Israel.”

The issue of the loan guarantees is more than Round 1 in the Bush-Shamir contest; for Bush, this is a make-it-or-break-it fight. The loan guarantees represent the most powerful potential leverage Bush has over Shamir. The reason is this: For most Israelis, the immigration and successful absorption of the Soviet Jews is the most important issue facing their country today.

This is much more than a matter of saving Jews from possible repercussions as the Soviet Union disintegrates; that could be accomplished by lifting the quota that restricts the number emigrating to the United States. But their coming to Israel is a validation of Zionism itself. It is the raison d’etre of the Jewish state, and if they do not come, or if they come and then leave because Israel cannot provide jobs and housing, then Zionism itself will have failed. The aliyah of the Soviet Jews is a one-time historical possibility. The issue of land may never be permanently resolved, but if the Soviet Jews reject Israel, they will be lost to Israel forever.

Polls show that, faced with a determined American administration, only 16% of Israelis would give up the loan guarantees rather than give in to American demands on settlement. The Israeli people will demand a new government rather than allow the absorption effort to fail. Since Israel cannot carry out the absorption program without the loan guarantees, Bush has the leverage he needs, unless Congress comes to Shamir’s rescue.

But what about the Soviet Jews? Shamir treats them as pawns when he gambles that Congress will break with the President; but they are also treated as pawns if we rely solely on the belief that the Likud will back down on the settlements or be replaced by a new government. Something more is needed: a U.S. safety net for Soviet Jews. If Shamir does not relent, and thus forgoes the loan guarantees, then the United States should open its doors to the Soviet Jews, giving them freedom to choose.