Some ‘Happy New Year’ Message! : Israel: The country is shocked by Bush’s blunt public posture--but shocked enough to compromise?

Israelis are shocked by what they saw on their TV screens: President Bush threatening to veto Congress if it voted now to provide Israel with $10-billion loan guarantees.

This may be seen as a typical power struggle between the two branches of the American political system. But most Israelis know that they are actually on the firing line. For the right-wing Israeli government, the guarantees, aimed to help to absorb half a million Soviet-Jewish immigrants, are a humanitarian issue, which should not be linked to politics. But the Bush Administration does see a clear linkage between the loan guarantees and the peace process: It wants to use the guarantees as a political leverage to stop Israel from building new settlements in the occupied West Bank and Gaza Strip.

While American diplomats continue the preparations to convene next month a Middle East peace conference with Israeli, Syrian, Jordanian and Palestinian participants, Prime Minister Yitzhak Shamir’s cabinet doubles the construction of new housing for Jewish residents in the territories. The Israeli public is highly divided on the issue of these settlements. While the Labor opposition shares the view of the Bush Administration and the Arabs that the settlements are an obstacle to peace, the government in Jerusalem believes in its Biblical right to the territories and in their strategic importance to maintain defensible borders against Arab hostility.

Since the occupation of the territories in 1967, successive Israeli governments of Labor and Likud have been spoiled by American generosity, without being asked to give anything tangible in return. Although all previous administrations, from Lyndon Johnson to Ronald Reagan, rallied against the construction of Jewish settlements in the occupied territories, they took no significant diplomatic action. It was George Bush’s predecessor who went further than any President had to make Israelis feel secure, maybe even arrogant. During the 1980s, President Reagan enthusiastically granted Israel $40 billion in economic and military aid. That kind of generosity and kid-glove treatment understandably led Israelis to believe they could do no wrong in American eyes.

Now the Israelis realize that the party may be over. President Bush and Secretary of State James A. Baker III lack their predecessors’ emotional and ideological commitment to Israel. With the self-confidence of winners in the Gulf, the Bush-Baker team went on to tackle the Israeli-Palestinian dispute to bolster America’s new posture in the region in alliances with moderate Arabs, and to contain the spread of nationalism and fundamentalism threatening the West’s oil supplies.

Israelis have never witnessed before any American President who would use against them such strong words, impressive body language and determination as expressed by George Bush on television Thursday.

Secretary Baker will be in Israel this week seeking a compromise, which has to be acceptable to the Administration, Congress and the Israeli government. Two days later, Israel will mark Yom Kippur, the Day of Atonement, the most sacred day in the Jewish calendar. It is a time of praying and soul-searching. Indeed, as the Jewish New Year begins, Israelis, regardless of their political inclination, realize that they are approaching a historic watershed. Will Israel settle for a compromise, saving the relations with its best ally, salvaging the peace process and receiving the money to absorb immigrants? Or will the country embark on a collision course leading to an unprecedented confrontation with the White House?