PERSPECTIVE ON ISRAEL : The Spare-the-Rod Days Are Done : Spoiled by years of U.S. forbearance, a greedy government finally got its knuckles rapped on the housing-loan issue.

Never has there been such a chapter in the history of relations between nations: A world power nourishes and supports a small, faraway country, which instead of being understanding and grateful mocks its benefactor. For many years, the tail not only wagged the dog; it also barked while keeping the dog muzzled. The United States has held positions, even clear ones, on several substantial matters concerning Israel. The United States was, however, permitted to express these positions only on the condition that Israel could reject and negate them completely. This has been the strange arrangement between the two countries since 1967.

Israel should have understood that this was not a normal situation, and, like all abnormal situations, could not prevail forever. A superpower would not always agree that a “client” country, no matter how important or nice, could profit at its expense and simultaneously kick it. Even the patience of a long-forgiving and indulgent lord must expire if the arrogant beggar continues sitting at his table while smoking, spitting, breaking dishes and otherwise ignoring etiquette. Out of habit and destructive self-indulgence, Israel became used to a free meal and succumbed to the belief that the benefactor was actually half-senile--generous, but stupid. It was possible to make endless demands because the response of the benefactor was constant submission. Thus, Ariel Sharon chose to wave his fork in front of a scandalized James A. Baker III and others gathered at the dinner table.

The United States finally reached the conclusion that Sharon was not only behaving wildly at the table; he might overturn it completely. It was no longer a matter of manners but of business. And it is impossible to conduct business while Sharon mocks the entire world and the world submits to his ridicule. Having broken Saddam Hussein, and with the Soviet Union in a state of collapse, the United States has decided to put Sharon in his place--to stop the housing minister’s policies, which have enslaved us Israelis in the role of overlords.

During the past 24 years, the government in Washington seemed to be mute. The United States did not recognize--and in fact opposed--the Israeli occupation of the West Bank, Gaza Strip and Golan Heights. But, in practice, the American government funded the policy of occupation with huge sums given to both Labor and Likud governments. Without outside sources of funding, the settlements in the territories could not have been built.

In theory, the Israeli government was obligated not to channel American aid into construction in the occupied territories. In practice, however, even if the building funds did not come from the same pocket, they were from the same pair of pants. Without the belt provided by the United States, these pants would have fallen long ago and we would have been exposed. Through a simple circular movement, dollars flowed to security, education and welfare, while shekels freed from these budgets flowed into the construction of at least 200 settlements. Thus, the Israeli government “deceived” the American government, which agreeably played dumb.

Especially since the onslaught of the immigration from the Soviet Union, one of the momentous events for the state of Israel since its founding, deceit has been added to deceit. Yitzhak Shamir promised George Bush unequivocally that new immigrants would not settle beyond Israel’s pre-1967 borders. And Shamir is an honorable man. From the very moment of this commitment, he launched a massive construction effort in the territories--only for established citizens, of course; who else has the money to buy a new home? And once the immigrants get their bearings, who can tell them where to live? After all, this is a democracy!

Shamir also hid from the United States how much money he was spending on settlements. Evidence uncovered by the Peace Now movement demonstrates that more than $500 million has been budgeted on settlement activity this year. This is more than twice the amount Israel told the United States it was spending.

Washington would have swallowed this deception if Sharon had not taken his fork and waved it each time Baker arrived in Israel to revive the peace process. Just when Sharon was ready for the main course, a $10-billion loan guarantee to build even more housing, the White House called an intermission: No more favors until the peace process has a chance to start.

Now that the Israeli government’s ruse has been revealed, it raises a hue and cry. What is the connection between immigrant absorption and the peace process? They are distinct. Absorption, says Shamir, is a humanitarian cause. Therefore, it should be considered apart from the peace process, which is not only non-humanitarian in his view, but inhuman. Bringing Jewish immigrants to Israel is humanitarian. Bringing peace upon them and upon all Israelis is not. The task of absorption is sacred; peace efforts are idolatrous.

The United States has regained its voice; speaking with the confidence of a world leader, it dares to insult its client with the observation that the peace process and the settlement process are connected by their diametrically opposed effects: If the settlements continue, there will not be peace; and if there is peace, there will not be settlements. Peace talks cannot progress as long as new settlements are being established or existing settlements enlarged. Negotiation is impossible when the object of the negotiating keeps changing shape.

And so the moment of truth has arrived. When the calendar turns to the next New Year, to the next Day of Atonement, we will know whether the construction of settlements was nothing but destruction.