Now It’s Israel’s Turn to Learn George Bush Is Not a Wimp : Diplomacy: The Administration’s tough stand on loan guarantees is a way of showing Israel that Washington has the upper hand.

Does this sound ridiculous: George Herbert Walker Bush, the tall, aristocratic leader of the world’s one remaining superpower, is fed up with being bullied by short, squat Israeli Prime Minister Yitzhak Shamir and his friends? Actually, it goes a long way to explain the Administration’s extraordinary behavior toward Israel in recent days.

Bush has made it clear that he is prepared to wage an all-out fight to prevent Congress from providing $10 billion in loan guarantees to Israel this fall. The assistance is intended to help Israel underwrite the cost of absorbing up to 1 million Soviet Jews expected over the next five years. More than 300,000 Soviet Jews have come in the past 18 months, and Israel is already hard-pressed to provide the necessary housing, jobs and infrastructure. The President knows it would be impossible for the deeply indebted Jewish state to borrow $10 billion without U.S. government-backed guarantees.

Among the explanations repeatedly offered for Bush’s tough stance is that the President just does not trust Shamir anymore. And trust, in this case, is about how Israel will use the $10 billion. Bush--and he is not alone in this--fears some of this money will find its way to the occupied territories, to underwrite the building of new Jewish settlements.

But there is an added personal dimension for Bush that goes back to an encounter with Shamir in the early days of the Administration. The President came away from that meeting with the impression that Israel, for the sake of peace, would put a brake on new settlement activity. He then felt betrayed when no such halt took place. The Israeli version is that Shamir told Bush not to worry about this issue. He would not be “disappointed.” When queried later, the Israeli leader appeared perplexed, telling intimates he was only being “polite.”

In fact, the Israeli manner of doing business is rarely, if ever, polite; and Administration officials say that this lack of tact has taken a toll with the demeanor-conscious Bush. Even the American-accented English of Israeli Defense Minister Moshe Arens--a U.S. army veteran and a graduate of Cal Tech--manages to rub the President the wrong way. During a Gulf War visit to Washington, Arens met with, and deeply offended, Bush when he bluntly threatened to retaliate against Iraq if the Scud missile attacks against Israel were not immediately halted. As one senior Administration official explained at the time, “The one thing you can count on with the President is that he is invariably polite. This is not something the Israelis are prone to or perhaps even capable of.”

While the Boy Scout-like virtues of steadfastness, loyalty and honesty clearly are of considerable importance to Bush, there are greater strategic issues at stake, say Administration planners. Chief among them is the President’s desire to see that Israel does not enter the peace conference with too strong a hand. Already, U.S. officials say it is the Arabs who have made 90% of the concessions. “If Israel gets the $10 billion with just the usual strings attached, Shamir will be the No. 1 power at the conference,” says one top Administration planner.

This specter of an omnipotent Israel may also go some way toward explaining the sense of embattlement that the President and his aides project when talking about pro-Israeli forces on Capitol Hill. In vowing to wield his veto power to thwart congressional passage of the $10-billion package, the President referred to himself--he later said, “only half in jest”--as “one lonely little guy . . . against something like a thousand lobbyists.”

But the thousand or so American Jews--loosely coordinated by five paid lobbyists--who were on Capital Hill on Sept. 12 did not see themselves as a match for the President. Nor do the Israelis. But they believe that, by linking aid to Soviet refugees with the Arab-Israeli peace process, Bush has picked a fight that they will find hard to duck.

Administration officials say it is up to the Shamir government to find a way to separate the two issues. Some aides to Secretary of State James A. Baker III predict Shamir will do just that. “Shamir will fight for the loan guarantees as if there is no peace conference,” said one State Department official, “and negotiate about the conference as if there is no fight over the loan guarantees.” This formulation is an intended paraphrase of the policy adopted by Israel’s founding fathers in 1939, when they opposed British restrictions on Jewish immigration to Palestine “as if there was no world war” and aided Britain in its fight against the Nazis “as if there were no immigration restrictions.”

But this approach, not to mention the analogy, does not sit well with Israelis or American Jews. For them, nothing--not even the Administration’s precious peace process--must be allowed to obstruct the free flow of the Soviet Jewish immigration. “Never again,” a reference to the extermination of 6 million Jews during World War II, has long been the rallying cry for Soviet Jewry. As one Israeli diplomat said, “This is the crux of Zionism, the reason for which our state was founded.”

Caught in the middle is the overwhelming majority of congressmen and senators who have actively supported Soviet Jewish immigration throughout their political careers. Some years back, a Soviet diplomat in Washington was asked how he explained the pro-Israel lobby to his superiors back home. He replied that he never had to. “Everything they need to know they learn when your average congressman goes to Moscow. We arrange for him to meet for a half-hour with a top Kremlin official. For five minutes he talks about war and peace, arms control, nuclear weapons. For the next 25 minutes all he wants to know about is some Soviet Jew.”

By week’s end this history and passion had produced a bare majority of senators willing to buck the President and near unanimity on Capitol Hill, in the American Jewish community and among the Israeli leadership that a compromise must be found. Unfortunately, all the Administration seems to be prepared for is Wham! Bam! Pow!--and the implicit threat that it is now Israel’s turn to learn that Bush is no wimp.