Next Step : U.S. and Israel: Alliance on Brink : Changing world dynamics and leaders’ animosity leave the relationship in disarray.

After a year of mounting tension between the United States and Israel, one of the world’s longest and strongest friendships appears to have crossed a new threshold.

The double-edged dispute--over Israeli intransigence on settlements in the occupied territories and the alleged Israeli sale or transfer of U.S. arms and sensitive technology to other countries--has left the relationship in disarray, according to American officials.

“How many times can you say that relations have never been worse?” lamented a leading U.S. analyst. In turn, Israelis are increasingly concerned about what they see as Israel-bashing in the United States.

Former U.S. Ambassador to Israel Samuel Lewis added: “Trying to take the temperature of the situation isn’t productive, but relations are certainly very strained and at one of their lowest points.”

Compounding the strain is the deep personal animosity between President Bush and Prime Minister Yitzhak Shamir, a dynamic that has contributed to the public airing of differences traditionally confined to diplomatic channels.

“One factor, and a very substantial one, is certainly the lack of understanding and mistrust that have grown between the leaders,” said Lewis, now president of the U.S. Peace Institute.

Analysts trace U.S. disaffection with Shamir, leader of the Likud Party, to March, 1990, when Israel balked at Secretary of State James A. Baker III’s first attempt to bring Israel and Arab countries to peace talks under a formula known as the Baker Plan.

Baker was so miffed at the Israeli position that, during testimony on Capitol Hill, he gave out the White House telephone number and said Israel should call when it was ready to negotiate.

“After that, Bush did not talk to Shamir until the Iraqi invasion of Kuwait,” said Marvin Feuerweger of the Washington Institute on Near East Policy. The thaw during Operation Desert Storm turned out to be temporary. “Anyone can see there’s a real tension between these men. It’s different from the way Bush relates to other leaders,” Feuerweger added.

Baker and Bush were further antagonized during the secretary of state’s eight trips to the region to set up the current peace effort. Each visit coincided with an Israeli announcement of a new settlement in the territories it has occupied since the 1967 Middle East War. Now that the peace talks are under way, Washington feels even more strongly that to make progress, the Israelis have to show good faith by ending the settlement drive on occupied Arab land.

The pervasiveness and depth of the animosity between the two governments is reflected in leaks that fueled allegations of illegal Israeli arms sales.

“The leaks occurred because there’s a perception in the bureaucracy and U.S. defense industry that the relationship is cooler at the top, and therefore things that have been better handled quietly in the past wouldn’t bring any penalty if they were brought into the open now,” said Lewis.

Relations have been under pressure before. Among the first and most famous confrontations was President Dwight D. Eisenhower’s ultimatum to Israel to withdraw from Egypt’s Sinai Peninsula during the 1956 war.

And, over the last decade, Washington and Israel were at odds during Israel’s 1982 invasion of Lebanon and the subsequent massacre by Lebanese militiamen of hundreds of Palestinians in the Sabra and Chatilla refugee camps in Beirut, when U.S. naval intelligence analyst Jonathan Jay Pollard pleaded guilty in 1986 to spying for Israel and during Israel’s iron-fist response to the Palestinian uprising in the occupied territories, which erupted in 1987.

In the past, however, it was not played out on a personal level, and behind-the-scenes dialogue eventually defused the tension. Israel’s strategic importance and its position as the only Mideast democracy were more important considerations.

As a result, no U.S. Administration ever deviated from President Harry S. Truman’s pledge in 1948 to “help build . . . a strong, prosperous, free and independent democratic state” in Israel.

The current crisis has coincided with the end of the Cold War, the deployment of Arab armies alongside U.S. troops against an Arab foe during Operation Desert Storm and the opening of the most extensive Mideast peace dialogue in 44 years. All three events have contributed to a reappraisal of U.S. foreign policy and America’s allies, including, for the first time, Israel.

U.S. and Israeli analysts do not foresee any serious break in relations. Although the Administration has refused a request for $10 billion in U.S. loan guarantees because of the settlements policy, Israel still receives about $10 million per day from the United States, by far the largest aid program in the world.

And in the first comment by a senior Administration official since the collapse of negotiations on loan guarantees, State Department policy planning chief Dennis Ross told the American Jewish Congress on Friday that the foundation of the strategic relationship has not changed.

“Regardless of the differences that exist between the United States and Israel now, I can tell you one thing categorically--there is not going to be a wedge driven between the United States and Israel,” he said.

“I still hope that we will be able to provide loan guarantees to Israel,” which were requested to help Israel pay for the absorption of Soviet Jews, he added. More than 350,000 have already emigrated to Israel and up to another million are anticipated.

The change in relations is, instead, in the level of intimacy between American and Israeli leaders and Israel’s influence in Congress.

Many analysts predict that relations at the top will not be significantly improved unless Israelis choose new leadership--from the Labor Party or even a coalition government between the country’s two main political rivals--in elections scheduled for June 23.

“If Shamir wins and insists on this policy of de facto annexation of the occupied territories, then I foresee nothing but trouble,” predicted Geoffrey Kemp, who was in charge of Mideast policy on the National Security Council during the Ronald Reagan Administration.

“But if there is a change of regime or a coalition with (Labor Party leader Yitzhak) Rabin in a strong position to influence Israel’s settlement policy, relations with Bush could be restored very quickly.”

Some Israelis feel that recent Administration actions and statements have, in fact, been designed to encourage a political change. “Likud clearly sees not only an American preference for Rabin, but it also perceives U.S. actions as designed to unseat Shamir in a very direct way,” said Feuerweger.

Rabin was ambassador to the United States between 1968 and 1973, a pivotal period in U.S.-Israeli relations. More important to Mideast peace efforts, he is seen as a leader who believes that holding on to the entire occupied West Bank is not essential to Israel’s security.

Although Rabin has backed settlements, the Administration feels that he may be willing to negotiate a compromise on the issue, which the United States believes is a key to movement in the peace talks.

“Going back to the 1970s, the United States has been interested in working with Rabin. There’s a feeling of warmth toward the individual. He was the Bush Administration’s interlocutor in 1989-90 on the Baker Plan,” Feuerweger added.

In contrast, Shamir, under pressure from right-wing religious members of his coalition government, is seen as fundamentally opposed to surrendering settlements or control of occupied land.

Since the first round of Mideast peace talks in Madrid last October, “Likud’s true colors have come to the surface,” said Kemp, who is now working on missile proliferation issues at the Carnegie Endowment for International Peace. “If push comes to shove between absorbing Soviet Jews, relations with the Americans and land, Shamir will chose land. That has the most profound implications on the peace effort to which Bush is committed.”

The tension between Bush and Shamir has reached such levels that some Israelis now fear that Shamir’s reelection might even lead to Administration reconsideration of other aspects of relations.

“People here fear that if Shamir is reelected, then the United States might bring up the subject of the annual aid package,” said Ehud Sprinzak, a political scientist at Jerusalem’s Hebrew University. The more than $3 billion in annual U.S. aid to Israel has, so far, not been affected by the debate over loan guarantees.

Israel is dependent on foreign aid--roughly $6 billion from governments as well as Jewish charities--to support a troubled economy further burdened with the absorption of Soviet Jews. Unemployment is estimated at 11%, while inflation has risen to double digits and income is falling.

Since polls last week for the first time showed the Labor Party with an edge in the coming election, many U.S. and Israeli analysts predict that the election will mark a turning point in restoring stronger ties.

But Israel’s influence in Congress may be going through a more fundamental change. The drawn-out debate between the White House and Congress over U.S. loan guarantees to Israel showed that the Jewish state can no longer count on Congress to pressure the Administration.

“It marked an important benchmark. It demonstrated that the strength of Israel’s friends in Congress is still great but that they’re not going to be effective when a President draws the issue very sharply as being support for him or support for Israel,’ said former ambassador Lewis.

Congress attempted to broker a compromise formula, by which Israel would get the loan guarantees minus the amount Israel spends on settlements. Bush had instead requested that Israel halt all settlement housing construction begun after Jan. 1.

When the White House balked at the compromise, Israel’s supporters in Congress did not push the issue further, as they have in past disputes. The result is a message that U.S. aid to Israel is no longer unconditional, and that Congress will not automatically play hardball with the Administration on Israel.

Future relations may also be reshaped by allegations of Israeli arms sales and technology transfers in violation of the terms of U.S. sales. Various reports have charged that Israel provided Patriot missile technology to China and sold arms to countries such as South Africa, China, Ethiopia and Chile.

A 16-member team from the Pentagon and State Department arrived in Israel on Saturday to investigate the reports. “If there’s conclusive evidence that Israel has cheated on technology transfers, then that becomes extremely serious,” Kemp said.

Some analysts countercharge that the allegations, which Israel has denied, have been overblown. “Some of these stories are as old as 12 years, some are patently false, and others we don’t know (whether they) are true and (they) appear ridiculous,” said Feuerweger.

“Much of the story will be shown to be false and merely Israel-bashing,” he added. “Israel needs a close relationship with the United States on technology issues, so it will need to show that it can protect U.S. secrets. But it will not be the last straw that will break the camel’s back.’