NEWS ANALYSIS : Washington Also Winner in Israel Vote : Policy: The Bush Administration’s push for a curb on settlements was a central issue in campaign, reflecting major U.S. influence.

The strong showing of the dovish Labor Party in Tuesday’s elections was a victory for the Bush Administration’s effort to nudge Israel toward a commitment to trade occupied land for peace with the Palestinians and hostile Arab neighbors.

Washington virtually defined the framework of the election campaign by withholding support of $2 billion yearly in economic development loan guarantees because of U.S. opposition to the ruling Likud Party’s massive program to build settlements in the West Bank and Gaza Strip.

Bush fought settlements on the grounds they undermined the U.S. formula to get Israel to trade land in return for peace and security arrangements.

Israeli voters were faced with two stark alternatives--to choose either a government that would curb settlements or one that would risk economic hardship for the masses of new immigrants flooding the country.

The made-in-America alternative became a central issue in the campaign. Labor’s Yitzhak Rabin said he would curtail settlements; Prime Minister Yitzhak Shamir, Likud’s leader, said he would keep building.

“The election was a ballet staged here but choreographed in Washington,” said political theorist Yaron Ezrahi.

“One cannot underestimate the role of the U.S. government in the results,” commented Ehud Sprinzak, a political scientist. “The loan guarantee issue was critical.”

The influence of the United States on Israel’s election adds a new dimension to relations between the two countries. It is conventionally said that no U.S. Administration can take on an Israeli government during a U.S. election year. Now there is a corollary: No Israeli government can take on Washington when Israeli elections are up for grabs.

With the possibility of a pro-peace government without Likud, expectations for speedier peace talks, not to mention a curb on settlement construction, will arise in Washington. “Rabin’s campaign slogan was ‘Israel is waiting for Rabin.’ I would guess that Washington is waiting too,” said Harry Wall, director of the Jerusalem office of the Anti-Defamation League.

Early in the race, Shamir campaigned briefly against Washington but then abandoned the strategy because Israelis are uneasy with strained relations with the United States, this country’s most generous benefactor. Blaming the Bush Administration for Israel’s economic problems and for applying pressure to freeze settlements only reminded voters of the gap between Shamir and Bush.

As a result, Likud largely hid from view its proudest achievement, one it had spent hundreds of millions of dollars to realize: the construction of thousands of new houses in the West Bank and Gaza Strip, a project Shamir had characterized as historic.

The settlement issue was stressed instead by the pro-settlement extreme right wing, further frightening the middle-class voter who was wavering between Likud and Labor.

Likud was also wounded by a general feeling that it had run out of ideas. Shamir had become the candidate of the status quo; he had opposed electoral reform that was popular in Israel and was slow to institute needed economic reform.

The party appeared never to have recovered from a bout of infighting among presumed successors to Shamir--a battle that will probably resume in coming months if the party is excluded from power. The irritation of Foreign Minister David Levy, who represents Jews of North African descent, a traditional bloc of Likud supporters, harmed Shamir’s effort.

Levy felt that rivals were ganging up on him to exclude him in case he should one day aspire to be prime minister. “Too many of our candidates were sulking,” concluded Health Minister Ehud Olmert, a protege of Shamir’s.

Party officials attributed some of Labor’s success to the vote of new Russian immigrants, who suffer from 40% unemployment, as well as to middle-class voters who are dissatisfied with the state of the economy.