Western Europe Gains Influence in Mideast Peace Process : Diplomacy: As the U.S. reviews its global commitments and foreign aid, others step in to fill the power vacuum.

King Hussein paused, beamed in the direction of his guest and called him “one of the greatest men of our times.”

A few minutes later, it was the turn of another Middle East leader, Israel’s Prime Minister Yitzhak Rabin, to praise the visitor.

“Your involvement, your decision to come to visit here, gives great hope,” Rabin said.

The subject of such effusive words was no traditional Middle East powerbroker but Germany’s Chancellor Helmut Kohl, who last week made his first visit to the region in more than a decade.

His reception, especially in Israel, underscored how much has changed in the interim.

While Germany’s relationship with Israel will always be laden with history and filled with complexities, the chancellor’s welcome in Jerusalem reflected that, half a century after the Holocaust, the two nations’ ties also contain a new dimension of goodwill.

On Thursday, Kohl, Rabin and senior officials of the Hebrew University gathered at the Mt. Scopus campus in Jerusalem for a ceremony to rename the school’s Institute for European Studies after the German leader.

And while the English-language Jerusalem Post complained about Germany’s ties with Iran, it also gushed over the chancellor’s record, declaring that “he has kept the German-Israeli relationship intact, while bringing Bonn’s relations with the Arab countries to unprecedented levels.”

Indeed, the way Kohl was greeted on his three-nation swing to Jordan, Israel and Egypt--and by Yasser Arafat in Palestinian-controlled Jericho--did more than underscore a higher profile for the reunited Germany. It also signaled another of the many changes unfolding in the Middle East: the new importance of Western Europe as a player in the peace process.

To be sure, the United States remains the preeminent power in brokering a lasting peace in the troubled region. U.S. aid to Israel and Egypt--totaling $5.2 billion this year--is still the largest single chunk of foreign assistance around, and no one but the United States can really provide the security guarantees needed to underpin a permanent settlement.

But within this context, West European influence is growing, with several factors driving the change.

For one, with the Soviet Union gone, the United States reviewing its global commitments and Congress questioning the very concept of foreign aid, the Europeans have simply stepped into a small, but significant, power vacuum.

“The Europeans are looking for a world role, and this is a place to start,” said Shmuel Sandler, a specialist on the peace process at the Besa Center for Strategic Studies in Tel Aviv. “They have money the Americans are no longer willing to give.”

For example, the Clinton Administration’s aid request for Jordan for next year is only one-third the $105 million Jordan received in U.S. aid just five years ago. Meanwhile, $275 million in debt forgiveness for Jordan--part of a de facto gift for its signing a peace agreement with Israel--ended up in a defense spending bill vetoed by the President.

By contrast, European Union economic assistance to the main players in the Middle East peace process has more than tripled since the late 1970s, and the EU is also the single largest donor to the fledgling Palestinian Authority.

Kohl pledged $7 million in additional aid to Arafat’s government Wednesday and said he will consider German investment in a Palestinian industrial park and an airport.

And the choice of this remote settlement along the Israeli-Jordanian frontier for Rabin and Hussein’s meeting with Kohl had mainly to do with the fact that Germany and the EU are financing a $450-million water development project considered crucial for the future of former enemies on both sides of the Arab-Israeli divide.

“I have come to make clear that we Germans and the European Union lend our support so that this project can materialize,” Kohl told his hosts.

But other factors besides money are now expanding the potential of this new relationship. They include a Labor-led Israeli government more receptive to Europeans than its predecessor, as well as moves by West Europeans that have helped them shed the image of being too pro-Arab to play a constructive role in the region.

A senior official at the Israeli Foreign Ministry talked of a “qualitative improvement in relations with Western Europe” after Norway’s successful mediation of talks that led to Israel’s recognition of the Palestine Liberation Organization in 1993.

“Until then, we had felt Europe couldn’t be trusted,” this official said. “It’s no accident that it was Norway, a little country with no pretensions, that played the instrumental role.”

Another factor contributing to the greater European role here is the increased influence that a reunified Germany has begun to exert within the EU--an influence now viewed positively by Israelis who were initially concerned about reunification.

They see modern, democratic Germany as a more sympathetic, reliable ally than some of the EU’s other big powers, such as France and Italy, that are more closely associated with such actions as the 1980 Venice Declaration, in which the EU effectively embraced Arafat.

In recent months, Bonn has led efforts within the EU to finalize a free-trade agreement with Israel that would give the Jewish state free access to one of the world’s richest consumer markets.

“We now have fewer problems with France and Italy, but on a practical level, we feel the Germans are closer,” said an official at the Israeli Foreign Ministry who declined to be quoted by name.

Said Sandler, more bluntly: “They feel responsible. We can play on guilt.”

Despite these developments, relations remain far from easy between Israel and a region of the world that former Prime Minister Menachem Begin once dismissed as the world’s biggest Jewish cemetery.

Enough suspicion lingers to limit what Europeans can do to push the peace process forward.

“They can’t provide the guarantees that the Americans can and, even if the EU had a foreign policy, I question if they could design, implement and sustain the kind of delicate policies needed here,” noted Raymond Cohen, a foreign policy specialist at Jerusalem’s Hebrew University.

Some EU officials have expressed frustration that the Israelis are happy to take European money yet reluctant to cede influence.

In part because of this complaint, the EU has been given the job of organizing the battalion of international observers for Palestinian elections planned for the West Bank.

“It’s easier now to give the Europeans responsibility,” the Israeli Foreign Ministry official said. “Giving them such a role in the [Palestinian] elections wouldn’t have been possible a year ago.”

Times staff writer Stanley Meisler in Washington contributed to this report.

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European Aid to Mideast

European Union assistance, in millions of dollars, to key participants in the Mideast peace process. Figures include grants and loans.

Country 1977-81 1982-86 1987-91 1992-96 Egypt $221 $358 $584 $738 Jordan $52 $82 $130 $164 Syria $78 $126 $190 $205 Israel $39 $52 $82 $106 Total $390 $618 $986 $1,213

Source: European Union