Shamir Government Raising Issue of U.S. Obligation to Jewish Emigres : Israel: It resists linkage between American loan guarantees and expanded settlements in occupied lands.

In preparing to resist the Bush Administration’s threat to oppose expansion of Israeli settlements in the West Bank and Gaza Strip by limiting aid for immigrant housing, Prime Minister Yitzhak Shamir’s government is raising the issue of a built-in U.S. obligation to help the program that brings Jews here from all over the world.

Moreover, rhetoric on the whole subject here has reached such a pitch that Housing Minister Ariel Sharon, a prime promoter of new settlements in the disputed territories, equates any U.S. act to withhold aid with the arms-length treatment once given by Western governments to Jewish refugees fleeing Nazi Germany.

Israel’s planned request for U.S. aid, in the form of guarantees for up to $10 billion in loans, is still two months away. Yet even whispered suggestions that such guarantees may be linked to the settlements issue upsets a delicate balancing act of Shamir’s rightist government: to maintain good relations with Washington while moving ahead with plans to keep the West Bank and Gaza under Israeli control.

Shamir argues that Washington, having struggled for the freedom of Jews to emigrate from the Soviet Union, is obliged to make their new life as comfortable as possible, regardless of other foreign policy concerns. He expressed disbelief at suggestions that the Administration might act otherwise.

“There is no difference between immigration and absorption,” Shamir told reporters last week. “Today, it is inconceivable that the United States will not help Israel to absorb the immigrants it fought so hard for.”

Disagreements over the conflict between Israel and its Arab neighbors have no place in the debate about aid, and it is too late to put conditions on Israel now, Shamir insisted. “U.S. Presidents and secretaries of state fought to open the gates of the Soviet Union. They never sought to make the help conditional on the political views of the Israeli government,” he declared.

“They never, for example, said, ‘We will fight for the right of Jews to leave the Soviet Union if you promise not to establish settlements.’ ”

Last week, during a meeting of the Jewish Agency, a semi-private group that encourages migration to Israel, Shamir urged American Jews to lobby the U.S. government for the loan guarantees. About 200,000 Jews arrived in Israel from the Soviet Union in 1990, and 100,000 have come so far this year.

Sharon, whose ministry has embarked on a feverish campaign to expand settlement construction in the West Bank and Gaza, evoked Holocaust history in saying that it would be immoral for the United States to withhold aid. “It would be unthinkable to us that the United States and other democracies will repeat what happened 50 years ago when they closed their gates . . . to Jews who could have been saved,” he said.

The Bush Administration favors a formula for Middle East peace that hinges on Israel’s giving up at least some of the West Bank and Gaza Strip in return for peace treaties and ties with Arab states. As a counter, Shamir’s government made it a point to open new settlements and seize land for further expansion during this spring’s fruitless series of diplomatic journeys to the Middle East by Secretary of State James A. Baker III.

Subsequently, politicians and Jewish leaders in the United States sent warnings to Shamir that Bush is fed up and will not support guarantees for large loans that Israel wants to pay for housing and jobs.

Although Shamir rejects linkage, it was he who first suggested that the disputed land would play a role in absorbing the immigration. In a speech to party supporters over a year ago, Shamir said that a “big immigration” required a “big Israel.”

In recent remarks, Shamir made clear his intention to resist Bush’s land-for-peace formula. Two weeks ago, he said that settlement of the land is “unstoppable,” and last Monday, he described the occupied territory as “integral parts of Israel.”

“We will struggle,” he continued, “to turn these feelings into reality and make further progress in expanding that reality.”

The differences between the Bush Administration and Shamir’s government appear rooted in their basic views of the goals of Zionism as well as the limits of Israel as a place. It is the difference between the concept of the State of Israel and a broader notion of the Land of Israel.

Bush, as past Presidents have done, supports the right of Jews to migrate to the State of Israel and backs the state with aid, which now approaches $4 billion yearly.

But the frontiers of the State of Israel, in Bush’s view, are defined by international consensus and do not include the West Bank and Gaza Strip and eastern sections of the city of Jerusalem. Expansion into those areas is a source of regional tension, Washington asserts, believing that surrender of at least some of the land would anchor peace with Arab states as well as with the 1.7 million Palestinian inhabitants of the land.

Shamir, on the other hand, sees his job as bringing Jews not just to the State of Israel but to the Land of Israel, a term currently used to describe all the territory west of the Jordan River. Shamir says that by virtue of biblical right and military need, this land belongs to the people of Israel. He holds that the State of Israel lies on only part of the land and that Israelis, including immigrants, have a right to live on all of it.

According to Shamir, tension in the Middle East is rooted not in Israel’s hold on the land, but in the refusal of Arab governments to accept Israel’s statehood. Giving up the land will solve nothing and only weaken Israel in the face of implacable enemies, he believes.

Last year, Shamir’s government pledged not to “direct” newcomers to the disputed land, but it went ahead and set up special mobile housing units for them. Members of his Likud Party are campaigning to set a time limit on the pledge not to direct immigrating Soviet Jews to the West Bank and Gaza. After a year or so, Likud officials say, the immigrants should be considered veteran Israelis and qualify for mass settlement.

New and longtime Israelis benefit from a range of financial incentives to move to the occupied land, a fact that makes Bush and Baker wonder whether U.S. aid indirectly encourages Israel’s accelerated settling of the territory.

There is some skepticism here about whether the American threat to withhold the loan guarantees, if it is carried out, would work to stop settlement. Shamir is ideologically committed to expansion into the West Bank and Gaza.

“He won’t step back an inch,” predicted Aryeh Naor, a former high official in the government of former Prime Minister Menachem Begin.

Moreover, Washington runs the risk that Israelis will resent the pressure, some analysts believe. “The American tactic could backfire and end by strengthening Shamir,” said Shlomo Avineri, a political scientist at Hebrew University.

But Avineri mused that Shamir, by suggesting that the Americans are obligated to shore up immigration with more money and by thumbing his nose at Washington’s opinion of settlements, is himself risking a burst of American resentment.