Congress Fears Queue for Relief

DESPITE overwhelming congressional support for President Bush's leadership through the Gulf crisis, his administration has not won approval from Capitol Hill for its plan to forgive Egypt's $7.1 billion military debt. According to a senior staff member of the foreign operations subcommittee of the House Appropriations Committee, ``there is a great deal of concern about forgiving debt in general. But we're really waiting to see the whole equation, including potential military sales to Saudi Arabia and additional assistance for Israel.''

The House Appropriations Committee decided on Tuesday to defer a decision on the debt forgiveness ``because the administration needs additional time to make its case and review additional approaches.'' Instead, the committee waived until Dec. 31 the Brooke-Alexander Amendment, which stipulates that a country is ineligible for additional aid if it is more than one year behind in its debt payments. A committee staff member says Egypt ``has been on the brink of Brooke for almost a year.''

Deputy Secretary of State Lawrence Eagleburger argues that, given the grave economic consequences of Egypt's immediate support for the United States against Iraq, Cairo's debt should be transformed into a US grant.

But Rep. David Obey (D) of Wisconsin, chairman of foreign operations subcommittee, remains unconvinced. He fears that a long line will soon form in Washington, composed of international borrowers requesting debt relief.

Tough budget choices

``We're an appropriations committee and we have the quaint idea we ought to know where we're going before we start on the journey.... How's it going to impact the budget? How's it going to impact our other choices?'' Mr. Obey asked Mr. Eagleburger in a recent hearing.

``We need to know what the costs are going to be not just with respect to this package, but with other packages down the road,'' Obey said. Several congressmen quizzed Eagleburger on what other deals the Bush administration might be making with indebted countries.

Eagleburger says there is no way to determine if and when other countries might request debt relief. But he stressed that Egypt's case ``is an isolated one,'' and that others would be considered ``on their merits.''

Israel seeks relief

At least one other country has already come forward to ask for debt reduction and additional aid, within the context of the administration's position on Egypt. Israeli Finance Minister Yitzhak Modai was in Washington this week for the annual meetings of the International Monetary Fund and the World Bank. He concedes that he has spent much of his time away from the meetings and visiting with Treasury Secretary Nicholas Brady, Eagleburger, and members of Congress.

``This is an emergency situation for the Israeli economy,'' says Mr. Modai, citing Israel's military costs, the economic impact of higher oil prices, and the budgetary strains caused by the huge influx of Soviet emigr'es. ``What Israel needs, and not necessarily from the US, is $8 billion in the next four to five years. Our total cost of [Soviet immigrant] absorption is over $40 billion.''

``It stands to reason that if there were forgiveness for Egyptian debt, there should be for the Israeli debt,'' Modai says. Egypt's military debt to the US is $3.2 billion. ``In our meetings with the senators and with Eagleburger, they let us know that they believe new formulas would satisfy the Israeli position.... I did not pursue any additional requests. We want to understand what is granted [nonrepayable] - we have our needs.''

Recognizing that the US has its own fiscal problems, the minister says with a smile: ``I don't exclude the possibility that after you know where you stand with your budget and your economy, I may ask to be invited here again.''

Eagleburger has stated that the administration is working on a new package for Israel. Any Bush administration decision to increase aid to Israel, sell military equipment, or forgive its debt must go through Congress.

Forgiving Israel's military debts ``would have a substantial budgetary impact,'' says the House Appropriations Committee aide. ``Israel makes all of its payments on time,'' he says. He adds that the US expects to be repaid by Israel, while Egypt's ability to repay, even if asked, is questionable, at best.