Era of Automatic US Assistance To Israel May Be Drawing to Close

WHEN Israel's interests are on the line, the legendary American lobby that represents it is usually unstoppable. Buoyed by a huge reservoir of American friendship for Israel, it has won more foreign aid from Congress, and on better terms, than any nation in history.

But Israel and its American friends have suddenly hit a wall of resistance. Despite months of urgent appeals, the Bush administration is still sitting on a request to underwrite a $10 billion loan to settle immigrating Soviet Jews. When and if it finally decides to go along, it is sure to be at a price Israel will find hard to swallow.

Israel's uphill battle on the issue of loan guarantees is partly the fault of an ailing United States economy. Generosity abroad is simply harder to sell now. But beyond the recession lie deeper problems that suggest the possible end of an era of automatic largess for Israel. "There continues to be a base of support for Israel, but that base is under constant attack and constant erosion," says a prominent political analyst in Washington.

The US has told Israel that it would insist on a halt to the construction of Jewish settlements in the occupied West Bank and Gaza Strip before it would agree to any loan guarantees. Israel says it will slow, but not stop, settlements. (Israel's quiet shift, Page 6.) Under terms offered by the US, Israel would be free to complete up to 9,000 housing units already under construction in the territories but would deduct from the total amount of the loan guarantees the costs of final construction.

For now at least, the tangible effects of the slow, perhaps temporary, decline in US public support for Israel are not likely to extend beyond the issue of loan guarantees.

One reason: What counts in Congress, in the end, is not public opinion but lobbying, which pro-Israeli groups still do with consummate skill. Even so, some American Jews note that weakening loyalties to Israel coincide with a shrinking economy at home. They are worried that if current trends persist, the size and terms of Israel's annual $3 billion foreign-aid package could also come under closer scrutiny. Concern about limits

"Military and economic aid to Israel has been uncontested for years," says David Cohen, co- director of the Center for Israeli Peace and Security. "Now we're concerned that Congress may begin to consider limits on this as well."

Ironically, these should be the best of times for Israel. With Iraq defeated, Russian immigrants pouring in, the Palestinian uprising under control, and Arab states negotiating with Israel face-to-face, the Jewish state may be more secure than ever before.

But against these hopeful developments for Israel is the hard reality that the relationship that has sustained it since its creation in 1948 has reached its lowest ebb in years. The main reason is the determination of Prime Minister Yitzhak Shamir's Likud government to tighten Israel's grip on the occupied West Bank and Gaza Strip, even as the US is determined to loosen it.

The US says the peace that it wants and that Israel needs can only come through territorial compromise. A defiant Shamir says, never. "Israel is in the awkward position of defending the status quo at the time the allies are pressing for change," says William Schneider, an expert on American politics and public opinion at the American Enterprise Institute. "The result is that Israel is more isolated now than it's ever been in history."

Pressed by recession-strapped constituents, lawmakers are having a hard time defending the idea of underwriting loans to Israel, even though only a small percentage of the total would actually have to be budgeted to hedge against default.

But beyond the immediate issue of the loan guarantees even lawmakers have grown exasperated with Israel's intransigence on the settlements issue. Many American Jews worry that Congress's frustration could undermine the solid support on aid and arms sales issues that Israel has relied on for years.

"Something very important is happening in Congress that Israel needs to take note of," says Dr. Schneider. "Support for Israel is not as strong and as automatic as it once was."

Signs of erosion are also evident in the arena of American public opinion. The Jewish state has always been viewed warmly by Americans who see it as a bastion of democratic values and who have worried about its vulnerability to the hostile Arab states that surround it.

But recent polling data suggest that these pillars of support have all been weakened. Americans increasingly perceive Israel to be the main obstacle to a Middle East peace. Sustained press criticism of Israel's controversial response to the Palestinian uprising has eroded the feeling of shared values. Despite Iraq's Scud attacks during the Gulf war, Israel is no longer seen to be at the mercy of Arab arms. "On one hand, Americans are convinced that Arabs are no longer intent on destroying Israel," says t he political analyst. "On the other, most Americans think Israel could defeat any and all Arab armies."

Caught in the middle of this shifting tide of opinion is the US's articulate, well-organized Jewish community. Although US Jewish leaders remain unwavering in their support for Israel and high levels of US aid, even mainstream American Jews are more dovish than the Israeli government, more willing to openly disagree with it, and, more convinced that the loan guarantees are more important than new settlements. Ideological chasm

According to recent polls, an ideological chasm now divides American Jews from the policies of the Shamir government.

In a November survey of the officers of one bellwether Jewish organization, the Council of Jewish Federations, three-fourths said Israel should freeze settlements to get US loan guarantees. Ninety percent favored territorial compromise in West Bank and Gaza. Eighty percent approved of a demilitarized Palestinian state with proper security arrangements. Only 22 percent said they would vote for Shamir's Likud party in an Israeli election.

"Clearly American Jewish leaders are driven by a security commitment," says Schneider. "Shamir appears to be driven by a territorial commitment."

The tone of President Bush's dealings with Israel has been cooler than that of his recent predecessors.

But while any foreseeable Democratic successor would be more openly supportive of Israel, analysts say, none would be able to escape the divergence of interests created by Israel's current reluctance to go along with the land-for-peace formula the US regards as the key to ending 43-years of Arab-Israeli strife.