What’s Amiss with US-Israel Relations? Washington Suspends $200m Anti-Terror Aid

The Bush administration, which only last month sought $200m in special counter-terror aid for Israel, has just suspended its allocation.
This underplayed news tidbit reflects an element of displeasure, according to debkafile‘s Washington sources, at the latest trends at the top of Israeli politics – chiefly the resurgence of the pro-Oslo camp with fresh demands for concessions and dialogue with Yasser Arafat’s Palestinian Authority and a new left-wing challenger for the Labor party leadership against defense minister Binyamin Ben Eliezer, Haifa mayor Amram Mitzna. This former army general, 57, promises if elected to take Labor out of Ariel Sharon’s unity government and open unconditional negotiations with the Palestinians, failing which he will effect a unilateral Israeli withdrawal (he does not say to which boundaries), together with the removal of all Jewish settlements from the Gaza Strip and most from the West Bank.
Mitzna, who frankly bucks the policies articulated by the Bush team, is picking up left-wing fringe support – more vocal than substantial – from such groups as Yossi Bailin’s pro-European, pro-Palestinian “peace coalition”, but also from a couple of cabinet ministers. He is also backed by an important wealthy elite, many of whose members made hay in the post-Oslo “New Middle East” economy. This faction is leaning heavily on Labor to quit Ariel Sharon’s national unity government. To deflect that pressure, Sharon is giving ground on some key security issues, particularly in the Palestinian arena, bringing down on his head a measure of American ire.
The revival of the Clinton-era Oslo faction in Israeli politics, which does not sit well with the Bush administration, is also resented by the majority of Israelis, who bitterly blame the Oslo regime for the miseries of suicidal terrorism, economic depression and galloping employment attendant on Arafat’s war of terror. Therefore, in the view of debkafile‘s political analysts, the doves’ revival and the Mitzna candidacy alike may generate some hype but no real momentum, before they fizzle out. However, Sharon will find that riding two horses at once is a politically damaging exercise.
The shortage of cash for Israel’s basic needs cuts deep. This week, government hospitals protest they have run out of essential medical supplies, sharing the pain of every field of social welfare and education. Blame is freely assigned to Israel’s security crisis, the collapse of the tourist industry and the bursting of the high-tech bubble worldwide. However, almost unnoticed, Israel’s routinely impoverished neighbor, Jordan, is prospering. Its boom comes from a single source: a huge US injection of the comparatively large sum of around $500 m into the small kingdom. A major expansion project has turned Jordan’s only port, Aqaba, into one of the largest American naval bases in the Red Sea region; four landing strips have been laid at its airport; new highways built between Aqaba and Amman the capital, running as far as the military bases in northern Jordan where US troops are stationed. America has also thrown up big new ground bases in central Jordan, near its eastern border with Iraq and not far from the conjunction if its northern border with those of Iraq and Syria. For these large-scale projects, the United States has hired Jordanian and Turkish contractors as well as Israeli Arab firms – as long as their proprietors are pro-Jordanian and Christian – not Muslim.
Significantly, the Bush administration has refrained from hiring any other Israeli contractors, withholding from the Israeli economy a desperately needed shot in the arm at the same time as the suspension of the $200 m allocation approved for Israel by the Senate. This is odd, to say the least, when Israel is one of the few countries locked in day-to-day combat with suicidal terror and threatened momentarily with a mega or unconventional weapons attack by Palestinians alone or in combination with Iraq. Palestinian terror has already crippled the Israeli economy, casting thousands every month into the burgeoning ranks of the jobless.
Israel is not the only country suffering economic punishment at the hands of Washington. Three days ago, the Bush administration informed Egypt that supplementary aid would not be forthcoming in view of the imprisonment of the pro-democracy, American-Egyptian academic, Saad Eddin Ibrahim.
Washington has taken another step to signal its disapproval of the forces manipulating the Labor party. Salam Fayad, the new Palestinian finance minister Washington endorsed as initiator of reforms in Palestinian finances, is a former World Bank official, whom Arafat has shunned ever since he was told to hand over his account books. Last week, the new minister created a central instrument of financial reform, the Palestinian Investment Fund, to operate under his direct control under a soon-to-be-appointed board of trustees. The new minister laid down new ground rules clearly: “If there is an asset of any kind which is either wholly or partially owned by or owned by the Palestinian Authority,” he said, “If it is not in the fund, it will be illegal.”
The new holding company’s powers will extend to the Palestinian Authority’s foreign assets, disbursements of international aid and management of cement and petroleum monopolies in Palestinian-ruled areas.
debkafile recalls that under the Oslo accord arrangements, those monopolies were created as Israel government-approved partnerships between Palestinian circles close to Arafat and Israeli business associates close to leading Oslo architects. The revenues were to be split between Arafat and the Israeli interests involved. Behind this business association, Arafat’s financial advisers and the heads of Israel’s pro-Oslo camp forged a strong political alliance. The association came in the form of monopolies, which kept any outsiders from engaging in major transactions in Palestinian-controlled territory in basic commodities, such as petroleum flour, cement, paint, iron, foodstuffs, minerals and the now shuttered Jericho Casino.
The new Palestinian Investment Fund and finance minister Fayad was thus empowered by Washington to become an instrument of transparency – not only in respect of Palestinian Authority finances, but also those of its Israeli partners in the key monopolies – a direct hit at the resurgent camp of doves.