Stance on Loan Guarantees Marks Significant Shift in US Israel Policy

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THE Bush administration's new get-tough attitude toward Israel is both watershed and precedent in United States policy, according to Middle East analysts, because of profound changes in the global strategic situation and in US public opinion on the Middle East.

In recent weeks, administration officials have said that the US hopes for a "land for peace" deal between Arab states and Israel, an approach Israeli Prime Minister Yitzhak Shamir rejects.

Meanwhile, Secretary of State James Baker III has consulted more closely with Palestinians from the occupied territories than past secretaries of state. He will meet this week with Palestinian leaders Faisal Husseini and Hanan Ashrawi in Washington.

Although the White House has backtracked on directly linking $10 billion in loan guarantees for Israel to a freeze in West Bank settlements, it is likely to maintain the link, analysts predict.

"The strategic alliance part of the relationship is over," says William Quandt, a Middle East specialist with the Brookings Institution. "During the Reagan period, this was hyped as a good reason for turning a blind eye" to Israeli policies. "That kind of glue is rapidly disappearing," he says.

"The idea of an anticipatory veto of the Jewish lobby" on the issues involving Israel "has been broken," says Mark Rosenblum, vice president of Americans for Peace Now, of the waning influence of pro-Israel interest groups.

US administrations going back to President Dwight Eisenhower have sparred with Israel, but friction has grown since the 1970s over settlements in the West Bank and Gaza Strip. US presidents have called the settlements both illegal and an obstacle to peace. But no president until now has dared to stop them by threatening to withhold aid.

Last month, after Secretary Baker's trip to Jerusalem in which Prime Minister Shamir rebuffed a US request to delay the loan guarantees, a senior administration official told the traveling press corps that the loan guarantees would hinge on a freeze on new settlement activity.

Reports of the official's comments sent the Israeli government into a tailspin and further galvanized America's Jewish lobby.

But the lobby suffered a setback last week when pro-Israel senators concluded they could not buck the president by passing the loan guarantees now.

"There's a whole new international dymanic," says James Zogby, executive director of the Arab-American Institute. "The East-West dynamic is over." With the decline of the Soviet Union, the US has become the uncontested world power. …