Was this just election-year posturing, or would Israel really go it alone? Though the Israeli government did always plan on a substantial amount of help from Jews abroad to resettle the Soviets, Bank of Israel Governor Jacob Frenkel thinks Shamir is being unrealistic: " We need huge sums of capital, and this can only be obtained in the money market. Let’s not delude ourselves." Others predicted U.S. Jews might raise at most an extra $100 million.
Shamir’s remarks have broader implications within Israel. They precipitated a debate about the political consequences of Israel’s long-held but unacknowledged economic policy: use foreign aid to prop up an inefficient economy dominated by state enterprise and powerful labor unions. That debate has long simmered beneath the surface of Israeli politics, but now it has the potential to reshape the country and its foreign policy. Man independent Israel economists argue that rather than more foreign debt, guaranteed or otherwise, the government needs to slash its budget deficit (currently running at more than 10 percent of gross domestic product), end price controls for goods ranging from bread to gasoline and sell off state holdings said to be worth more than $15 billion. Such arguments can be heard not only from market oriented doves who oppose borrowing money to settle the occupied territories but also from radical rightists who think it’s time Israel quit depending on the largesse of non-Jews. “Israel does not need the guarantees,” says Israel Harel, a leader of West Bank settlers. Israelis, he says, should “roll up their sleeves.”
So it’s an open question whether Shamir’s nationalism will sell with the broader electorate. Most Israelis seem to be in the middle, nervous about giving the entire West Bank back to the Arabs but equally jittery about alienating the United States. This may explain why the opposition Labor Party, which has sounded a conciliatory note toward Washington on settlements, recently took the lead over the prime minister’s party in the opinion polls. Last week Shamir attended a ceremony marking the arrival of the 400,000th Soviet immigrant. Laborite Simcha Dinitz, a former ambassador to Washington who now directs the immigration drive, boycotted the gathering to protest Shamir’s anti-U.S. talk. “Whoever hopes to defeat the United States is liable to be defeated,” he warned. It was a cold statement of realpolitik that Israelis may soon see put to the test.
