Correspondents' Correspondence Israel's Tight Squeeze

...For that reason alone, it felt confident, the White House and Congress would be somewhat receptive to its pleas...

...Weizman's critics and political opponents hurried to accuse him of having failed in his mission, and of having made a fool of himself to boot...

...The last, of course, is an especially risky economy to make at a time when the U.S...

...they had misread the situation...

...Israel's Tight Squeeze Jerusalem—Several months ago, Israel submitted a $3.5 billion aid request to the U.S...

...for the fiscal year 1981—almost double what it had received for 1980...

...there was no chance, they insisted, that the U.S...

...The second would restore the bureaucratic tangle of economic controls, which stifles initiative, fosters black markets and could put Israel back where it was 25 years ago...

...officials to grant a $400 million increase, which would at least compensate for the devaluation of the dollar during the last two years...

...The Begin government responded to all this by noting that it had arrived at the surprisingly large aid figure on the basis of two harsh realities: The gap in Israel's balance of payments will widen significantly over the next year...

...It will be a hard choice.-elihau Salpeter...

...But no sooner did he arrive back in the Jerusalem than the State Department informed the Israeli Embassy that the aid figure for 1981 would increase by only $200 million in military credits...

...would come anywhere near the figure...

...More important than these petty squabbles, though, is the fact that Israel will indeed be in a very tight squeeze next year...

...While the first alternative would boost exports, it would also push the prices of many products beyond the reach of the average wage earner, causing social strain...

...2) dip into foreign currency reserves normally kept for sudden emergencies...

...and 3) cut back significantly on the imports of arms and military equipment...

...is selling sophisticated weapons to Saudi Arabia and has virtually agreed to modernize the entire Egyptian military establishment, when Soviet arms are pouring into Syria and Iraq, and when Moslem rebels and Soviet troops in Afghanistan have turned the whole region into a smouldering powder keg...

...The Israeli press and some of the more responsible politicians immediately criticized the move as so unrealistic as to cast doubt on the seriousness of Israeli aid requests in general...

...At the White House shortly afterward, Weizman emerged from a meeting with President Carter feeling optimistic...

...Moreover, Jerusalem was convinced that the Iranian crisis had put a premium on continued Egyptian and Israeli military and economic stability...

...Apart from cutting back nonmilitary imports drastically, it will be obliged to take three potentially dangerous steps: 1) apply for additional foreign loans, thereby increasing its burden of indebtedness (with the concomitant deterioration of the terms of future loans...

...He even, rather undiplomatically, voiced the hope that Carter would be returned to the Oval Office for another four years...

...Thus in late December they sent Defense Minister Ezer Weizman to Washington on a last minute rescue mission...

...Some economists gloomily predict that regardless of the steps it takes, Israel will soon have to cut back imports drastically by accelerating the devaluation of the Israeli pound (several experts say the dollar will equal I?60 or more by the end of the year, compared with I?35 now), or else reinstitute foreign currency controls and rationing essential commodities...

...His friends, on the other hand, hinted that he had fallen into a trap laid by Begin, who is said to dislike the widespread speculation that he will sooner or later be succeeded by his Defense Minister...

...They were reportedly convinced that he could persuade U.S...

...According to this view, Begin knew beforehand that there was no hope of increasing the aid figure and only wanted to damage Weizman's image as the successful optimist...

...As the date for the decision approached, however, Prime Minister Menachem Begin and his Cabinet realized the critics were right...

...In addition, the Israeli Embassy in Washington warned that since the Carter Administration was trying hard to reduce the Federal budget deficit, a boost in support was unlikely...

...and the country's oil bill will jump sharply not only as a result of recent increases in the opec price for crude but because of the return to Egypt of the Alma oil fields, the source of about one quarter of Israel's fuel needs, under the terms of the Camp David peace agreement...

...And when representatives of Israel's Finance Ministry talked with officials of the Agency for International Development (AID) in Washington, they actually had no difficulty demonstrating that the sum being sought was not extravagant...