Down Payment on Peace Demands Tough Terms : Mideast: Israel can’t keep building on Palestinian land and expect U.S. tax dollars to guarantee the scheme.

The collapse of Israeli Prime Minister Yitzhak Shamir’s coalition government and the scheduling of an election in June have put the future of the Middle East peace talks in doubt. Will Shamir present himself to the voters as Israel’s best hope for peace with the Arabs, or will he reaffirm his hard-line credentials as defender of “Greater Israel�?

In either case, the United States will have a pivotal role in determining the outcome of the election and the future of the peace talks. The trump card is $10 billion in U.S. loan guarantees.

Congress’ approval of the guarantees would give Shamir and his Likud party an easy victory in the parliamentary election. And he probably would claim that as a mandate for taking an even harder line on peace negotiations.

The focus now is on Washington: Will Secretary of State James A. Baker III renew the Administration’s demand that the loan guarantees be conditioned upon a promise by Israel to halt Jewish settlement in the occupied territories? Will President Bush, himself seeking reelection, renew his pledge to go to the American people to win support if Congress defies his position?

A compromise reportedly is being considered: In return for the loan guarantees, Israel would stop expansion of the settlements--after completing construction that has begun. Since the pending construction would increase the Israeli population of the territories by one-third, this “compromise� would be almost entirely in Shamir’s favor.

The $10 billion is to be used to create housing and employment for the anticipated 1 million Jewish immigrants from the former Soviet Union that Israel expects over the next five years. The Shamir government has dropped all pretense that the immigrants will not be settled in the West Bank and Gaza, which Israel has occupied since the 1967 war. The government’s 1992 budget provides for the construction of 5,000 homes in the territories, and its tentative five-year plan envisions 80,000 new housing units. This news adds to Palestinians’ fears that Israel is using its participation in the peace talks to gain time for expanding the settlements.

Other actions taken by the government demonstrate that this concern is not unfounded: the recent expulsion order against 12 Palestinian activists; continued confiscation of Palestinian property, including houses in East Jerusalem; the establishment of infrastructure--roads, schools, offices and factories--to serve the new settlements, and the sanctioning of settler vigilante squads that have killed unarmed Palestinian civilians, including children, and terrorized entire communities, with virtual impunity. In contrast, the killing of an Israeli settler by Palestinians in Ramallah last month resulted in the entire city being placed under round-the-clock curfew for more than two weeks.

By extensively publicizing acts of violence against Jewish settlers, Israel hopes to whip up emotions as far away as the United States in support of its settlement policies. Yet the Shamir government has tried to keep secret--even from its major donor, the U.S. government--how well those policies are succeeding: Palestinian land, home to 2 million people, is disappearing.

Already, Israel has illegally confiscated 70% of the land of the West Bank and 50% of the Gaza Strip, and has annexed the Syrian Golan Heights entirely. It has appropriated some of this land to establish 200,000 settlers in nearly 100 colonies, including housing projects in Palestinian East Jerusalem. Israeli officials hope that the settlement of 1 million Soviet Jews will accomplish a de facto annexation of the territories. Apparently, it’s of no consequence that this will all but kill the prospect of a comprehensive peace between Israel and its Arab neighbors.

Clearly, Israeli intransigence demonstrates the lack of a genuine commitment to peace. In the past, the United States could be counted on to turn a blind eye to Israeli transgressions. Washington has been unwavering in giving more assistance, direct and in perks, to Israel than to any other ally. This aid, now $5 billion a year, has allowed the settlements to be built by freeing money from elsewhere in the Israeli budget. Thus, Israel has never felt compelled to alter its policies regarding settlements, human rights and Palestinian self-determination. But last fall, President Bush stunned Israel when he went on television to ask the American people to support his demand that Congress delay the housing-loan guarantees.

Apparently, he struck a responsive chord. A recent poll in New Hampshire and Iowa showed that a bipartisan majority of 80% in both states opposes granting Israel the $10 billion loan guarantees or wants severe restrictions tied to the assistance.

The Bush Administration must be firm this year: The American taxpayers’ cookie jar is off-limits for financing the illegal and immoral displacement of the Palestinian people. Congress must gather the courage to confront the Shamir government and the Israel lobby. If Congress is unwilling in this election year, then President Bush should again take his case to the American people directly, this time encouraging them to demand representation in Washington that reflects their wishes.

A firm conviction on the part of our government is essential if a lasting resolution of the Palestinian-Israeli conflict is to be achieved. Only an independent, democratic Palestinian state will bring about a genuine and just peace in the Middle East. The approval of $10 billion in loan guarantees to Israel would only serve to reward intransigence and perpetuate conflict, rather than to promote peace in the land holy to Muslims, Christians and Jews.