Uncle Sam Will Pay

The white houses of Shilo stand on narrow streets on hilltops north of Ramallah in the West Bank. The homes have red tile roofs and wide lawns, and on weekday mornings almost the only sound is a dog barking. The Israeli settlement has the standard gate at the entrance, and a swimming pool, an outdoor sports center with tennis and handball courts, and five synagogues -- one built to look like the ancient Tabernacle that the Bible says the Children of Israel erected here -- and a view of the Palestinian village of Turmus ‘Ayya.

A new 1,100-square-foot starter house at Shilo costs about $120,000, an Israeli bargain-basement price, especially because it can be expanded later and because the government provides a well-subsidized mortgage of $50,000 or more. Shilo's nearly 2,000 settlers came to this spot out of intense nationalist belief that the West Bank must belong permanently to Israel, regardless of the cost -- and in the process have done quite well for themselves.

No one knows how much Israeli government cash has gone into subsidizing the lifestyle of suburban occupation, at Shilo and other West Bank settlements, though the sums are clearly huge. Certainly, no one could say how much U.S. aid to Israel has indirectly funded the settlement enterprise. What's more certain is that in the months ahead, Israeli Prime Minister Ehud Olmert will ask Washington for billions of dollars to help evacuate Shilo and many other settlements.

In his May 23 visit to the White House, Olmert got the closest thing to endorsement of his plan for a unilateral Israeli pullout from much of the West Bank. At their joint press conference, George Bush made a predictable call for negotiated peace, but praised Olmert's “bold ideas” as another possible way to a two-state solution. The Israeli leader said he'd really like to negotiate -- and reiterated that he won't wait long for the Palestinian Authority's Hamas-led government to change its hardline positions and come to the table.

Olmert is betting that Hamas won't budge, and that a U.S. administration with problems elsewhere will certify that he did his best. He knows that Bush isn't exactly looking for chances to get involved diplomatically. So the prime minister will move forward on his plans to set Israel's borders unilaterally. Dozens of settlements deep in the West Bank, such as Shilo, would be evacuated, and tens of thousands of settlers would have to leave. In Olmert's blueprint, some could move to larger settlements that would remain in Israeli hands.

Relocating the settlers, according to media guesstimates, could cost from $10 billion to $50 billion. Olmert has already told The Wall Street Journal that he'll ask for American assistance.

At first glance, the expected request will set a record for chutzpah. For years, Israel has ignored American protests against settling on occupied land -- and now it wants American cash to undo the damage? A flat no would be understandable. But it would be smarter to provide funds, with some tough conditions.

It's true that the United States opposed settling Israelis in the West Bank from the moment the first settlement was announced, just a few months after Israel occupied that territory in 1967. The next spring, the State Department ordered the U.S. Embassy in Tel Aviv to remind Israeli officials of “our continuing opposition to any … settlements” and of the U.S. view that they violated international law. At first the objections were voiced mainly by mid-level diplomats, often behind closed doors. By 1976, the American delegate to the U.N., William Scranton, stated in a Security Council debate -- as public a forum as possible on earth -- that settlements were “illegal under the [Fourth Geneva] Convention.”

Yet meanwhile, America's generous aid to Israel arguably helped finance the settlement enterprise, whose true cost remains a mystery even to top Israeli officials. The investment in settlements is hidden in myriad corners of the Israeli budget -- subsidized mortgages for settlers under the Housing Ministry, job perks for teachers under the Education Ministry, security costs in the classified defense budget. As far back as the 1980s, a left-leaning cabinet minister told me that he tried to find out how much the government was spending on settlement, only to hit a brick wall. Lack of transparency is one reason Israel has been able to sink into this quagmire.

U.S. aid, of course, hasn't been earmarked for settlement building. But by paying for other government expenses, America made it easier for Israel to spend its own taxpayers' cash on settlements. This is the principle of fungibility, which became famous in 1991-92, when the first President Bush demanded a settlement freeze in return for U.S. loan guarantees to help Israel absorb Soviet Jewish immigrants.

That episode briefly put settlement costs on the Israeli public agenda, and may have helped Yitzhak Rabin win the 1992 election. Yet it stands out precisely because it was isolated. The number of settlers in the West Bank has more than doubled since Bush Sr. left office. It would be disingenuous for Washington to squawk now that it has been made a silent partner in settlement, when it has raised no objection for most of the past 39 years.

It's better, therefore, to invest in cleaning up the mess. Olmert's plan certainly falls far short of a solution to the conflict. But dismantling at least some settlements would be a signal to both Israelis and Palestinians that disentanglement is possible. Every settlement evacuated now is one less settlement to cause daily friction with Palestinians, and one less that can grow and become more difficult to remove later. Those advantages justify U.S. assistance.

But only if the way is left open for a real peace agreement. Settlements aren't the only obstacle to this, but they are a major one. When negotiations do finally take place, any plausible agreement will be based on a border very close to the pre-1967 border between Israel and the West Bank. More settlements will have to go. It would be absurd to move settlers to those communities now, only to force them to move again -- and absurd for the United States to invest in such a project.

The conditions of aid, therefore, should include a commitment to relocating evacuated settlers within Israel proper, and halting expansion of those settlements that will remain for now.

The conditions should also include a full, public accounting of Israeli government spending on settlements. Much of the Israeli public would celebrate that transparency, even as it weeps over what it has paid for Shilo's suburban comforts.

The Bush now in the White House isn't likely to give Olmert such a nuanced answer. But Congress can, and should, do so when it is asked to vote for aid. The conditions will do much more for Israel, and for peace, than a blank check.

Gershom Gorenberg is the author of The Accidental Empire: Israel and the Birth of the Settlements, 1967-1977 (Times Books).

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