A senior Israeli official said today that President Reagan has agreed to give "favorable consideration" to Israel's request for more generous military assistance and for the right to use some of the U.S. aid to develop weapons systems produced here.
The official, who asked not to be identified, said Reagan made the commitment to Defense Minister Moshe Arens and Foreign Minister Yitzhak Shamir in Washington last week during a visit that officials of Prime Minister Menachem Begin's government today hailed as a great success.
"This trip was one of the most successful trips ever made by any Israeli minister to Washington," the senior official said.
White House and State Department officials declined to comment on the Israeli official's description of the meeting between Reagan and the Israeli ministers.
The senior official, who accompanied Arens and Shamir to Washington, said the Reagan administration was asked to increase that portion of the military aid package that is an outright grant, as opposed to loans, and to approve the use of some of the military aid for the development of Israeli-produced weapons systems such as the Lavi fighter.
When these requests were put directly to President Reagan by Arens and Shamir, the official told foreign correspondents here, Reagan responded by saying he was aware of Israel's financial problems and would give the requests "favorable consideration."
The prospect of an increase in military grants, coupled with the administration's acceptance of Israel's plans for a partial withdrawal of its forces in Lebanon, clearly delighted the Begin government.
It also provided a sharp contrast to the state of U.S.-Israeli relations exactly one year ago. Then Israel's Air Force and artillery units of its Army were engaged in almost daily bombardment of Beirut, angering administration officials, including the president, who saw this as undermining diplomatic efforts to arrange a peaceful evacuation of Palestinian forces from the city.
The strain brought on by the war in Lebanon was compounded by Reagan's call last Sept. 1 for a freeze on Jewish settlements in the occupied West Bank and for negotiations leading to a confederation of the territory with Jordan. The Begin government rejected both suggestions out of hand.
During Arens' and Shamir's three days of meetings in Washington, the senior official told reporters, the subject of the West Bank "was raised marginally--one or two sentences.
"We were discussing operative things in Lebanon," he said. "We did not have time to discuss philosophy."
Reagan asked Arens and Shamir to come to Washington last week after Begin canceled his scheduled visit for "personal reasons" that have not been explained fully. At the time, officials here feared that the Reagan administration would seek a delay in Israel's plans to redeploy its forces to more defensible positions along the Awwali River north of Sidon.
Instead, the administration ended up endorsing the Israeli plan, with both sides agreeing to call the redeployment the "first stage" in the planned withdrawal of all foreign forces from Lebanon.
In describing the partial pullback as the first stage in a complete withdrawal, the United States and Israel apparently hope to increase pressure on Syria to withdraw its troops from eastern and northern Lebanon.
But there have been no signs that Syria is willing to do this, and in the meantime Israel will be free to go ahead with the partial pullback, which the Army hopes to complete by November.
Israeli officials emphasized that there has been no change in Israel's insistence that a withdrawal of Israeli and Syrian troops from Lebanon be simultaneous. They specifically denied press reports here today that Israel is now willing to consider withdrawing its troops before the Syrians withdraw theirs as long as Syria first agrees to a timetable for its withdrawal.
Israeli officials refused to disclose details of the aid discussions in Washington, but any increase in grants and corresponding decline in loans would be welcomed by a country faced with incessant labor strife, triple-digit inflation and a mounting foreign debt.
According to Bank of Israel figures quoted by the Jerusalem Post recently, Israel's foreign debt of $21 billion is the highest per capita in the world. The United States is Israel's largest creditor, and, as a result, Israel's annual repayment of principal and interest on loans from the United States now exceeds the amount of yearly U.S. economic assistance.
The repayment obligations are expected to balloon to more than $1 billion by the 1990s, leading the U.S. General Accounting Office, in a recently released report, to predict increasing pressure from Israel for more outright grants and other aid concessions.
In the current fiscal year, Israel received $785 million in economic assistance, all in the form of grants. Israel also received $1.7 billion in military aid--$750 million in grants, or "forgiven loans," and $950 million in loans that must be repaid.
For the fiscal year that begins Oct. 1, the Reagan administration proposed the same amounts of economic and military aid, but asked that the loan portion of the military assistance program be increased to $1.15 billion and the grant portion reduced to $550 million. Congressional committees, however, went in the opposite direction, approving a military aid package consisting of $850 million in loans and an equal amount in grants.
Israeli officials said they are not asking for an increase in overall aid, only a change in the mix to provide more in grants.
The Lavi fighter plane, due to go into production in the late 1980s, is a pet project of Arens, an aeronautical engineer. One of Arens' first steps after he took over the Defense Ministry earlier this year was to win administration agreement to release U.S. technological data needed for the development of the Lavi.
Now Arens is seeking permission to use U.S. aid funds to help finance development of the Lavi, which some critics in the United States contend eventually will compete with American-built aircraft in world markets.
According to Israeli officials, Israel received a similar concession in the 1970s, when it was allowed to use $100 million in U.S. aid in the development of the Merkava tank.