An Israeli delegation, bucking the Reagan administration drive for fiscal austerity, is to resume negotiations here today for U.S. aid and is expected to seek a record $4.1 billion in the next fiscal year and an additional $800 million in emergency economic aid for this year.
Such requests for new military and economic assistance pose potentially difficult choices for an administration that wants to cut domestic spending to reduce the federal deficit.
U.S. aid to Israel for this year is set at $2.6 billion, the highest amount for any country. Many senior administration officials are known to feel that, to make domestic cuts palatable to the American public and Congress, parallel cuts or at least a freeze in foreign-aid levels might be necessary.
The Israelis argue that a strong Israel committed to Western interests in the Middle East is a "bargain" compared with the cost of maintaining U.S. forces elsewhere.
Israel says it needs additional economic help to combat runaway inflation and severe balance-of-payments problems eroding its economy and increased security assistance to help a major arms modernization designed to maintain the qualitative and quantitative edge in weaponry over Arab adversaries.
Reinforcing the Israeli argument is the expectation that the administration will move next year to sell large amounts of tanks, jet fighters, air transports and various ground- and air-launched missiles to Saudi Arabia and possibly to Jordan and various Persian Gulf states.
Israeli Prime Minister Shimon Peres' government has been signaling for some time the scope of the requests it is expected to make when two Israeli teams, one military and one economic, meet with U.S. officials at the State Department today to resume discussions started last month.
The Israelis last proposed that military aid be increased $700 million to $2.1 billion in fiscal 1986. In addition, they made clear that they would like an economic aid increase of $1.5 billion over two years to help economic reforms aimed at combating runaway inflation and severe balance-of-payments problems.
Diplomatic sources and U.S. officials said the Israelis are expected to present that economic-aid proposal today. Specifically, the sources said, the Israelis are understood to want the sum spead over the present and coming fiscal years, an emergency supplemental appropriation of $800 million added to their $1.2 billion in economic aid for fiscal 1985 and a $700 million economic-assistance increase in fiscal 1986 to $1.9 billion.
U.S. officials have said the administration attaches major importance to helping Israel and plans aid increases for next year. But they have cited serious questions about whether President Reagan can ask Congress for the record sums as he is preaching austerity.
White House chief of staff James A. Baker III, asked recently about aid to Israel, pointedly noted that the administration has deficit problems and is debating with congressional leaders about freezing all spending, including foreign aid.
Other U.S. officials are known to feel that the Peres government has been too slow in imposing austerity, and they want more signs of major structural changes in the Israeli economy before specific U.S. commitments.