President Reagan informed Israeli Defense Minister Yitzhak Rabin yesterday that the administration will seek a $400 million increase in military aid for Israel, to $1.8 billion, when it submits the budget to Congress next week but still has not decided on the level of economic assistance it will ask, the White House said.
Rabin said in interviews yesterday that he was generally satisfied with the "understanding and readiness to help" Israel that he encountered at the White House and on Capitol Hill and that he was confident that the administration would agree to economic assistance greater than the current level of $1.2 billion as it sees the measures Israel takes to get its faltering economy under control.
Rabin cited cuts in Israel's defense expenditures "from its own resources" to a 12-year low of $2.6 billion as an example. Israel is "taking real risks" by making these cuts, he said.
To bolster an economy with inflation of more than 400 percent last year, and rising unemployment, Israel also has asked for an additional emergency appropriation of $800 million this year and $1.85 billion for 1986.
While Rabin was optimistic when he talked of the expected U.S. help for Israel's economic problems, he showed little optimism in his discussion of relations with Israel's neighbors and prospects for the resumption of the Middle East peace process.
The defense minister reflected his government's growing concern that as it carries out its announced unilateral withdrawal from the Lebanese territory it has occupied for 2 1/2 years it will be blamed for any atrocities and retributions committed among the bitterly divided Lebanese population.
Because the Lebanese government and Syria have not yet agreed to let United Nations peace-keeping forces fill the vacuum left by Israel's pullout in the area around the coastal city of Sidon and the Lebanese have appeared unwilling or unable to keep the peace themselves, Rabin said they will be responsible "for whatever happens in Lebanon when havoc and chaos prevail."
"They will bear the responsibility for massacres or anything that can take place there," he said at an afternoon press conference.
Underscoring this same point, the Israeli Foreign Ministry in Jerusalem took the unusual move of informing foreign ambassadors there that Israel will not be held accountable for any violence or bloodshed following the first stage of the withdrawal, scheduled for completion by Feb. 18.
When Rabin spoke of the prospect for continuing or expanding a broader peace process in an interview with editors of The Washington Post he described it as something for "later on," after more pressing concerns have been addressed.
Repeating what he said he had told Reagan, Rabin described economic recovery, for which the U.S. assistance is essential, as Israel's number one priority. The second, he said, is to withdraw Israel's troops from Lebanon without compromising his country's basic defenses. The third is to "warm" Israel's chilled relations with neighboring Egypt.
Only after these conditions are met, said Rabin, is it likely that broader peace talks can be pursued with hopes of success.
Asked at his press conference about such recent developments as Iraq's renewal of diplomatic relations with Washington and Jordan's resumption of diplomatic relations with Egypt, hailed by some analysts as strides toward a moderate Arab alliance capable of working toward a broader peace, Rabin remained cautious.
"I see in all this small steps that create new realities that in the long run will expand possibilities for the peace process," he said.
Rabin is the first of several dignitaries from the Middle East scheduled to visit Reagan as he begins his second term. Saudi Arabian King Fahd arrives in February. Egyptian President Hosni Mubarak is to come in March.
They are expected to test U.S. reaction to various proposed initiatives and possibilities for resolving the region's violent confrontations and to present sometimes conflicting requests for arms and aid.
Rabin said yesterday that Israel opposes the planned U.S. sale of 40 F15 fighter planes to Saudi Arabia. Bolstering his position, a bipartisan group of senators led by Alan Cranston (D-Calif.) signed a letter to Reagan yesterday expressing concern over the potential sale of the warplanes and other arms to the Saudis at this time.
Administration officials said a decision on the sale is not likely until after Fahd's visit.
Rabin also expressed concern that plans for U.S.-Soviet talks relating to the Middle East might lead to attempts by the superpowers to impose a solution or to calls for an international peace conference. Israel opposes such measures.
Administration officials generally expressed an understanding for Rabin's position.
Reagan, according to White House officials, told Rabin that he was pleased with the planned withdrawal from Lebanon and emphasized U.S. hopes that through Israeli-Lebanese talks, held in the Lebanese town of Naqura, some arrangement for a U.N. troop presence might still be found.
Reagan also assured Rabin that there will be no negotiations with the Soviets and that the United States does not favor any type of international peace conference on the Middle East situation, White House spokesman Larry Speakes said.
The administration has been reluctant to ask Congress for the enormous amount of economic support requested by Israel, especially in the midst of its own radical budget cutting in other areas, until it can show that the Israeli government has adopted prudent and effective new economic policies.
Israel, the strongest U.S. ally in the Middle East, already receives more U.S. assistance than any other country. If it were to get the entire package of about $4 billion in military and economic aid it has requested, the U.S. assistance would amount to more than $1,000 for every Israeli citizen.
Because Israel is cutting back its defense budget as an austerity measure, Rabin said yesterday, the military aid that the Reagan administration is requesting for 1986 is two-thirds as large as the amount Israel will spend for defense from its own resources.
Richard W. Murphy, assistant secretary of state for Near Eastern and South Asian Affairs, told a House subcommittee yesterday that "the United States and Israel accept the principle that additional extraordinary U.S. economic assistance would only serve a useful purpose in the context of a comprehensive Israeli economic reform program."
But administration officials are also looking for mechanisms to get Israel some of the economic support it wants as soon as possible.
Murphy testified that if the economic aid were limited to the current $1.2 billion it would "make it extremely difficult for the government to carry out its economic reforms."
Another administration official said that while the budget will be presented to Congress on Monday without a figure for economic support to Israel, there may soon be a short-term emergency request of $800 million to $1 billion and then a second, bigger supplementary request when Israel has shown its ability to use the aid effectively. Another possibility, the official said, would be one very large request broken into two parts, the second of which would be conditioned somewhat on the use of the first.
The White house said that the $1.8 billion military aid request for Israel, which is less than the $2.2 billion Rabin was seeking, is still designed to give it a "qualitative military edge" over its neighbors.
Even this level of U.S. aid, however, could cause problems in American relations with Egypt, which has expected aid levels comparable to Israel's since signing the Camp David accords.
Rabin criticized Egypt's refusal to return its ambassador to Tel Aviv, removed in protest in 1982 after the Israeli invasion of Lebanon and the Sabra and Shatila massacres.
Rabin maintained that Israel's announced pullout from Lebanon and renewed talks with Egypt on disputed border territory should mollify the Egyptians.
"We the Israelis believe we have paid heavily for peace," Rabin said of the relationship. "We have to try our best to make it a real model for peace, not just no war."