Although Israeli Finance Minister Yitzhak Modai is to begin new talks with U.S. officials here today, officials of both nations said yesterday that the discussions are not expected to produce immediate agreement on an economic aid package to help Israel combat runaway inflation and balance-of-payments problems.
The officials said W. Allen Wallis, undersecretary of state for economic affairs, is expected to make that clear today when he testifies about aid to Israel before the House Foreign Affairs subcommittee on Europe and the Middle East.
Wallis heads the American side of the U.S.-Israeli commission established last year to explore ways of overcoming Israel's economic crisis.
Last month, when the Reagan administration unveiled a $14.47 billion foreign aid request for fiscal 1986, it included $1.8 billion in military aid for Israel but left blank the Israeli economic aid figure on the understanding that it would be submitted later.
However, the officials said yesterday, the administration is unwilling to fill in the figure, primarily because Secretary of State George P. Shultz and other senior officials believe that Israel lacks a comprehensive program of economic stabilization and austerity.
In addition, officials said, the administration does not want to commit itself to large aid increases for Israel until Egyptian President Hosni Mubarak visits here next week.
The fiscal 1986 request of $2.3 billion in military and economic aid for Egypt is much less than Mubarak sought. It would be diplomatically embarrassing if Israel were given a sizable increase at a time when President Reagan is expected to resist Mubarak's plea that Egypt should have much more.
Israel is receiving $1.2 billion in economic assistance for fiscal 1985, and some officials said the administration tentatively plans to propose the same amount for fiscal 1986.
The Israelis also are seeking an additional $1.5 billion in emergency aid over two years, and the administration is expected to ask Congress to provide the first increment of about $800 million as a supplement to the 1985 budget.
State Department spokesman Bernard Kalb said yesterday that congressional hearings on the U.S.-Israel Free Trade Agreement, concluded this week, will begin today and probably continue throughout the month. After the congressional review, he said, the administration expects the agreement to be signed next month.
In another development, Langhorne A. (Tony) Motley, assistant secretary of state for inter-American affairs, told the House Foreign Affairs subcommittee on Western Hemisphere affairs that the administration wants an end to Congress' requirement that aid to El Salvador be conditioned on submission of regular reports about progress toward democracy and respect for human rights.
Liberal members of Congress have insisted that the "conditionality" requirement is necessary to prevent abuses by the Salvadoran military and anti-reform forces.