Israel's efforts to control its economic crisis have been like clamping a lid on a boiling pot, Secretary of State George P. Shultz said yesterday.
"You have to keep your eye less on holding the lid down and more on how high you've got the heat turned up," he said.
Shultz told the Senate Appropriations subcommittee on foreign operations that he would "hold open for the time being" any decision on the level of further U.S. economic aid to Israel because he is "very uneasy" about whether the "lid" of wage and price controls is "a system that will really work" to control Israel's 1,200 percent annual inflation rate and growing unemployment.
Israel has asked for $1.5 billion in economic aid over two years, but the Reagan administration has urged fundamental economic reforms first and has not yet asked Congress for the funds. Shultz testified in defense of a $14.8 billion foreign aid program, and said that any funds for Israel would raise the total.
"There are still things working in Israel" regarding proposed new banking, budget and currency controls, he said, "and we want to see how they evolve." Other officials have said a package for Israel will be presented next week after Egyptian President Hosni Mubarak's visit to Washington.
Subcommittee Chairman Robert W. Kasten Jr. (R-Wis.) warned Shultz that further delay in submitting the Israel package "could raise havoc later" as Congress works on its budget resolution.
Asked about studies claiming to document systematic human rights abuses by the U.S.-backed antigovernment rebels in Nicaragua, Shultz said the reports are "not in accord with the factual base we have."
He said any abuse "doesn't represent the policy" of rebel leaders. He said the reports were timed to appear just as Congress takes up further aid to the rebels.
Reed Brody, a former assistant New York state attorney general, collected 145 signed affidavits from Nicaraguans who swore they witnessed at least 28 murders, rapes, assaults or torture incidents, most by the Nicaraguan Democratic Force (FDN), the largest rebel group.
The study was independently verified and released yesterday by the Washington Office on Latin America, a leading critic of Reagan administration policies, and the International Human Rights Law Group.
Other State Department officials were more outspoken than Shultz. The report "was bought and paid for by the Nicaraguan government," one said.