The Bush administration could support cutting U.S. aid to Israel and Egypt if similar cuts were applied to other nations as a way of freeing money for emerging democracies, Secretary of State James A. Baker III said Thursday. Baker told a House subcommittee that ``we're willing to stand up and be counted'' on such a plan because it would result in the flexibility to put foreign aid money where it is most needed. The secretary also told the panel he has done ``pretty much all we can do'' to bring the Israelis into talks with a Palestinian delegation aimed at setting up elections in the occupied territories. An Israeli Cabinet meeting was scheduled for Sunday. In answer to a question by Rep. David Obey, D-Wis., chairman of the House Appropriations subcommittee on foreign operations, Baker said administration support for the cuts would ``depend on whether we do it in a non-discriminatory manner.'' In his busy Middle East diplomacy, Baker said, he has not found any significant reduction in tensions. But he added: ``At the same time, we must find a way to respond to changes in Eastern Europe, in Panama and in Nicaragua.'' ``If these leaders are not able to produce for their people, we will rue the day'' that the United States fell short in providing aid, he said. ``We are talking about supporting an extraordinary outbreak of freedom and democracy.'' Baker also said he did not want to see a repetition of the current year's budget crunch, in which some friendly countries that expected U.S. aid got little or nothing because 90 percent of the aid budget was already earmarked by Congress for specific other recipients. ``We ought not to be hidebound by what's been done over the past 10 years,'' Baker said. He said economic aid to all of Africa totaled just $14 million this year ``because there's no one up here lobbying for them.'' His comments were the clearest indication yet that the administration would accept cuts to Israel and Egypt, which get the largest slice of U.S. aid as a result of their participation in the Camp David Middle East peace accord a decade ago. Israel is receiving $3 billion this year and Egypt $2.1 billion, out of an overall budget of roughly $10 billion for bilateral aid. The administration has asked Congress for the same amounts for both countries next year. Baker left himself some latitude, saying he could also support a total elimination of earmarks or the creation of a new discretionary fund which the administration could use to meet new needs that develop during the year. He also said he could support enlargement of the overall foreign aid budget. But he acknowledged that those outcomes are unlikely. Earmarks have been almost sacred in Congress because of the political clout of the countries which receive them and because of lawmakers' view that such spending guidance is their prerogative as keepers of the federal purse. It is equally difficult to increase foreign aid spending because of the popular notion that money spent overseas is wasted. Bush has proposed an increase of about $800 million for fiscal 1991, which begins Oct. 1, to an overall level of $15.3 billion. But potential new aid recipients have been popping up faster than the budget can accommodate them. Already there are demands for new aid to Eastern European countries emerging from Soviet domination, reparations to a newly democratic Panama, and support for the new democratic government in Nicaragua. Earlier this year, Senate Minority Leader Bob Dole, R-Kan., proposed finding the money for such needs by cutting 5 percent from the top current aid recipients. The administration denied planting the idea with Dole at the time, but expressed agreement with its goal of increased flexibility in distributing aid money. In his testimony, Baker also said the administration would support $400 million in loan guarantees for Israel to build housing for an influx of Soviet Jewish refugees, but only if Israel offers assurances that it would not put any new settlers in the occupied territories of the West Bank and Gaza strip. The money is expected to be added to an upcoming supplemental appropriations bill and is likely to win congressional approval because of Israel's strong support on Capitol Hill. Israel has declined to provide such assurances about future settlement, but has contended that in the past that about 1 percent of refugees have settled in the territories. ``Settlements are not conducive to the peace process'' because they aggravate tensions with Palestinian residents, Baker said. ``We see them as an obstacle to peace... It is not unreasonable to ask some assurances these funds will not be used to create new settlements or expand old settlements in the occupied territories.'' Baker also said ``we're coming very close to the time when we will know one way or the other'' whether Israel will accept a proposal for talks with a Palestinian delegation about elections among the 1.7 million Palestinians in the territories. Baker has been expressing growing impatience with Israel's failure to respond to his proposals, aired during his meetings with the foreign ministers of Egypt and Israel. ``We've really done pretty much all we can do, we think, from our end, and we are waiting for a response from the Israeli government,'' Baker said.
