Politics and Power: The 1992 Israeli Loan Guarantees Policy, 1988-1992

This paper examines the exercise of power in the U.S.-Middle East foreign policy formation process. Through application of historical methods, the capacity of state, class and historical contingency perspectives of political power to explain the formation of the U.S. Israeli loan guarantee policy between 1988 and 1992 is analyzed. Historical analysis supports a central proposition in historical contingency theory, which suggests that political power and alignment of class segments varies over time and is impacted by respective economic interests. Class segments unified to create political alliances with both Congress and the executive branch to establish preconditions to the provision of U.S. loan guarantees to Israel. As class segments began to mobilize politically, the pro-Israel lobby became split. Economic interests and previous state structures led to the establishment of class coalitions. Coalition efforts resulted in the establishment of the 1992 policy linking Israeli foreign aid to Israel?s settlement activities in the Occupied Palestinian Territories, among other conditions. The analysis suggests that future research on U.S. foreign policy in the Middle East should not focus only on the actions of state managers, but should examine how and under which conditions do social forces external to the state influence the foreign policy formation process.