You Take $10 Billion, I'll Take California

George Bush's relief that Yitzhak Rabin is now Prime Minister of Israel is genuine, and the President is eager to reward every accommodating step that Israel takes. The withholding of U.S. loan guarantees earlier this year after the Jewish state refused to freeze its settlements in the occupied territories guaranteed a lengthy chill in relations between Bush and Yitzhak Shamir. The only graceful exit from this impasse seemed a defeat of Shamir's Likud at the polls. Since that is exactly what happened, Bush took pains at a Kennebunkport summit last week to emphasize his warm feelings for Rabin, whose government has canceled Likud's plans to build 6,500 houses in the territories but will continue with 10,000 others. He invited Rabin to stay overnight -- making him one of only five world leaders to do so -- and introduced him to his mother and grandchildren. More tangibly, Bush promised to guarantee the repayment of up to $10 billion in bank loans Israel will obtain over five years to energize its economy and help it absorb immigrants from the former Soviet Union.

The money is an important trophy for Rabin, who promised voters he would repair ties with Washington and revive sagging economic growth. It also boosts his authority to speed up peace talks with Palestinians and Israel's Arab neighbors, which start again in Washington next week. For Bush, the cheery tone of U.S.-Israeli ties should be an electoral plus. The peace talks are a remarkable diplomatic feat, capable of reinforcing Bush's campaign pitch that his international leadership gets results. And because some key electoral battlegrounds -- California, Florida, Illinois -- have large Jewish populations, the President is delighted to show that he and Rabin can do speedy business together.