Austerity buffets Israeli workers

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The collapse of Israeli designs on Lebanon coincides with another crisis of comparable importance. Ilan Chaim reports in The Jerusalem Post that the current Israeli unemployment rate of 6.3 percent—a 20-year high-would double within three months.

The Jerusalem Post also reported on Feb. 9 that Israel's foreign reserves had fallen below the old "red-line" mark of three month's worth of imports. The fall in January had been $282 million, bringing reserves down to $2.3 billion.

This means that three-quarters of the $1.26 billion in U.S. aid received in November had already been swallowed up. Huge debt repayments mean that these reserves will continue to disappear each month.

The government, the Histadrut labor federation, and the manufacturers signed a pact that Finance Minister Yitzhak Moda'i called "a moment that will go down in Israeli history."

Eight months after the pact was signed, however, workers' wages have fallen 7.5 percent, and subsidies in basic goods have been cut by 55 percent. A key feature of the new pact is a sharp cut in government subsidies in basic goods and services.

Yediot Aharanot reported that "the average person finds himself assailed on two fronts. His living costs will rise substantially due to subsidy cuts while his income is eroded."

"Iron Fist" Rabin, however, demanded an increase in the defense budget from the Treasury proposal of $2.2 billion to $2.6 billion.

Health services decimated

The social impact of these measures on the Israeli public is considerable. Health Ministry Director General Don Michaeli stated that all hospitals would have to go on a rotation system for emergency services. Half the country's emergency wards will be closed. All outpatient departments in general hospitals will be closed, and no elective diagnostic tests or surgeries will be performed.

The Health Ministry notified all private patients and public hospitals providing care for geriatric and chronic-disease patients that no funds could be expected in the foreseeable future. Finance Minister Moda'i cut the budget request of Health Minister Modechai Gur by $75 million below the already reduced amount.

These cuts will occur despite Gur's warning that they "seriously threaten the health services and endanger the lives of patients."

Three major hospitals announced that they could accept only emergency cases. The Hadassah Medical Organization had to borrow funds to pay staff salaries for two months.

The crisis produced bitter comment from medical administrators throughout the country. Professor Peter Vardi, director of the Barzelai Medical Center at Ashkelon, stated: "To those who have, it shall be given; from those who have not, it shall be taken."

In the midst of this crisis the Central Bank reaffirmed its demand to cut governmental expenditure and reduce public and private demand on the economy. This was in response to pressure from the United States.

Israeli officials were embarrassed when The Wall Street Journal was leaked a secret document disclosing that Israel had asked the United States for $12 billion in economic and military aid over the next three years.

The confidential 80-page "white paper" showed that U.S. officials were concerned that as U.S. assistance to Israel and Egypt have been parallel since the signing of the Camp David Accords in 1978, major increases for the Israelis would have to be matched for Egypt.

Grants tied to austerity measures Israel is revealed to have demanded $4.4 billion in grants for fiscal 1986, projecting similar needs for 1987 and 1988. Secretary of State George Shultz, according to The Wall Street Journal, was insisting upon further austerity measures.

The Jerusalem Post revealed that a new strategy-to defer a secret plan worked out with the U.S. government— had been proposed. The plan, which called for immediate elimination of all subsidies on basic goods and services and a massive devaluation of the shekel, was considered "too drastic."

The Israeli authorities had concluded that the mass unemployment and social austerity would lead to "generalized unrest, and instead they devised a packPEACE