Democratic Palestine : 17 (ص 22)
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- Democratic Palestine : 17 (ص 22)
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export of industrial goods to the US, capital investment, trade
with Africa and Europe, sale of government-owned companies,
special projects, legislation and tourism.
The difference between IO and previous campaigns to boost
investment in ‘Israel’ is the influence in the business world
enjoyed by the 85 members of the IO’s North American and
international task forces. According to US economics expert
Stanley Fischer, «This is a high-powered group that can get
things done.» Special attention is now being focused on tourism
because it is the only sector which can achieve high returns in a
relatively short period, not to mention its being one of the
world’s fastest growing industries, second only to petroleum. It
is hoped that tourism will add $1 billion a year to the income side
of the Israeli balance of payments, and that the recent 30% drop
in tourism will be made up.
No less active were the teams from the IMF, AID and the
US-Israeli Joint Economic Development Group. The general
guideline for these teams was summarized by US Assistant
Secretary for Near Eastern and South Asian Affairs, Richard
W. Murphy: «The US and Israel accept the principle that addi-
tional extraordinary US economic assistance would only servea
useful purpose in the context of a comprehensive Israeli eco-
nomic reform program.»»?
Besides the ventures mentioned above, there are other joint
ventures that herald a much higher and more significant degree
of integration between the US and Israeli economic systems.
Chief among these are the FTA and the Strategic Defense Initia-
tive (SDI), better known as Star Wars. Suffice it to say that an
overhaul of the Israeli economic system is required to lay the
groundwork for a high-tech base if such ambitious programs
are to be implemented. «Science and technology are not merely
one aspect of our economic life. Rather the whole country must
be based on them,» asserted the Jerusalem Post on April 24,
1985.
PACKAGE DEALS IN ACTION
The past few years, Zionist economic policy has vacillated
from attacking inflation to stimulating exports. However, up
till now no policy has been found for successfully reducing
inflation and improving the balance of payments simulta-
neously. The 1973 war was followed by 8 years of increase in
economic growth, averaging 9-10%. However, by 1984, the
growth rate was zero. Without economic reforms, inflation
would stay at 900-1000% levels. Realizing they had a national
emergency on their hands, the Zionist leadership was left with
no choice but to implement reforms, prompted by the barrage
of economic initiatives, plans and new historic agreements, and
cushioned by the $1.5 billion injection of emergency aid. By
mid-1985, the wheels of the austerity program has begun to
turn. Kicking up a fuss once in a while but eventually buckling
under, the Zionist authorities began their eight-month austerity
program. This program was characterized by devaluation of the
shekel and «dismantling Israel’s pervasive indexation system,»
according to an AID report. Subsidies for basic foodstuffs and
transport were reduced; subsidies on gasoline and other petro-
leum products were eliminated; taxes were raised and new ones
levied; higher charges for government services, including elec-
tricity, post, medical care and higher education, were imposed.
These measures were expected to save $200 million in foreign
currency, and yield about $300 million in new taxes and levies.
Moreover, a new law is going through the Israeli parliament
that will make it an offense punishable by loss of job or pension.
for public employees, including ministers, to exceed budget
allotments. In April 1986, an official report called for the resigna-
tion of the heads of the Israeli Central Bank and four big com-
mercial banks, because of their part in the 1983 stock market
collapse - a calamity which contributed significantly to the
1983-4 economic slump, escalating the prevailing 500% infla-
tion rate. A second law is to give independence to the Central
Bank in establishing the overall monetary policy. This will allow
the bank to refuse government requests to print money to cover
government deficits.
22
The shekel was devaluated. This caused the cost of imports to
rise, but lowered the price of Israeli exports abroad. There was a
33% reduction in the monthly cost-of-living increment paid to
workers to compensate for inflation, according to indexation
which links wages to prices. These payments now cover only
about half the rise in the cost of living. Government hiring has
been frozen. Some 15,000 government jobs are being elimi-
nated, and new purchases of goods and services were frozen for
six months. These reforms are aimed at achieving a growth rate
of 6-7%, stimulated by a 10% annual increase in exports, espe-
cially of high-tech goods, via the unique FTA.
By April 1985, the unemployment rate had jumped to 7.4%,
i.e., 92,000 jobless. Although assurances poured forth in the
press that this situation was temporary, this did not eliminate
fears of social unrest or mass emigration from the country, as
happened in 1980, the last time unemployment rose. Imple-
mentation of the measures designed to save the Zionist entity
from an economic disaster was beginning to have side effects.
According to provisional figures released on March 17th by the Cen-
tral Statistics Office, 19,000 Israelis emigrated from the country in 1985
- 12% more than in 1984 (17,000). According to the New York Times,
January 7th, «Immigration to Israel last year fell to its lowest point
since the country was founded in 1948... Only 11,298 immigrants
arrived in Israel in 1985, a 41% drop from 1948, when 19,230 immi-
grants arrived...» These figures include the approximately 10,000
Ethiopian Jews brought in the secret airlift from Sudan.
This was the reason for Peres’ objection to devaluating the
shekel in May 1985 and to further reducing indexation prior to
cancelling it: ‘‘Who says that curing the economic situation jus-
tifies worsening the social situation?’’ This not only signalled an
adverse social situation, but was meant to push for a more gra-
dualist approach to implementing economic reforms. The US
adopted a benevolent attitude, but was not really reassured of
the effectiveness of such an approach. ‘‘Adoption of the gra-
dual program was a fact of life the US administration had to
accept,’’ said a State Department official. The US came through
with aid and gave the Zionist leadership a free hand to imple-
“Our relations
with the U.S.
rest on firm
foundations
of .
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