LONDON (Nov. 8)
The Financial Times, in a lengthy analysis of Israel’s economy, declared this week-end that if Israel “wants to put its house in order,” it must adopt strict economy measures, including devaluation of its currency, freezing of wages, import liberalizations and unification of exchange rates.
Under the title, “Israel On The Road to Solvency,” the newspaper described the “considerable progress” already made but it insisted that strong measures, similar to those put into effect by the De Gaulle regime in France, were necessary to strengthen Israel’s economy.
Other steps which the Financial Times said were needed were the elimination of “featherbedding in the domestic economy, together with measures to restrain consumption from increasing too fast.” The newspaper said the necessary changes should be effected in a single operation. The article noted that a chief barrier to such a policy was the Histadrut’s demands for increased wages but added that “here again progress has been made.”
The financial daily noted that Israel’s economy would face the “testing point” in 1962 when West German reparations would begin to taper off seriously and that to pass this “danger point” a political decision “must be made.” The newspaper also reported that “some of the more sophisticated Israelis” were increasingly in favor of economic policies which would depend less on foreign financial help, whether West German reparations or funds from American Jewry.
While the standard of living in Israel is still low by West European standards, the newspaper said, “definite progress has been made: the national income has been increasing on an average of 10 percent per year; private consumption has been rising by five percent per year, and in general the majority of the population ‘never had it so good.'”
The article noted that one of the main difficulties facing a student of Israel’s economy was “the lack of a simple rational basis for evaluating investments because of the plurality of exchange rates.” In spite of this problem, the Financial Times analysis presented a picture of a fast-developing economy moving toward prosperity.