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Eshkol Confident Mapam Will Accept New Economic Austerity Program

Prime Minister Levi Eshkol voiced confidence here today that Mapam, one of the coalition partners, would go along with the Mapai-Achdut Avodah alignment in supporting the Government’s economic austerity program. The new program is aimed at improving the competitive position of the nation’s exports, thereby reducing Israel’s unfavorable trade gap. Without Mapam’s approval, the new economic program might collapse, and the Government could fall.

The Premier expressed optimism over the program for which he has been trying to round up full coalition support during the past few weeks, at the founding meeting of the alignment’s ideological youth circle. He indicated that he would meet shortly with the coalition parties to secure broad agreement on the plan. In reply to a question at the meeting, however, Mr. Eshkol dismissed a proposal that, in view of the economic crisis, the time had come for a government broader than the present coalition.

During the weekend agreement was reached within the alignment on one major point of difference. The Mapai-Achdut Avodah economic committee decided to recommend to the Histadrut, Israel’s labor federation, that only half of the cost-of-living allowance increase forthcoming as a result of expected price rises be paid in 1967 and 1968 to those earning more than 400 pounds ($133) a month. Under the compromise proposal, persons earning less than that minimum figure would be compensated in full for all price increases from now on.

While the original austerity program as proposed by Finance Minister Pinhas Sapir sought to eliminate all cost-of-living increases starting next year, this was opposed by the Histadrut labor leaders.

COMPULSORY LOAN ADVOCATED; CONSUMER PRICES RISE, AVERAGING 20%

Achdut Avodah, however, continued today to press its demands that the economic program should include a compulsory levy of a loan of 100, 000, 000 pounds ($33, 300, 000) on self-employed persons in the upper income brackets, and also increase the direct taxation of this category as well as of corporations. Mr. Sapir opposes these measures, contending that they would seriously hamper the development of business in Israel.

The remaining coalition partners — the National Religious Party and the Independent Liberals — while protesting what they termed “neglect and lack of consideration” for their views on the part of the alignment in developing the economic program, generally support the broad outlines of the plan.

Today, meanwhile, the first effects of the program began to be felt by the Israeli consumer as a number of everyday items, such as eggs and other farm products, increased in price. Dairy products, consumed by Israelis in large quantities, are also due to rise in price, along with soap, oil, fats and cotton products. Most increases averaged about 20 percent.

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