Israel Cabinet Finally Approves New Economic Austerity Program

Israel’s Cabinet approved here today the new economic austerity program for the country, affecting wages and prices, intended to fight inflation, cut production costs, increase production, and make Israeli exports more competitive on the world markets. The plan was outlined by Prime Minister Levi Eshkol in a broadcast to the country tonight.

The decision was taken by the Cabinet after an unusually long session, today, lasting nine hours. The action followed a decision this weekend by the Mapam Party, the left-wing member of the Government coalition, which had staunchly opposed the Government’s program but finally voted “to fight in the Government, in Parliament and in Histadrut (the labor federation backbone of the Government) to eradicate unemployment, stabilize prices and distribute the economic burden equally.”

Outright refusal by Mapam to endorse the program, worked out by Minister of Finance Pinhas Sapir and backed fully by Premier Eshkol, would have meant the downfall of the existing coalition Government. The Mapam decision was adopted by a 52 to 20 vote of its central committee. The continued Mapam opposition stemmed from refusal of the plan’s sponsors to levy a compulsory loan and higher taxes on higher income groups, the failure to provide sufficient funds, in Mapam’s view, to cut joblessness, and the failure to stabilize prices.

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