Israel’s Coalition Faces Crisis over Cost-of-living Allowances

Premier Levi Eshkol struggled today to avert a possible collapse of his 13-month-old coalition Government in a sudden revival of a dispute between parties in the coalition over payments of cost-of-living allowances to Israeli workers.

At odds are the leftist Mapam against the National Religious and the Independent Liberal parties. The issue involves a proposed compromise offered by the economic committee of the dominant alignment of Premier Eshkol’s Mapai Party and Achdut Avodah. The compromise apparently was acceptable to Mapam and to the Histadrut, Israel’s labor federation, but evoked a virtual negative ultimatum from the religious bloc and the Independent Liberals. The Premier could manage to maintain a government without Mapam, but a walk-out by the religious bloc and the Independent Liberals would force the coalition to dissolve.

The compromise provided that a payment would be made of a 4 percent cost-of-living allowance — half of the official rise in the cost-of-living index to which the allowance is pegged. It would be paid only to workers earning less than 500 Israeli pounds ($167) monthly. A further modification specified that one-quarter of the allowance would be paid to those earning more than 500 pounds a month.

While Mapam had insisted on full payment of the allowance to those in the lower income bracket and half to those with higher incomes, plus a 5 percent increase in wages to workers generally, the compromise had apparently set the stage for an agreement acceptable to all sides.

EACH SIDE DIGS IN; ULTIMATUMS, CONFERENCES HARASS ESHKOL

However, the religious bloc and the Independent Liberals responded today with a virtual ultimatum to the Premier that, if he acceded to Mapam demands and permitted even the smallest increase in allowances or wages, they would leave the Cabinet. The warning was presented to the Premier after the two parties had been in almost continuous consultation separately and with each other for 12 hours. They asserted that any concessions on the issue would be “contrary to the government’s stated policy, and unwarranted by Israel’s economic situation.”

Observers pointed out that the compromise would have meant increases of $5 a month at the most, but that the matter was important to Mapam as a matter of principle. Moshe Shapiro, Interior Minister, and religious bloc leader, was quoted, however, as saying that “there will be no government if a decision is adopted to pay an allowance above that previously agreed to.”

The religious bloc leaders also reportedly were irked by the fact that they were not consulted on the negotiations with Mapam. The Independent Liberals, under Tourism Minister Moshe Kol, called a caucus while the religious bloc was meeting, and the two sessions soon were merged. The merged meeting drafted the warning to the Premier which declared that the compromise would “severely undermine efforts to stabilize the economy and would cause growing unemployment.”

Mr. Eshkol, who was in Parliament delivering a speech on the Prime Minister’s office budget, was hurriedly called out and began an impromptu discussion on the spot with Mr. Shapiro, who remained adamant. The Premier then conferred again with Mapam leaders, who also refused to budge. Subsequently a stream of party leaders flowed into the Premier’s office for urgent consultations throughout the day on means of averting a Cabinet crisis at a time when Israel was struggling with severe economic problems.