Cabinet Puts Brake on Economic Integration of West Bank with Israel

The Cabinet today put a brake on a plan for economic integration of the West Bank with Israel. Its decision to vest final approval of new enterprises in the occupied territory with a special ministerial committee was at least a partial victory for Minister Without Portfolio Pinhas Sapir over Defense Minister Moshe Dayan and Finance Minister and Minister of Commerce Zeev Sharef. Mr. Sapir, the former Finance Minister and now secretary-general of the Israel Labor Party, wants to keep the occupied territories segregated from Israel. Gen. Dayan and Mr. Sharef favor economic integration. The Cabinet decision today reversed a Nov. 29 Cabinet committee decision that gave Mr. Sharef sole power to approve West Bank enterprises aided by Government funds.

The effect of the decision will be to slow down economic integration. Each proposal will have to be brought before the full ministerial committee. The unit will have to approve the enterprise and the amount of aid it is to be granted. Mr. Sapir had objected earlier to two proposals to establish factories on the West Bank that would serve as sub-contractors for Israeli and other firms. Mr. Sharef, who received a carte blanche only last Friday, had already urged world Jewry to assist in establishing plants and factories in the occupied territories.

The Cabinet’s consensus decision was announced by Prime Minister Levi Eshkol. The Cabinet also began a general discussion of policy in the occupied territories which it will continue at future sessions. No specific plans have yet come up for discussion. Participants in today’s session were Menachem Beigin, Mordecai Bentov, Gen. Dayan, Moshe Kol, Zalman Aranne, Joseph Saphir and Pinhas Sapir. Messrs. Dayan, Beigin and Joseph Saphir are classed as “hawks” while Kol, Aranne, Bentov and Pinhas Sapir are considered “doves.” Mr. Eshkol is said to lean to the “hawks” but tends to mediate between the two camps rather than take sides.

In a television interview last night Gen. Dayan said the crux of the ongoing debate was what “practical measures” could be taken on the West Bank and in the Gaza Strip in the interim period pending a peace settlement. He explained that his plan for economic integration was not intended to turn West Bank Arabs into Israeli citizens nor did it involve annexation of the territory. He said, however, that the present situation of no-peace, no war would not change within the year and Israel must begin planning for a third year of occupation. He said that if a situation arises that forces Israel to choose between holding its present lines and a new war, the Government would have to examine the situation carefully. Its decision would depend on what new lines were proposed and against whom a new war might have to be fought. For the present, he said he believed the whole Government agreed that Israel must not withdraw from the cease-fire lines without a guaranteed peace.

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