Peres Warns Arab Economic, Political Strength Poses Serious Difficulties for Israel

Shimon Peres, Israel’s Defense Minister, declared here last night that the vast economic wealth and political strength the Arabs possess today are being channeled in a belligerent direction which will create serious difficulties for the Arab states and for Israel.

The Israeli leader, who was the guest speaker at the dinner session of the International Fall Leadership Conference of the Israel Bond Organization, attended by more than 750 delegates from the United States and Canada, pointed out that both Syria and Egypt are rebuilding their war machines in spite of the disengagement agreements that were signed earlier this year.

Peres emphasized that Israel must construct “a new generation of Israeli strength” backed by “a modern generation of weapons” to face the dangers of war and terror. Discussing the possibility of another war, Peres observed that the Arabs are impatient to give vent to their “belligerent tendencies.”

He cited the fact that Syria has not yet decided whether it will renew the mandate for the United Nations forces stationed there as a result of the Syrian-Israeli disengagement agreement which will expire this year, while Egypt, though restoring the cities that were damaged during the Yom Kippur War, is rebuilding her military strength. He also said that “terror is an immediate danger that Israel has to face daily.”

The Defense Minister also warned of the massive military support extended to the Arabs by the Soviet Union, adding that captured Russian documents urged the Egyptians to join the Russian camp with “its global and nuclear power.”

ISRAEL ECONOMY BESET BY PROBLEMS

He pointed out that Israel’s economy is beset by two main problems at the present time: inflation and an unusually heavy deficit in its balance of payments. Peres emphasized Israel’s dependence on the Jews of the United States and the rest of the free world for large-scale financial aid through the Israel Bond Organization. He said that while Israel accumulated a deficit of $5 billion as a result of four wars and its development program, the Arabs have a surplus of $45 billion this year.

BURDENED BY ADDITIONAL TAXATION

Sam Rothberg, general chairman of the Israel Bond Organization, told the delegates that the widest response to Israel Bonds was needed “not only to shore up its economy which was seriously disrupted as a result of the Yom Kippur War, but also to provide funds for industrial expansion, and the creation of jobs for new immigrants. Economic development is also a major factor in the success of Israel’s search for peace.”

Michael Arnon, president and chief executive officer of the Bond organization, underscored the fact that Israel’s citizens must bear the burden of additional taxation as a result of the government’s new measures of austerity aimed at curbing inflation and narrowing the country’s trade gap.

He pointed out that the increase in compulsory defense loans under the new austerity program amount to $240 million and an additional $240 million will be frozen for a year under a new 20 percent compulsory deposit at no interest on imports. He estimated that the total of old and new taxes, compulsory loans and subsidy curtailments amounted to $1.9 billion. On a per capita basis, Arnon said, each Israeli man, woman and child will now pay more than $1500 a year in taxes, more than $6000 for an average family of four.

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