Laborite Ministers Say out Going Govt. Leaving Israel in Better Economic, Military Condition

The Cabinet devoted its meeting today, and a special session Friday, to describing what it said was the improved economic and military condition in which the out going Rabin government was leaving the country.

Finance Minister Yehoshua Rabinowitz said at today’s session that the Treasury now has the largest foreign currency reserves ever and that the government had laid the foundation for checking inflation which may increase by no more than 15 percent this year. He stressed his strong opposition to any plan that calls for increasing unemployment as a means of combating inflation. “We shall not cure the maladies of the economy by catastrophies,” Rabinowitz declared. The American economist Milton Friedman, who Likud wants to invite to be the government’s special economic advisor, advocates such a policy.

Addressing the special session Friday, Defense Minister Shimon Peres said the outgoing government was handing over a defense force which may not be able to prevent a war but would ensure the country’s security. He said that since the Yom Kippur War Israel’s defense forces have been strengthened through unprecedented growth. “One of my main aims was to improve both the national moral and the moral of the defense force, “Peres said and “this was achieved.”

Discussing American-Israel relations, Peres, who heads the Labor Party said that while the United States had not kept 100 percent of its commitments to Israel, Israel could never have achieved what it has without U.S. help. He reported that Israel spent IL 3.7 billion on research and development since the Yom Kippur War, but the problem is that it has more talent than money. He said that the Arab states have improved in technology and in the quality of their manpower and noted that Saudi Arabia has evolved from a financial power to an economic power and my soon become a military power.

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