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Anger Subsides over Government’s Drastic New Fiscal Measures

The flare-up of anger over the government’s surprise announcement of drastic new fiscal measures subsided today into stoic acceptance of what most Israelis seem to regard as necessary if distasteful economic medicine. Labor Alignment leaders in the Knesset and Histadrut have adopted a moderate stance and are obviously not inclined toward a showdown with the Likud regime at this time.

Labor’s Knesset faction rejected a proposed no confidence motion when the Knesset debates the new economic measures this afternoon. Members of the Labor-dominated Histadrut Central Committee turned down a proposed warning strike. But Histadrut will organize protest meetings during working hours at places of employment all over the country.

Observers said one reason Histadrut is backing away from a showdown is the fear that it will have no support from the Likud workers who voted in the Histadrut elections on June 21. Likud polled 28 percent of that vote and remains a sizeable minority within the trade union federation.

Finance Minister Simcha Ehrlich claimed today that he had invited Histadrut Secretary General Yeruham Meshel to discuss the fiscal measures with him last month in secrecy. But Meshel refused on grounds that economic plans had to be treated openly before the entire Central Committee. Ehrlich said that was the reason Histadrut was not informed or consulted in advance of his announcement Sunday night.

Most observers appeared to agree that secrecy was necessary to prevent the kind of wild buying sprees and hoarding that occurred in the past whenever the public had advance knowledge of pending price hikes. Ehrlich said the Bank of Israel would have had to print more money and pump it into the economy if the Treasury had failed to reduce subsidies. That would have sent prices soaring, he said. Former Finance Minister Yehoshua Rabinowitz described the new measures as a “correction of course.” Basically, he said, the budget and program of the former Labor government remains and Likud has introduced no new economic program.

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