New Economic Plan Sparks Unrest
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New Economic Plan Sparks Unrest

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Strikes, work stoppages and preparations for mass demonstrations against the Likud government’s new economic order swept over Israel today in a gathering storm of labor discontent. Consumers, meanwhile, descended on supermarkets, automobile showrooms, appliance stores and other shops in a panic buying spree to stock up on necessities and luxuries before prices soar out of their reach.

Ashdod, Israel’s big port city south of Tel Aviv, was virtually paralyzed today. All factories and construction sites and most of the docks were deserted as workers left in buses for Jerusalem to demonstrate outside of the Knesset. The Haifa Bay industrial zone, site of Israel’s major heavy industries, was paralyzed by a four-hour work stoppage that the workers said was only the first in a series of protests.

All work was suspended for the day at Ofakim and Shderot townships. Beersheba was girding for a general strike Wednesday. Three thousand El Al passengers were stranded as ground maintenance crews began a 24-hour work stoppage preventing the departure of eight flights.


Labor wrath was aimed chiefly at Finance Minister Simcha Ehrlich, author of the economic plan which overnight decreed that Israel must abandon 30 years of planned economy in favor of a free market economy with minimal government regulation. The workers were not concerned with economic theory but that their pay checks, already diminished by inflation, will shrink even further as prices for such basics as food, shelter and fuel rise to record heights.

Angry crowds outside the Haifa industrial plants shouted for Ehrlich to resign and denounced him as anti-labor. The few who suggested that Ehrlich’s plan be given a chance were shouted down and threatened with physical violence.

In an attempt to cool the heated atmosphere Ehrlich used a television interview last night to appeal to Histadrut Secretary General Yeruham Meshel for a meeting to work out a joint plan for labor peace. Television was an unfortunate choice for such an approach. A spokesman for Meshel retorted that “the Secretary General does not conduct Histadrut affairs through the mass communications media.”

Ehrlich swallowed the rebuff and dispatched a telegram to Meshel urging a meeting before the situation reaches “a point of no return.” A Histadrut spokesman said that “when Ehrlich’s telegram arrives, he (Meshel) will consider it.” A meeting between the two is expected shortly, but not before mass demonstrations in Jerusalem and other cities.


Sources close to Ehrlich said today that he was prepared to listen to any complaints. Meshel said this morning that Histadrut will demand advanced payment of cost-of-living allowances and set a deadline of two weeks. Trade union statisticians are working on a formula to bring the c.o.l. allowances in line with higher prices.

Political circles said that the approaching Histadrut convention which opens early next week was a factor in labor’s strong reaction to the new economic measures. Histadrut leaders must appear tough and determined before their constituents, they said. Nevertheless, the situation in the next few weeks will be serious. The price of imported goods is expected to rise by 30 percent, food by 20 percent, clothing by 15 percent and hotel accommodations by 50 percent for Israel is although tourists will pay the same prices as before or even less.


The only quiet places in Israel were the banks which reopened this morning in anticipation of a flood of dollar-hungry customers eager to take advantage of the lifting of foreign currency restrictions. But the deluge did not materialize. Israelis apparently are more interested in material products than greenbacks and the banks did not have to draw on the $750 million reserve they amassed over the weekend to meet the expected demand for U.S. and other foreign currencies.

The banks sold dollars today at the rate of 1L 15.50 – $1 and bought them for 1L 15.15. The bankers agreed last night on a uniform rate. The Bank of Israel carried out transactions today at the rate of 1L 15.25 – $1. More Israelis were selling dollars than buying them today. They used their windfall of Pounds to purchase all manner of goods while the current prices last. (See related story Page 3.)

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