Liberals Give Government 90 Days to Accept Its Economic Guidelines
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Liberals Give Government 90 Days to Accept Its Economic Guidelines

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The Central Committee of the Liberal Party gave the government a 90-days reprieve in which to accept the party’s stringent guidelines to stem Israel’s record inflation and save its foundering economy or face the resignations of the four Liberal ministers from Premier Menachem Begin’s Likud Cabinet coalition.

The two-thirds majority vote by the Central Committee in Tel Aviv last Thursday night averted an immediate crisis that could have brought down Begin’s government and precipitated new elections. The Central Committee voted 86-49 against a resolution by the party’s young guard calling for the immediate resignation of the Liberal ministers, including Finance Minister Simcha Ehrlich, the party’s leader.

The 90-days compromise was worked out by the Liberals’ No. 2 man, Leon Dulzin, chairman of the World Zionist Organization and Jewish Agency Executives. Dulzin said it nevertheless represented a warning to the party’s coalition partners to take Liberal demands seriously if the government is to survive. The Liberal Party wing of Likud controls 15 of the Likud coalition’s 45 Knesset seats.


The Liberal Party guidelines call for the elimination or reduction of the government’s price support subsidies on a wide range of basic commodities and services, including food, fuel and transportation in order to stem an inflationary rate that may reach 100 percent by the end of the year.

Ehrlich had been about to ask the Cabinet to approve that drastic step two weeks ago but was dissuaded by Begin apparently for political reasons. The Finance Minister said at the time that he was appalled by the price increases that were projected if the price supports were suddenly withdrawn. On the other hand, he maintains that the subsidies eventually will have to be eliminated.

Ehrlich’s backtracking brought him under attack from his own party and the opposition Labor Alignment for failure to take decisive action. Demands for his resignation were heard from the younger elements of the Liberal Party and his own protege, Deputy Finance Minister Yehezkel Flomin who supported immediate subsidy cuts. Flomin resigned last week.


Ehrlich himself admitted that he was on the verge of resigning until Begin told him flatly that he, too, would step down if the Finance Minister quit. Ehrlich said he wanted to avoid at all costs the downfall of the Likud government because at this juncture it would bring chaos to the country. Begin took sick and was hospitalized shortly after wards. Begin’s sudden illness is believed to have played a part in easing the government crisis at this point.

In an interview published in Moariv over the weekend, Ehrlich stated that he would not resign at this time but called for the formation of a national government embracing the Labor opposition and the Likud-led coalition. But Labor Party chairman Shimon Peres turned down the idea, and Ehrlich’s Liberal colleague, Avraham Sharir, chairman of the coalition Knesset faction, said it was “impractical” because Labor would never cooperate.

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