Modai Warns Israel May Be Heading for a Serious Recession
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Modai Warns Israel May Be Heading for a Serious Recession

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Yitzhak Modai, Minister of Energy and Infrastructure, warned last night that Israel may be heading for a serious recession. He said that the first signs of a slowdown in the economy are already visible in several branches of the economy.

Modai, who was speaking at the opening of an exhibition, “Energy ’80, ” designed to show methods of saving energy in the construction industry, said the Tel Aviv exhibition is displaying devices that can cut energy use by 10-15 percent.

The Energy Minister also warned that the price of oil will increase substantially over the next few months because of a 14 percent rise in the spot market in Amsterdam.

The fear of a recession is playing a major factor in Israel’s negotiations with the American firms constructing two new airfields in the Negev. Although the Americans can bring in foreign workers, Israel wants a clause that Israeli unemployed will receive preference.

The Defense Ministry has promised Histadrut that the American firms will have to hire more Israelis if there is a recession. However, the Ministry admits the U.S. has the right to choose the contractors and that the American contractors will be using foreign workers as well as equipment purchased abroad.


Gad Yaacobi, chairman of the Knesset Finance Committee, accused the Defense Ministry yesterday of surrendering to American pressure when it agreed that equipment for the construction of the two American-financed airfields in the Negev would be transported to Israel exclusively by American carriers. U.S. cargo preference laws require that assistance cargoes be shipped in American-flag vessels.

But Yaacobi, who was Minister of Transport in the previous Labor-led government, charged that the arrangement was a “scandal. ” He urged Defense Minister Ezer Weizman to try to have the agreement changed so that Israeli shipping companies can bid for the freight.

Meanwhile, Israeli managers appear to be having no trouble landing jobs for constructing the airfields. Many Israelis, who directed large-scale projects in Africa, Asia or Latin America have been hired as deputy directors for various projects in connection with the airfields. Other Israeli construction officials have gone to the United States to seek jobs on the projects. The two airfields, at Ovda and Rimon; are to be completed by 1982 when Israel abandons its existing airfields in Sinai.

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