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Knesset Votes 60-53 to Approve the New Government Headed by Shamir Political Change is Overshadowed

The Knesset voted 60-53 today to approve the new coalition government headed by Premier-designate Yitzhak Shamir. But the political change was overshadowed by the economic crisis which burst on the country with the partial collapse of bank shares and the sudden new devaluation of the Shekel. (See separate story.)

Economic factors dominated the angry debate before the voting. They were the centerpiece of Shamir’s speech and of the withering attack on the government by Labor Party chairman Shimon Peres.

PROMISES ‘IMMEDIATE’ FIRM ACTION

Shamir promised “immediate” firm government action to slash expenses, prune subsidies on basic commodities and to fix a “realistic” rate for the Shekel. He spoke of “bridling public consumption”, implied a tough government stand against wage demands and a more austere life for most Israelis.

“Our real living standards have gone up in recent years beyond the country’s abilities,” Shamir declared. He warned that demands which “do not jibe with the national good” will not be entertained. “We shall have to accept the fact that living standards will cease to go up for a certain time… till we attain a healthy economy.”

He said that “all sectors of the population” would have to share the burden of putting the economy right but promised repeatedly that his government would protect the weakest sections from the effects of the envisaged austerity regime.

PERES ASSAILS OUTGOING GOVERNMENT

Peres accused the outgoing government of “punishing” hundreds of thousands of “innocent” citizens for their “trust.” He declared that Shamir, as a senior minister in that government, shared with Finance Minister Yoram Aridor and others the responsibility for the policies which brought on the present “tragic situation.”

He asked if the Knesset and the nation could or should have confidence in the ability of the same people to conduct a better policy. “I demand that those men responsible be replaced,” Peres declared, pointing to the Cabinet table. He urged “immediate” elections without a prolonged campaign period.

Shamir’s new coalition is identical to the outgoing one headed by Premier Menachem Begin. Shamir pledged that the “basic guidelines” of the Begin administration would be the foundation of its successor. But he expressed hope that talks for a national unity government embracing the opposition would be resumed and said it was his firm intention to follow up every opportunity to achieve an all-party coalition.

He blamed Labor for the failure of the talks and for rejecting a proposal whereby divisive issues would be held in abeyance under a unity government until the next scheduled elections in 1985.

Shamir opened his speech with a warm tribute to Begin whose poor health prevented him from attending the Knesset session. There was no word from Begin aides as to whether he intends to resign his Knesset seat. The former Premier has rented a flat in a Jerusalem suburb and is expected to vacate the Prime Minister’s residence within a few days.

Circles close to him said today that he is still suffering from a skin disorder but is otherwise well physically and has been maintaining control of State matters from his home.

Shamir was expected to convene his Cabinet tonight to discuss the most pressing economic issues. There was speculation that he does not intend to lose time in implementing the austerity measures he referred to in his Knesset speech. Informed sources said some of the measures might be decided on tonight and others by the end of the week.

COALITION SEEN AS SOUND

The 60-53 vote in the Knesset for the new government deprived Shamir of his absolute majority in the 120-member parliament by the deliberate absence of Yigael Hurwitz (Independent), the former Finance Minister, in an expression of dissatisfaction with the economic policy.

But the coalition margin is in fact sound: it stands at 64. The two other MKs who were absent today, in addition to Begin, were Aharon Abu Hatzeira who began serving a prison sentence last week, and Avraham Melamed of the National Religious Party who is attending a conference in South Korea.

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