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Cabinet Discusses Lavi Again After Economist Says Its Too Expensive

The Cabinet Sunday held its fifth meeting devoted to the Lavi jet fighter project. No decision is expected until next Sunday’s session, but pressure on both sides of the issue has intensified.

As the ministers deliberated, several thousand employees of Israel Aviation Industries (IAI), which has built and is testing prototypes of Israel’s second-generation jet fighter plane, demonstrated noisily outside the Prime Minister’s Office. They warned this was “only the beginning” of their campaign and that abandonment of the Lavi would have dire consequences.

But Michael Bruno, Governor of the Bank of Israel, the country’s central bank, delivered the most fierce and outspoken public attack yet against the project in an address to the Israel Management Institute in Tel Aviv Tuesday.

“There is no ‘on the one hand and on the other hand.’ On the basis of economic analysis, there is no justification whatsoever for continuing the project,” Bruno said.

THREATS MADE

Likud Minister Moshe Arens, an aeronautical engineer by training and the strongest supporter of the Lavi in the government, threatened a “harsh reaction” inside Likud if Premier Yitzhak Shamir sides with the Lavi’s opponents.

Probably the strongest opponent is Minister-Without-Portfolio Ezer Weizman of the Labor Party, a former Air Force Commander and, like Arens, a former Defense Minister. He has spoken publicly against the Lavi which he had originally supported as a “second line” aircraft to replace Israel’s aging American-made Skyhawks. Since then, he has said, the Lavi has escalated to a highly sophisticated front-line combat plane which while technically worthy, does not warrant the huge development and production costs. Defense Minister Yitzhak Rabin argued at Sunday’s Cabinet meeting that as long as there are no additional funds, the Lavi project cannot be continued. He reflected the views of a growing majority within the defense establishment and the Israel Defense Force who contend that the Lavi is diverting funds from other urgently needed weapons systems.

Bruno argues in a similar vein. He said the fact that the Lavi represents a great technological achievement for Israel does not mean it “ought to be manufactured.”

“Nor is it relevant if alternative sources of financing can be found, because these will only be at the expense of other possible uses for the money,” Bruno said.

“The economy has no comparative advantage in producing the plane. It is only a substitute for imports, but these imports will cost less than producing the Lavi, even without taking into account the development costs. Nor will this project lead to subsequent ones,” the Bank of Israel chief said.

RIPS JOB-LOSS DEFENSE

He addressed the problem of unemployment if the Lavi is scrapped — the primary concern of the IAI employees. “From the employment point of view, any advantages of continuing the project would be only short-term,” Bruno maintained. “Even the limited number of specialists employed on research-and-development work would be employed only for the next five years. Their tasks would then be completed and they would in any case have to find other employment.”

Bruno warned that the long-term effects of the project would be less funds for other projects, less exports and fewer jobs available.

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