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Israel Approves $20 Million to Help Build Atari Factory

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The Cabinet agreed unanimously Sunday to authorize about $20 million to facilitate establishment of a personal computer factory in Israel by Atari, the American videogames and computer giant.

The government money would be used to set up a new investment corporation that would modernize existing plants or build new ones to produce parts and provide ancillary services for the Atari factory.

That was the condition of Atari, whose headquarters are in Sunnyvale, Calif., for choosing Israel as the site of its new offshore plant.

The entire project promises to create over 2,000 new jobs in Israel, and ultimately possibly as many as 3,000, at a time of severe unemployment. But some cautionary voices have been raised in the government.

Amos Rubin, economic adviser to the prime minister, expressed misgivings over Atari’s plan, saying the Cabinet’s vote was “far from being the final decision on the matter.”

Final approval is needed from Finance Minister Yitzhak Moda’i and the minister of industry and trade, Moshe Nissim.

It was Nissim who scored the coup when he persuaded U.S. businessman Jack Tramiel, a major stockholder in Atari, to consider Israel for a factory to make parts and component assemblies for Atari computers.

Tramiel, who is Jewish, agreed to build a plant in Israel on condition that parts and services are provided locally.

An investment estimated between $75 million and $100 million would be required, of which Israel would provide half. The rest would come from private investors recruited by Tramiel.

But the Finance Ministry pointed out that the plan agreed to Sunday by the Cabinet would have the government invest 80 percent of the capital while holding only a one-third interest in the new company.

The bulk would be controlled by outside minority investors.

The Treasury noted, moreover, that a new investment company to stimulate local manufacturing has been under consideration for some time apart from the Atari deal. It needs the approval of the Government Corporation Authority.

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