Begin Defends Ehrlich

Premier Menachem Begin came to the defense of his embattled Finance Minister Simcha Ehrlich today. He told a Maariv reporter that he had full confidence in Ehrlich and saw no reason to dismiss him from his post. He also indicated that he would support Ehrlich’s five-year economic program which has been criticized by other Cabinet members. It is expected to be debated at this Sunday’s Cabinet session.

Denunciations of the government’s economic policies and a rising chorus of demands for Ehrlich’s resignation followed Tuesday’s announcement that the cost of living index rose by 8.7 percent in April, the third largest monthly increase since April 1952. However, according to Begin, “Ehrlich is doing his almost to curb inflation and there are no grounds for demands that he resign.”

The Premier acknowledged, however, that the economic situation is “serious.” But he said the inflationary tide could be stemmed by a joint effort of all ministers and the cooperation of Histadrut.

The government will face three motions of no-confidence in the Knesset next week over the deteriorating economy. Two have been submitted by the Labor Alignment and one by the Rakah (Communist) Party. Begin met with Ehrlich and Bank of Israel Governor Arnon Gafni yesterday to discuss economic problems. Sources close to Ehrlich said afterwards that the Premier had given his unqualified endorsement to the economic program and would use his influence to have it approved by the Cabinet.

Meanwhile, the Israel Pound was devalued again and now stands at almost IL 24-$1. The rapid devaluation was expected to please export manufacturers who have an easier time competing on the world market. However, several senior industrialists complained today that the system of devaluation makes the import of raw materials more expensive which only adds to the inflation rate. In the past, exporters were given special incentives by the government but these were abolished after a major devaluation of the Pound in November, 1977.