A glimmer of good economic news that emerged with the March statistics just published here failed to quell the bitter verbal battle being waged within the unity coalition government over the latest economic measures.
The principal antagonists are Deputy Premier and Housing Minister David Levy, a rising power within Likud’s Herut faction, and Finance Minister Yitzhak Modai, a Likud Liberal whose across-the-board price hikes less than a week before the Passover holidays, stirred Levy’s wrath. Labor ministers and party officials have joined the frey.
The Cabinet last Sunday approved a new economic package to replace one in effect since January which was not working. It calls for a round of wage and price increases, to be followed by a two month freeze. The ministers left the timing to the Treasury and Modai, arguing that the government could no longer bear the strain of price subsidies, put the hikes into effect as of midnight last Sunday.
He made the move despite pleas by about a dozen fellow ministers to hold off until after Passover, or at least until after the seder next Friday night (there is no second seder in Israel).
TAKES UP CUDGELS FOR THE CONSUMERS
Levy promptly took up the cudgels for the consumers. He spoke Sunday of distraught housewives rushing to the supermarkets the previous night to stock up before the price rises took effect.
He spoke Monday of housewives trying to prepare for the holidays confronted by 20 percent increases in the price of virtually all goods and services. They are spending what remains of their families’ last wage packet he said. March wages were paid yesterday.
Levy blasted the Treasury as unfeeling and insensitive. He broadened his attack to include the entire unity government which he claimed has failed to cure the economy and is in grave danger of dissolution. His remarks drew angry rebuttals from Laborites Moshe Shahal and Gad Yaacobi, the ministers of energy and infrastructure and economic planning respectively, who observed that it was the previous Likud government that created the economic mess.
Uzi Baram, Labor Party Secretary General, publicly chailenged Levy today to propose formally to his Herut faction’s Central Committee that Likud secede from the unity government.
Modai, speaking in his own defense, said it was quite impossible to cure Israel’s long-standing economic ills in the 6-7 months of the unity regime. He said he would be happy indeed if the economy could be put right in two years.
Modai and his Treasury aides — and optimists of all political persuasion — took some solace from figures released yesterday by the Central Bureau of Statistics. They showed that in March — for the first time in many months — the Treasury did not print new money. Moreover, Israel’s foreign currency reserves declined last month by only $55 million, a much smaller decline than in previous months.
Modai said today that these figures do not mean the economy has turned the corner. But they are not entirely coincidental, indicating his policies have had some effect.
JTA has documented Jewish history in real-time for over a century. Keep our journalism strong by joining us in supporting independent, award-winning reporting.
The Archive of the Jewish Telegraphic Agency includes articles published from 1923 to 2008. Archive stories reflect the journalistic standards and practices of the time they were published.
