A leading Israeli economist today urged Americans to consider United States aid to Israel not as foreign aid but part of the American global defense budget, The economist, Dr. Haim Ben-Shahar, president of Tel Aviv University, said that Israelis are growing concerned about the attitude of some Americans who ask why the U.S. government should aid Israel financially when it is not helping New York City. He said two-thirds of Israel’s $3.5 billion balance of payments deficit is due to defense costs.
He explained that if there were no outside influences on the Arab-Israeli conflict Israel would be able to meet its own defense needs. But since the Soviet Union is arming the Arabs, the Mideast conflict is part of a global conflict and help to Israel aids America’s global defense strategy.
Dr. Ben-Shahar’s remarks were made at a press conference at the office of the American Friends of Tel Aviv University here. He said he is making his first visit to the U.S. in order to increase ties with scholars here and Tel Aviv University.
Dr. Ben-Shahar, who was head of a committee which proposed reforms of Israel’s tax system which are now being put into effect, said that in 1972 Israel’s deficit was $1.2 billion. He said it rose to $3,5 billion since the Yom Kippur War and will go up another half billion to meet the cost of importing oil to replace the petroleum formerly received from the Abu Rodeis oil fields in the Sinai which Israel is returning to Egypt.
ISRAEL IMPROVING ITS OWN SITUATION
However, the Israeli economist noted that Israel was doing much on its own to improve the economic situation. He said non-defense spending has been cut drastically; there have been four tax increases since the Yom Kippur War and the Pound has been devalued since last November when it was valued at IL 4.20 to the dollar to the present rate of IL 7 to the dollar. He said this belt-tightening process is not yet completed.
Dr. Ben-Shahar said the major aim of these efforts–which he said are supported by the public–is to increase exports and foreign investment in Israel. He said Israel is presently planning to liberalize its already liberal foreign investment law and is carrying on a campaign abroad to interest foreign investors. He said one of the major proposed investments for foreign companies is in science-based industries since Israel has a high number of skilled scientists.
The interim agreement, according to Dr. Ben-Shahar, may provide opportunities for Israel and the Arab countries to cooperate on economic projects for their mutual benefit. He said this could be done on an informal basis rather than through formal treaties. He said one project being raised by an independent group of Israeli economists is a canal from Haifa to Jordan where Jordan could build its own port for exporting Jordanian products. He said this project would also provide hydroelectric power for Israel.
WORKING ON ENERGY NEEDS
As for Israel’s energy needs, Dr. Ben-Shahar said Israel was working on means of harnessing solar energy and was also prospecting for oil within its own borders, Dr. Ben-Shahar, who has recently been studying the policies of the Organization of Petroleum Exporting Countries (OPEC), said that it is OPEC’s short-range benefit to increase oil prices but in the long run this will speed up the search for alternative means of energy.
Dr. Ben-Shahar said the tax reform proposed by the special committee which he headed will be introduced in stages during a two to three-year period. He said despite the complaints of some groups it will not be watered down by the government because it has been accepted by all segments of the society.
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