Finance Minister Simcha Ehrlich, who soon must prepare Israel’s budget for fiscal 1978-79, has indicated concern over the possibility of reduced economic aid from the United States. The Americans are getting tired of aiding Israel economically, he told the Likud Knesset faction yesterday. He mentioned no specific American threats but indicated that potential difficulties with Washington required Israel to effect substantial cuts in its expenditures.
Ehrlich’s somber remarks were in contrast to his optimistic assessment when he returned from Washington earlier this month after presenting Israel’s request for $2.3 billion in economic aid for the next fiscal year. At that time, Ehrlich stressed that the Americans drew a sharp line between their political differences with Israel and economic aid. But there is growing uneasiness here that such may not always be the case.
Arnon Gafni, Governor of the Bank of Israel, has urged immediate cuts in government expenditures. In that connection he referred to the recent remark by Zbigniew Brzezinski, President Carter’s National Security Advisor, that the U.S. has the right to exert “leverage” on the parties to the Middle East conflict.
Ehrlich also faces domestic pressures. While every Israeli minister acknowledges the need to retrench, each one considers his own ministry to be an exception. Defense Minister Ezer Weizman, for example, accepted defense budget cuts when he took office last June but now demands a five percent increase in the next budget for defense.
Proposals for the new budget amount to about IL 160 billion, a 25 percent increase over the current budget. But even if accepted, such a budget would demand drastic reductions of government expenditures because of inflation. According to the Treasury, a budget of at least IL 170 billion would be required to maintain the present level of government services. About a quarter of next year’s budget will be devoted to servicing the national debt.
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