Israel Cabinet Discusses Threat of Sanctions; Analyzes Developments

The Israel Cabinet discussed today the situation that is developing in Washington and in the United Nations in the face of Israel’s firm stand not to withdraw its forces from the Gaza and Akaba areas until Egypt pledges the free passage of Israelis ships through the Gulf of Akaba and renounces its claim to “rights of belligerence.” The attempts to pressure Israel into “unconditional withdrawal” under threat of sanctions was also considered at the Cabinet meeting.

The opposition developing in United States Congressional circles, as well as in the American press, against imposing sanctions on Israel is receiving close attention here and has provoked considerable satisfaction among the people. Anti-American resentment here was somewhat ameliorated by a report that President Eisenhower had sent a personal letter to President Nasser of Egypt asking him to pledge no aggression against Israel.

The Israel Association for the United Nations cabled United Nations Secretary General Dag Hammarskjold asking him why he had not yet inquired of the Egyptian Government whether it is willing to cease hostile acts against Israel. The cable stressed that the current situation presents a unique opportunity to end hostilities by both sides in the Israel-Egyptian dispute.

FEAR OF SANCTIONS DEVELOPS INFLATIONARY TENDENCY IN ISRAEL

The fear of possible economic sanctions imposed from abroad, coupled with the plans of the Israel Government to decrease non-essential imports is now beginning to build up an inflationary tendency in the country. An increase of some five percent was registered today in the foreign currency and gold blackmarket. Stocks on the Tel Aviv exchange linked to dollars have also risen, as has the cost of such raw materials as cotton and textile yarns

Actually there is no shortage of foodstuffs, except in sugar which is now very expensive. Nonetheless, the monthly distribution of rationed sugar, fats and flour is proceeding in orderly fashion at last month’s fixed prices. In the free market, slightly higher prices obtain on essential commodities. Meat from East Africa continues to flow into the country, assuring sufficient reserves. End of season sales in clothing kept prices on these items in line and many Israelis took the opportunity to buy need articles.

Meanwhile, the Mapai Party economic committee, after hearing a report from Finance Minister Levi Eshkol on his proposed emergency economic plan designed to tighten Israel’s belt in the event of formal sanctions, named a special committee to draft an enforced wage savings plan. This would be designed as a substitute for Mr. Eshkol’s suggestion that the present high cost of living be frozen. Other suggestions by Mr. Eshkol include a cut in the civil service payroll by the dismissal of at least 2,000 persons; a special tax to be used to combat increasing unemployment; a cut in government subsidies for essential commodities, and a slash in imports.

In view of the fact that the United States has to all practical purposes already imposed economic sanctions on Israel, Minister of Trade and Industry Pinchas Saphir called today for manufacturers and exporters to increase productivity and exports and complete a scheduled four-year export plan in two years. He noted that the U.S. has halted all grants-in-aid and the below-cost sale of surplus commodities. The Minister warned of what he said was the intention of the U.S. to extend sanctions to Jewry’s aid to Israel.

ISRAELIS FIRM IN BACKING GOVERNMENT’S REFUSAL TO YIELD TO THREATS

Despite these evidences of increased economic difficulties, neither government members nor the ordinary citizens of Israeli have shown any tendency to knuckle under to demands that Israeli troops be withdrawn from the Gaza and Akaba areas without prior guarantees of security and freedom of navigation. The man in the street feels that if Israel surrenders now to an Arab pressured United Nations, it will set a precedent which will shortly threaten Israel’s very existence.

The people of Israel assembled in huge mass meetings yesterday to pledge their support of their government’s refusal to yield to United Nations and United States pressure to compel immediate and unconditional withdrawal from the Gaza and Akaba areas under threat of sanctions. Hundreds of thousands of Israelis met in Tel Aviv, Jerusalem, Haifa and smaller cities in a national act of protest against the tremendous squeeze on Israel.

The rallies demanding international guarantees of freedom of navigation and of non-aggression from Egypt spontaneously became friendship demonstrations toward France, the only major western power now openly supporting Israel’s stand in the United Nations deadlock. The meetings followed attendance at synagogues where rabbis appealed to the world’s conscience for an equal measure of justice to both Israel and Egypt and urged congregants to attend the protest rallies.

CHIEF RABBINATE ISSUES PROCLAMATION; CERTAIN OF ISRAEL’S VICTORY

A proclamation issued by the Israeli Chief Rabbinate expressed regret that the United Nations, “whose prime duty is to promote world peace and foster cooperation among the nations” was yielding to the pressure of Israel’s enemies. The proclamation, signed by Chief Rabbis Isaac Halevi Herzog and Isaac Nissim, called on Israel’s people for solidarity and unity in the faith that Israel’s cause was just and that victory was therefore certain.

It was the first time in the nine-year history of Israel that mass meetings on such a scale have been held. The rallies were organized jointly by all coalition parties, except Herut, with the General Zionists, who are not in the coalition, participating. The right wing Herut party demanded a more extreme position for participation than the coalition parties would accept. Only the tiny Communist party abstained from support of Israel’s stand on withdrawal and the man on the street did not fail to remember that, as in the Sinai campaign, the Communists were the only supporters of the UN position.

At each rally resolutions were endorsed “indignantly protesting” the UN attempt to “strike a blow at Israel’s security and equality” and expressing full support of the Israel Government’s effort to combat attempts to “ust the United Nations to revive tensions and hostilities on the Egyptian-Israel border.” Calling on all nations to assist Israel, the demonstrators declared “neither political nor economic pressure nor the threat of sanctions will break our spirit or determination. United we will endure any sacrifice required in the defense of our homeland and for the preservation of the United Nations principles of equality and sovereignty of all nations.”

100,000 DEMONSTRATE IN TEL AVIV; 30,000 IN HAIFA; 20,000 IN JERUSALEM

An estimated 100,000 Tel Aviv citizens, one-fourth of the city’s population, massed into the mile-long Allenby Road and marched to the seashore where Mayor Haim Levanon and members of the Knesset addressed them. They displayed banners and posters in Hebrew, French and English opposing withdrawal and the “Hammarskjold-Nasser partnership,” a reference to UN Secretary General Dag Hammarskjold and Egyptian President Nasser. Other banners hailed French aid to Israel. No incidents were reported anywhere though stronger police guards were placed near a number of foreign missions including the American delegation.

An estimated 20,000 Jerusalem residents gathered in Histadrut Square and adjacent streets to hear Moshe Kol, member of the Jewish Agency executive and other officials express the attitude of the Government and Israeli national institutions. An indication of the hostility developing toward the United Nations and particularly Mr. Hammarskjold was the approval of the Tel Aviv throng for a demand by Igal Alon, youthful Knesset member and former Palmach commander, who called for the resignation of Mr. Hammarskjold.

Some 30,000 Haifa citizens heard similar appeals for unity in the nation’s crisis from Mayor Abba Chushi. A mass meeting in Ramleh, inhabited mainly by newcomers, pledged similar support to the Government’s policy. Several hundred settlers from 14 Israeli settlements along the Gaza Strip brooder demonstrated at Nachal Oz settlement, which was under constant attack by Egyptian fedayeen before the Sinai action. The rally opposed the return of “Egyptian murders to our doorstep.”