New Cabinet Crisis Looming

A new Cabinet crisis that may force Premier Menachem Begin to reshuffle his coalition government loomed this week after Finance Minister Yigal Hurwitz threatened to resign over the issue of higher pay for teachers. Hurwitz said that if the recommended pay hikes are adopted they would trigger similar demands from other professional groups, leading to the collapse of his efforts to restrain inflation.

As a result of these developments, Shimon Peres, chairman of the opposition Labor Party, may postpone his trip to the U.S. next week. Peres was invited to speak for the United Jewish Appeal and the Israel Bond Organization but he was also scheduled to meet with members of the outgoing Carter Administration and President-elect Reagan’s transition team. Peres met with Begin yesterday at the latter’s invitation, their first meeting in some time.

Details of their talk were not disclosed but aides of Peres and Begin said Peres’ forthcoming visit to the U.S. was not discussed. The government is reportedly upset by the prospect that Peres would meet with officials of the new American Administration before Begin or his representatives have a chance to do so.

POSSIBLE SHIFT INDICATED

The departure of Hurwitz and the two other members of his Rafi faction in Likud is not likely to topple the Cabinet at this time. Begin is expected to replace them by co-opting Shlomo Eliyahu, head of the Ahva faction which broke away from the Democratic Movement some time ago, to the Cabinet. Eliyahu has expressed willingness to serve, but not if Hurwitz’s economic policies are implemented.

The teachers’ pay hikes are strongly supported by Education Minister Zevulun Hammer of the National Religious Party. He has hinted that he would resign if they are not implemented. The teachers’ union has threatened a general strike. The matter is expected to be resolved one way or another at Sunday’s Cabinet meeting.