Israel’s Likud-led government easily defeated a Knesset no-confidence motion on the economy Monday, but economic battles loom as the Cabinet prepares to discuss the state budget for fiscal 1992.
The Knesset, which is in summer recess, was called into special session at the insistence of the Labor Party and other opposition factions.
The reason was the unexpected 3 percent hike in the cost-of-living index for July, which was announced Aug. 15. It was the highest July increase since a Labor-Likud unity government introduced drastic economic reforms in 1985.
Most of the rise reflected an increase in construction and housing costs. Building costs alone rose 10.7 percent in July, raising fears of a new round of soaring inflation.
But Finance Minister Yitzhak Moda’i accused the Labor Party of “playing politics” with the figures. “Anyone who draws far-reaching conclusions from one or two months’ inflation rate doesn’t know what he’s talking about,” he said.
Laborite Micha Harish accused Prime Minister Yitzhak Shamir of “doing his favorite thing” with the economic crisis — “keeping silent.”
He was alluding to Shamir’s remark last week that he was glad he had refrained from commenting publicly on the military coup in the Soviet Union until it collapsed.
Shamir’s silence was criticized by media commentators who thought he should have spoken out along with other world leaders against the attempt by Communist hard-liners to take over the Soviet government.
Meanwhile, major battles are shaping up in the Cabinet, where Moda’i will attempt to cut costs in fiscal 1992 in face of increases demanded by Housing Minister Ariel Sharon and Defense Minister Moshe Arens.
Sharon told the Knesset that 85,000 homes are under construction. He said there is no one in Israel who can be described as homeless today.
For his part, Arens said he will seek a $40.9 million increase in military spending. “I am not bargaining like in a bazaar. You can’t intercept Scud missiles with new roads or schoolhouses,” the defense chief said.
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