Peace in the Middle East Will Not Lead to Economic Dislocation, Says Dovrat

An official of the Finance Ministry said today that the advent of peace in the Middle East will not lead to mass unemployment in Israel or create lasting economic problems, According to Efraim Dovrat, the Ministry’s assistant director general, the main problem confronting Israel’s economy stems from heavy defense expenditures which create labor shortages, require heavy imports and create a foreign trade imbalance and a deficit. Dovrat, who made his remarks at a lecture in Haifa, is the third government official in recent days to refer to the impact of peace on Israel’s economy. The subject was brought up by Finance Minister Pinhas Sapir last week and was referred to last night by Dr. David Horowitz, Governor of the Bank of Israel, at a meeting with foreign newsmen. The author of the “Horowitz Plan” for aiding underdeveloped nations, said that no more than one or two years would be needed to reconvert Israel to a peacetime economy after an establishment of peace. Dr. Horowitz said he did not share the fears of Sapir that such a process would take much longer. Horowitz noted, however, that the conversion would not be easy, considering that 25 percent of the country’s gross national product is now allotted for defense and Israel’s external debt comes to $1,200 per capita. But a great deal can be done to develop and increase Israeli exports, he said, Dovrat explained that conversion to a peace-time economy would be gradual because it will take years before Israel can be certain that the peace settlement is lasting. Israel’s industry is expected to supply more and more of the items needed by the defense establishment and will have to increase its labor force to provide production for export, he said. In that connection, the official mentioned that Israel’s arms exports had to be cut by 18 percent in the past year due to local arms demands and the scarcity of skilled manpower.