Premier Yitzhak Shamir said last night that the reduction of government expenditures will include a cutback of settlement activity on the West Bank but there will be no “freeze.”
He gave the assurance in a television interview during which he discussed the urgent measures being taken by his government to restoie economic health. The Ministerial Economic Committee, he noted, decided this week to cut the budget for the 1984-85 fiscal year by 58 billion Shekels (nearly $800 million).
“Settlements are not excluded,” he said. But the government would never order a settlement “freeze “on the West Bank because “that would be a political act, not an economic measure,” Shamir said.
He gave no indication of the extent of the cutback on settlements and in fact there is no information yet as to what specific economies are planned throughout the government. But the Premier seemed buoyed by the fact that the Economic Committee succeeded — at least on paper — in meeting the Treasury’s demands for budget reductions without precipitating a coalition crisis.
WELFARE BUDGET INCREASED
That accomplishment is precisely what raised skepticism among economic analysts that the budget cuts are little more than cosmetic. While Shamir said consultations were continuing with the Tami Party over the Welfare Ministry budget, the Ministerial Economic Committee has in effect acceded to most of Tami’s demands. It was reported yesterday to have increased the welfare budget by 400,000 Shekels, resolving to cut more deeply into the budgets of other departments.
Tami, which represents a low income, largely Sephardic constituency, had threatened to quit the coalition if its demands were not met. If it did, Shamir’s parliamentary majority would be reduced to one. Shamir said last night that he was “sure” Tami would not bolt.
The Premier said he was “very sensitive” to the economic hardships of low paid civil service workers. He noted they have always been badly off. He maintained that the next cost-of-living allowance, to be paid this month, would compensate all wage-earners for the erosion of their income by inflation, now running at an annual rate of about 200 percent. Independent economists say the compensation would be partial at best.
INDUCED UNEMPLOYMENT NO ANSWER TO INFLATION
Shamir stressed that Israel, unlike other economically troubled countries all over the world, would not combat inflation by inducing unemployment. Israel is different, he said, because “we want to attract aliya and prevent yerida,” the emigration of Israelis who take up permanent residence abroad. But many economists believe that the budget cuts proposed by the government, if implemented, would result in the loss of 30.000-50,000 jobs.
Shamir acknowledged that the most recent public opinion polls show his government to be in trouble with working class voters. But he expressed confidence that Likud soon will be able to “persuade them that we are with them … We have always looked after them … better than any other party.”
Meanwhile, the government was hit by more bad economic news yesterday. Figures released by the Central Bureau of Statistics showed that Israel’s foreign trade deficit stood at $3.47 billion in 1983, a 17 percent increase over the previous year. It was attributed to the three percent drop in exports and a 4.5 percent increase in imports.
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