Knesset Backs Government’s Devaluation Policy; Rejects Opposition Move
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Knesset Backs Government’s Devaluation Policy; Rejects Opposition Move

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The Knesset, Israel’s Parliament, today supported the Government’s new economic policy by defeating by a vote of 66 to 43 three non-confidence motions introduced separately by the Herut, Mapam and Communist factions in protest against the devaluation of the Israel pound. The Liberal Party abstained on the vote.

Among the supporters of the Government policy were the Achdut Avoda deputies, who went along with their coalition partners. Although Achdut Avoda accepted the new economic measures which devalued the Israeli currency from 1.8 pounds to three pounds to the dollar, the party will still demand special Government action to ease the burden of farmers whose dollar-linked mortgages increased in principal value by 67 percent.

Meanwhile, several thousand workers in large plants in Tel Aviv staged a two-hour demonstration strike today to protest against attempts to postpone paying higher cost-of-living allowances. The left-wing Mapam Party called for a mass demonstration against the new economic policy, on Wednesday. Workers belonging to the dominant labor party Mapai and to the Histadrut, Israel’s Federation of Labor, did not support today’s strike.

The Histadrut Central Committee decided today to wait until March 15, when the February cost-of-living index is published, before deciding whether circumstances warranted demands for an additional cost-of-living allowance.

The Government’s first major test in holding the price line following devaluation met with success today when an agreement was concluded between the Manufacturers Association and the Government, providing that the latter would waive any claims to levy surtaxes on all local stocks and consignments en route to Israeli manufacturing firms in cases where credit was obtained before February 9, the day the devaluation was announced.

The manufacturers, for their part, agreed to freeze prices for a period up to six months. Industries or individual firms unable to maintain pre-devaluation prices will automatically be subject to the surtax, according to the agreement. A spokesman for the Manufacturers Association said that subsequent negotiations might find a way to extend the price freeze for an indefinite period “provided services and wages were also kept at the present levels.”


A remaining field of friction, not covered by today’s agreement was between the Government and the country’s major importing firms. The importers have refused to pay the surtax on goods already in port and refuse to clear them from the dock areas. The Haifa port, as a result, was almost totally blocked today by goods and ships waiting in Haifa Bay for space to unload.

The Port Authority has warned the importers that if the port is not cleared by Wednesday, the goods will be removed to bonded warehouses at the expense of the importers. The latter are demanding the same arrangements granted to the manufacturers–that goods already paid for should be paid at the old exchange rate.

Details regarding concessions that will be made to holders of dollar-linked obligations were being worked out today by Finance Minister Levi Eshkol and Housing Minister Giora. Josephthal for presentation tomorrow to a meeting of the Ministerial Economic Committee. The proposal affects only loans financed by the Government in public housing schemes.

One of the first groups to take advantage of a mortgage concession granted by the Government was the Miami Group of investors, which raised $2,000,000 within a few days to pay off at the pre-devaluation rate 6,000,000 pounds of the 8,000,000 pounds in dollar-linked loans granted by the Government Tourist Development Corporation for the group’s hotels in Israel. Y. Federman, head of the Miami group, who left for the United States yesterday, raised the required sum from among the members of the group.


Israeli Postal authorities are planning to issue new denominations of postage stamps in the event any shortagas develop from the withdrawal from circulation of several series of stamps following the devaluation of the Israeli pound. The withdrawal was made in order to protect stamp collectors and dealers abroad from any loss ensuing from the new currency exchange rate.

The withdrawal of the stamps from circulation will eventually tend to increase the values of stamp stocks abroad and will compensate for any decreased values due to devaluation. Among the issues taken out of circulation were the Israel Philharmonic Jubilee stamp, a number of afforestation stamps and nine stamps in the landscape series. This left for Post Office use 13 stamps of the Zodiac series.

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