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Eshkol Seeks to Prevent Cabinet Crisis over New Economic Program

August 11, 1966
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Beset and belabored by many disagreements from members of Israel’s coalition government and from some of its most important backers, Prime Minister Levi Eshkol and Finance Minister Pinhas Sapir were still fighting hard today to hammer out the new economic policy which they hoped to have ready for presentation to the Cabinet next Sunday.

However, chances of having the program ready for Sunday debate by the Cabinet seemed to fade when all of the various divisions regarding the plans were summarized here. There are differences inside the dominant political alignment, with Achdut Avodah opposing Mapai. Leaders of Histadrut, which is the Mapai backbone, are at odds with Mr. Sapir, who is the Mapai draftsman for the new economic program. The left-wing Mapam, whose backing in the Cabinet is essential if the coalition government is not to split wide open, is still adamant against the planning which Mapam sees as favoring the well-to-do against the interests of the Israeli workers.

Finally, two other members of the coalition, the National Religious Party and the Independent Liberals, are critical, contending that neither of them has been constituted sufficiently in the formulation of the economic plans. Unless negotiations are held with these parties, the leaders of these groups threaten, they will not vote for the Eshkol Sapir program.


The seriousness of the split inside the Mapai-Achdut Avodah alignment became evident last night when a special session of the alignment’s economic committee met for 10 hours in the office of Mr. Eshkol, then adjourned without having reached a decision binding on both parties.

This morning, a joint committee composed of representatives of the alignment and Mapam started negotiations on the economic planning. Mr. Eshkol had already offered to include in the economic program a tax on upper ranges of capital gains and on dividends, in return for a Mapam agreement to a wage freeze on all Israeli workers. But the Mapam leadership was still dissatisfied, and accusing the Premier of making only “minor” concessions.

As for Histadrut, it was also accusing Mr. Sapir of trying to put forth an economic program that would hit the Israeli workers much harder than it would affect corporations or persons with higher earnings.

One important backer for the Eshkol-Sapir program came forth today when David Horowitz, governor of the Bank of Israel, announced in an address at Tel Aviv that he supports the Government’s economic retrenchment plans and the proposed freeze on wages and income, coupled with a rise in Israel’s productivity. However, irony was seen in some circles here in the fact that, after the luncheon, the Bank of Israel announced officially that it has granted its employes a salary increase of 6.5 percent. It was understood that the bank workers had originally sought a raise of 10 percent, but compromised for the lower figure.

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