Premier Yitzhak Rabin said last night that the stringent economic measures adopted by the government yesterday, including devaluation of the Pound, were an unavoidable part of the national effort to mobilize Israel’s resources for security. Rabin appeared on television, speaking informally, as he put it “in the way we Israelis talk things over.” His remarks were obviously calculated to cushion the shock of soaring prices for fuel and basic food commodities resulting from devaluation and to convince Israelis that the time for belt-tightening is at hand.
He won the praise of political commentators, some of whom only a few days ago were questioning his capacity for leadership. This morning they saw “a courageous and confident Prime Minister capable of looking people in the eye and telling the truth, even if it is bitter.” How the general public, and especially labor, will regard the new economic measures remained to be seen today. But the government’s tough moves have already won the support of leading economists, leaders of the business community and a large segment of the press.
The banks which were closed yesterday, a normal day of operation, in order to revamp their systems in line with the devaluation reopened today. Depositors flocked to the various branches to withdraw money to buy up available commodities. (See separate story.)
DEVALUATION CALLED WISE STEP
Ernest Yeffet, director general of the Bank Leumi, said devaluation was a wise and necessary step. Avraham Shavit, deputy president of the Manufacturers Association welcomed the new economic measures though he thought the decision to freeze credit was a mistake that could lead to unemployment. Moshe Zanbar, Governor of the Bank of Israel, proposed that Israel float the Pound in a way that would link it to other monetary systems rather than exclusively to the U.S. dollar.
The success of the new economic program will depend largely on whether the government and Histadrut can reach agreement on cost-of-living allowances. A 30 percent rise is due in Jan and Histadrut Secretary General Yeruham Meshel has already served notice that labor will demand full payment. Government economists fear that would negate an important aim of the emergency economic measures which is to reduce inflation by reducing spendable income.
LABOR URGED TO COMPROMISE
Influential sections of the press urged labor to compromise today. Maariv called Histadrut’s demand “a sign of weakness rather than strength” and suggested that the labor federation “argue with its own members rather than with the government.” Histadrut “should explain to its members that they must make an effort to lower their living standards to give the economy a chance to recover,” a Maariv editorial said.
Most other papers agreed with the government’s proposal to pay COL allowances on the basis of living costs that prevailed immediately prior to devaluation. Yediot Acharonot claimed that the economic situation was an additional factor calling for the establishment of a national unity government. The only dissenting voices in the press today came from the Histadrut daily Davar and Mapam’s A1 Hamishmar. Both papers stressed the need to compensate low income families for the new price increases.
The Archive of the Jewish Telegraphic Agency includes articles published from 1923 to 2008. Archive stories reflect the journalistic standards and practices of the time they were published.
