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Controversy over a Project

April 26, 1983
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The proposed Mediterranean-Dead Sea canal has emerged as a center of controversy after Energy Minister Yitzhak Modai accused the Finance Ministry of diverting about $100 million, raised for the massive hydro-electric project through the sale of Israel Bonds, to other purposes.

The Finance Ministry did not deny the charge nor did it deny reports that it has had second thoughts about the viability of the canal project. The Ministry maintained that purchasers of Israel Bonds earmarked as “seed money” for the canal were informed that their investments might not in fact be used for it.

Nevertheless, Modai’s charges and the Treasury’s response are likely to have severe repercussions in the U.S. and other countries where the Israel Bond Organization mounted major campaigns to finance the canal. According to Modai, the Finance Ministry has been spreading doubts about the efficacy of the project. He accused the Ministry of adopting policies “which stifle development projects and redirect resources, including huge foreign currency loans, to meet current expenditures.”

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