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Israel Partially Restores Cuts in Subsidies to New Immigrants

March 13, 1991
See Original Daily Bulletin From This Date

Finance Minister Yitzhak Moda’i restored recent cuts in subsidies to new immigrants Tuesday, in what Treasury sources said was a decision to “save” aliyah.

Moda’i ordered the so-called “absorption basket” of cash and services, which helps tide newcomers over their first year in the country, raised by 3,000 shekels, or approximately $1,350 at the new exchange rate, effective April 1.

That will bring it to its previous level of 17,000 shekels ($7,750), still considerably less than the original 21,000 shekels ($9,600) for an immigrant family of three.

The cost to the Treasury is estimated at $137 million, which it plans to take initially from the budgetary reserves.

Treasury sources said Moda’i took into consideration increased housing costs and living expenses, as well as the detrimental effect the subsidy cuts might have on the level of aliyah.

The move was unexpected, nevertheless, because Moda’i told his Cabinet colleagues Monday that the government could no longer bear the cost burden.

About a third is shared by the Jewish Agency for Israel, which relies on donations from Diaspora Jewry for most of its funding. The agency, however, has converted its share from a grant to a loan.

The reduced subsidies raised an outcry among immigrant absorption officials and aliyah activists, who feared it would greatly decelerate aliyah from the Soviet Union.

The Knesset Finance Committee was not expected to approve the cuts. According to some sources, the Treasury decided to avoid that embarrassment by restoring them.

Housing Minister Ariel Sharon, a sharp critic of the government’s absorption policies, resigned Sunday as chairman of the Cabinet committee dealing with immigration and absorption problems, partly to protest the cuts.

The Israeli public has become increasingly aware that many immigrants face financial difficulties. The daily Yediot Achronot published a photograph Sunday of Soviet olim scrounging for leftovers at a Tel Aviv vegetable market.

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