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Nissim Explains Why the Lavi Had to Go

September 15, 1987
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Israel’s Finance Minister Moshe Nissim told an audience of Jewish leaders here Saturday night that it was only “after a long period of the most difficult deliberations” that he concluded that Israel’s Lavi jet fighterplane project had to be abandoned.

That decision made him “tremble with sorrow at the loss of a large and important national project that would have put us in the first line of high-tech countries,” he said. But as painful as it was, Nissim stressed to 500 American and Canadian Jewish leaders at a dinner at the 1987 Israel Bond North American Leadership Conference at the Queen Elizabeth Hotel here, Israel will benefit economically and militarily from the decision.

Nissim also outlined to the Jewish leaders Israel’s long-term economic goal which is “privatization and liberalization of Israel’s economy,” to make it attractive to investors at home and abroad.

Nissim, a Likud Liberal, drew the wrath of many of his party colleagues when he joined the Labor Party Ministers in a 12-11 vote August 30 to scuttle the Lavi project. He explained here the decision was based solely on the needs of the country.

Cancellation of the Lavi will benefit the economy and strengthen the Israel Defense Force with new, sophisticated weapons systems which will be developed in Israel, he said.

“The advantage these weapons will give Israel in any future war will be greater than the difference between the Lavi and the F-16C planes” which the U.S. has offered to sell Israel as a replacement for the Lavi, Nissim said.

“Continued development and production of the aircraft (Lavi) would have necessitated an additional financial outlay each year of hundreds of millions of dollars,” Nissim stated. “Such a large expenditure would have halted the progress of economic growth and could even have caused our economy to regress. Security and economic considerations together made me take this difficult and painful decision.”

Speaking of Israel’s economic condition in general, Nissim said “Confidence in the Israeli economy on the part of both the public and the international financial community has grown. Not long ago, we were begging banks to grant us loans on disadvantageous conditions. But now the banks run after us to offer loans on very good conditions,” Nissim said.

He noted that the International Monetary Fund (IMF) has singled out Israel as the country most successful in the application of an economic stabilization program. He acknowledged that Israel still faces economic difficulties.

The two main threats are expansion of the government’s budget and demands for wage increases, he said. But the austerity program adopted by the unity government has withstood them to the extent that the fiscal year 1986 ended with the first budget surplus in the country’s history.

Nissim referred to his recent appointment of the First Boston Bank as a consultant to the government on the sale of “government-owned corporations to private interests. “The Bank will appraise” the sale of some 30 government corporations, he said.

The aim is “to create a new climate in which investors will find the State of Israel attractive with a liberal economy where the free market will governed by the private sector and subjected to international forces,” the Finance Minister said.

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