48 Friday, September 28, 1919
THE DETROIT JEWISH NEWS
Inflation, Housing, Debt Threaten Israel
•
By YITZHAK SHARGIL
TEL AVIV (JTA) —
While Israel is engaged for
the first time in its history
in the process of implement-
ing a peace treaty with one
of its neighbors, the pre-
carious state of the nation's
economy poses a threat to
its survival. The danger is
compounded because in the
economic sphere, appear-
ances are deceptive.
To the casual observer,
Israel this year was a coun-
try of booming prosperity, a
flourishing healthy
economy, full employment
— too full in fact — and a
well-heeled consuming pub-
lic enjoying the good things
of life. At least a half million
Israelis vacationed abroad
during the past summer,
each allowed to take $3,000
in foreign currency.
New car sales soared to an
all-time peak despite as-
tronomical prices and the
highways are jammed. Is-
rael has yet to introduce
color television; neverthe-
less, 110,000 color TV sets
were sold in recent months.
Every Israeli fit to
work has a job or can
have one and the labor
market is seeking at least
30,000 more workers. In
addition to Israelis, the
country provides regular
employment for some
70,000 Arabs from the
occupied territories who
get their jobs legally
through the labor ex-
changes and an esti-
mated 20,000 more who
circumvent the legal
channels. Several
thousand Lebanese from
south Lebanon commute
to jobs in Israel daily.
But this rosy picture con-
ceals a grim reality. Israel
this year was caught in the
worst inflationary spiral in
its history. The inflation
rate is expected to exceed 80
percent by the end of the
year, probably the highest
in the world, and at the
MARLENE & MORREY KATZ
STEVEN & NANCY
Wish a Healthy & Happy
New Year to all their
relatives & friends
Wishing all our Family &
Friends a Happy, Healthy
& Peaceful New Year.
-
TUT, ANITA & MIKKI MENTZEL
To all our friends and
relatives near and far
The ARNOLD OLEINICK FAMILY
Wish you all a very Joyous, Prosperous,
Healthy and Happy New Year.
GERRY & LEO ROCKIND
wish all their relatives
& friends a Healthy &
Prosperous New Year
A Healthy and Happy New Year
to all our friends and relatives.
MAUREEN & BOB SHAPERO
SANDY & MICHELLE
WE WISH YOU A HEALTHY,
HAPPY NEW YEAR
DESIGNS IN DIMENSION
SUE WASSER AND CYVIA SNYDER
DR. & MRS. JOHN COHEN & FAMILY &
DR. & MRS. ARNOLD H. GARTNER
would like to wish all their
relatives & friends a
Happy & A Healthy New Year
May the year ahead
be a year of Health,
Happiness and Peace
RUTH AND FRANK
FRIEDMAN
moment there seems to be
no way to control it. Infla-
tion is fueled by feverish
consumerism. Israelis do
not save their money be-
cause it shrinks rapidly in
value. Those who do save
invest in cost-of-living
index related government
bonds which only adds to
the internal debt.
But Israelis are buying
everything available. They
are spending their money
mainly on expensive dura-
ble goods such as cars, re-
frigerators and TV sets at
ever higher prices. As de-
mand increases, manufac-
turers hire more workers
and are ready to pay higher
wages. But the more Is-
raelis consume, the less
there is to export.
Exports increased at the
meager rate of three percent
this year and the country
may face a $4 billion bal-
ance of payments deficit. Its
cumulative foreign debt
now stands at about $17 bil-
lion. At the current rate, it
will reach the danger point
of $25 billion in four years
at which time the govern-
ment will experience great
difficulties in getting
foreign credit.
Fighting inflation is not
an easy task for a gov-
ernment which depends
on coalition partners to
muster a majority in par-
liament. When the Likud
government came to
power two years ago, the
controversial American
economist, Milton
Friedman, was invited to
offer suggestions. Fried-
man's conservative phi-
losophy and especially
his view that a degree of
unemployment is neces-
sary to reduce inflation
raised an outcry in labor
circles.
The Likud government
cannot permit itself to
create unemployment for
that would surely lead to its
downfall. So the govern-
ment has taken only half-
way measures against in-
flation with very little suc-
cess.
It has been unable to cut
down on its own expendi-
tures primarily because de-
fense needs swallowed a
third of the present IL 320
billion budget. And because
of inflation, the budget will
have to be increased by
about IL 70 billion.
Connected to the inflatio-
nary spiral is the housing
problem which is a social as
well as an economic prob-
lem. Housing construction,
a basic branch of .the
economy, is slowing down.
In the last two years, the
price of an apartment has
tripled, the price of land
went sky-high and con-
struction starts have di-
minished.
Israel's construction in-
dustry is not highly
mechanized. Building is
time-consuming and more
costly than in other coun-
tries. A small two-room flat
in Tel Aviv, Jerusalem or
Haifa costs over IL 1 million
($30,000) and there are no
apartments for rent at rea-
sonable prices.
This situation carries
the kernel of social un-
rest as newly-married
couples find it impossible
to pay for a home of their
own. It contributes to the
phenomenon of emigra-
tion among Israelis —
yordim. In recent months
the emigration rate was
2,000 per month and it is
not likely to be stemmed
unless the price of hous-
ing can be brought down
to affordable levels.
Israel has just informed
the United States that its
budgetary deficit for the fis-
cal year beginning Oct. 1,
1980, will amount to about
$3.4 billion. But hopes are
not high that the U.S. will
cover that deficit with
grants, considering the re-
cession and inflation in
America.
Some American aid will,
of course, be forthcoming.
On the other hand, the U.S.
will indirectly feed Israel's
inflation by pouring money
into the new airfields to be
built in the Negev, replac-
ing those in Sinai.
Because of that danger,
the entire project will be a
closed venture. But no one
will be able to prevent the
foreign workers from spend-
ing their money in Israel
nor will the American con-
tractors deny themselves
products and services on the
local market, thereby com-
peting with Israeli consum-
ers.
Still, Israel's economic
picture is not entirely
bleak. Export industries
have made enormous
strides. Only last year,
$550 million worth of Is-
raeli goods that were the
result of local research
and development were
sold abroad. The entire
industrial export was
$3.5 billion and there was
a significant expqrt of
military hardware such
as the Gabriel missile and
the Kfir jet interceptor.
Industry is shifting more
to sophisticated electronic
systems and there is a con-
tinuous stream of invest-
ments.
Regarding the gradual
normalization of relations
between Israel and Egypt,
experts expect it will have
little effect on Israel's
economy in the year ahead
because local industry,
geared to the requirements
of the European market,
will need time to adapt itself
to Egyptian market de-
mands. Moreover, it will
take several years of peace
before trade relations be-
tween the two countries will
develop to a point where it
will be a significant factor.
Summing up, Israel's
economic targets for the
coming year are to put a
brake on inflation; close the
balance of payments gap;
and step up housing con-
struction. Mainly, the dan-
gers of social unrest and in-
creased polarization be-
tween the rich and the poor
must be avoided.
Life begins with a
commitment of the heart.
—Ben Zion Bokser
To All Our Relatives and Friends
A Happy, Healthy New Year
BARNET REALTY CO.
(The Bookspans)
Southfield, Michigan
MR. & MRS. BERNARD FARBER
& CHILDREN
Wish all their Relatives & Friends
A Healthy,
Happy New Year
May the year ahead be blessed with
Peace & Good Health
MARILYN & JERRY FLACK
JEFFREY & ELINOR
4 11111
MR. & MRS. JOSEPH FRANK
Wish their relatives &
friends a Healthy & Happy
New Year
A Very Happy New Year
to all my relatives & friends
MRS. MAX GLADSTONE
Huntington Woods
13303 Borgman
MR. & MRS. ISAAC GOLD
AND FAMILY
Wish their friends & relatives
A Happy and Healthy New Year
Our special wishes for a very happy, healthy &
prosperous Year to our great friends and relatives
MR. & MRS. ERVIN GOLDING
Oak Park
25385 Montmartre
ANN, IRV, DEBBIE &
MICHAEL GOLDSTEIN
Wish their Family & Friends
A Happy 8, Healthy New Year
Wishing our Family and Friends a
Happy & Healthy & Prosperous New Year
THE LEIBS
Burton, Vicki, Sheryl, Jennifer
David & Deborah
rov5
nzrizn
MR. & MRS. BERNIE BENKOFF
& SHERI
WISH ALL THEIR FRIENDS ?
RELATIVES A VERY
HAPPY, PROSPEROUS & HEALTHY
NEW YEAR
L'shana Tova
To all our family and
friends may the New Year be
filled with health & happiness
Sharon, David &
Marc Benkoff
DAVE BENKOFF
PAINTING & WALLPAPERING, INC.
Wishes all' his customers
& friends a very Happy and
Healthy New Year
c-
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