THE DETROIT JEWISH NEWS
Israel's Economy Turns. Corner
Just As 5741 Comes to An End
By JERRY CHESLOW
World Zionist Press Service
JERUSALEM
—
Whereas 100 percent infla-
tion would be considered an
economic tragedy in most
Western countries, for
Yigal Hurwitz and Yoram
Aridor, the two finance
minitsters who ran the Is-
raeli treasury over the past
year, it was an unattainable
goal.
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MORRIS
The year 5741 came in
with a world oil price rise
shock and adverse trade
conditions, which posed a
serious threat to the coun-
try's balance of payments.
Israel imports 40 percent
of her resources as well as
all of her fuel since the re-
turn of Egypt's Sinai oil-
fields. These problems,
compounded by an annual
inflation rate of 130 per-
cent, led finance minister
Yigal Hurwitz to imple-
ment a tough austerity pro-
gram, claiming that Israel's
economic problems stem-
med from the fact that the
country as a whole spent
more than it earned.
For the first time since
1967 there were pockets
of unemployment, a five
percent reduction in real
wages, and a seven per-
cent drop in private con-
sumption in the first half
of 5741.
The Hurwitz policy,
which included severe cuts
in public services, ran into
stiff opposition from various
other cabinet ministers.
There was talk of a record
number of Israelis emigrat-
ing. Labor unrest was wide-
spread with numerous
strikes in the public sector.
One of them, by the
teachers, eventually led to
Hurwitz's resignation.
It was against this at-
mosphere of gloom and
doom that Yoram Aridor
took over the finance
portfolio, with the economy
in what is called a cost infla-
tion: the prices of raw mate-
rials cost more, driving up
the price of finished goods
and services. This was
coupled with massive public
buying to offset price hikes,
another factor in the spiral-
ling inflation.
To restore confidence in
the economy, Aridor
brought down the prices of
some durable goods such as
televisions, cars and re-
frigerators, by reducing
purchase tax. In spite of the
rapidly devaluing Israeli
shekel, he kept the prices of
most essential foods down
by compensating with an
increase in subsidies.
How did all this affect
the average Israeli? Al-
though the shekel is
worth less than half what
it was last Rosh Hashana
and inflation is still well
over 100 percent, average
wages grew by more than
the rise in the COL index.
Israelis, 'who during the
Hurwitz era appeared to be
groaning under the yoke of
the economic sacrifices de-
manded of them, somehow
found the money to buy tens
of thousands of color televi-
sions and thousands of new
cars, when the purchase tax
was reduced. And half a mil-
lion Israelis traveled abroad
during the past year.
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