20
Friday, December 28, 1984 THE DETROIT JEWISH NEWS
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NEWS
Shultz warns Peres
Continued from Page 1
tober 1. This is $1.5 billion
more than the $2.6 billion Is-
rael will receive during fiscal
1985, all of it grants.
The media reports said
Shultz's letter advised Peres
that his government would
have to demonstrate that the
increased aid will be put to
good use and will not simply
fuel inflation. American offi-
cials have been demanding a
detailed economic plan from
Israel to justify its new re-
quests.
So far, the government has
been moving slowly with eco-
nomic reforms for fear of trig-
gering high unemployment.
But the three month wage-
price freeze package instituted
in November, appears to be
producing results.
Last Sunday, Israel's Cen-
tral Bureau of Statistics pub-
lished, for the first time, an
interim cost-of-living index
covering the first two weeks in
December. Normally, the c.o.l.
index is published monthly
and covers the entire economy.
The interim report was a
breakdown of the various
components of living costs
from which the monthly index
is compiled. It showed, accord-
ing to economists, that the
freeze is working satisfactor-
ily. They noted that the c.o.l.
increased by an average of 2.5
percent in the two-week period
and that most of the rise was a
carry-over from the pre-freeze
period last month.
Food prices rose by only 0.6
percent; clothing, footwear
"and household furniture by
about two percent; education,
recreation and entertainment
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costs rose by the same amount, ployment that it thinks re-
far less than in the pre-freeze covery temporarily requires.
period. •
Unemployment offends both
While doctors raised their socialist and Zionist doctrine
fees by seven percent despite and could drive many Israelis
the freeze, the cost of dental to. emigrate.
care dropped by about two per-
"Israel needs some money
cent in the two-week period. If and deserves support. But first
no special price increases are it needs to commit itself, con-
allowed, economists believe vincingly, to austerity meas-
that the c.o.l. index for De- ures that would put America's
cember will increase by less emergency aid to constructive
than ten percent, the first time use."
this year that the inflation
Congress, to consider the
rate will be single digit.
request for aid, should be
Haaretz reported that while shown a working timetable for
Shultz acknowledged to Peres matching aid to the pace of
that the unity government has progress, the editorial con-
indeed slashed its budget,
more remained to be pruned.
He urged "structural changes"
Shultz acknowledged
in the Israeli economy,
Haaretz said, meaning appar- that the unity
ently that the state must stop government has
funding uneconomical
indeed slashed its
businesses and projects.
budget . . . but urged
According to Haaretz,
Shultz counseled a steep drop
structural changes'
in living standards in Israel
in
the Israeli
and greater autonomy for the
Bank of Israel, the country's economy.
central bank, so that it could
restrain the printing of money
to cover budget deficits. The cluded. "If Israel's leaders
authority to print money pre- need American pressure at
sently rests with the Treasury. their backs" in order to im-
Israel Radio predicted that plement austerity measures,
official figures for 1984 would "let Americans provide it by
show an eight percent decline holding back, as the State De-
in living standards and a sub- partment has proposed, until
stantial narrowing of the Israel shows how much• it is
willing to help itself," the
balance-of-payments gap.
Haaretz quoted an unnamed Times said.
Last week, Deputy Secre-
economist as saying that to fol-
low Shultz's formula would re- tary of State Kenneth Dam
sult in tens of thousands of Is- indicated that Israel would not
raelis unemployed. The Fi- get all of the increased aid it is
nance Ministry has expressed asking for because, if its eco-
anger and astonishment that nomic austerity program
Shultz's letter was leaked to works, Israel will not need it
and because of the difficulty in
the press.
So far the government has increasing foreign aid in a
been moving slowly with eco- time of cutbacks in U.S.
nomic reforms for fear of trig- domestic programs.
While stressing that he was
gering high unemployment.
The New York Times indi- speaking generally about
cated Monday that it does not foreign aid, and not specifi-
at this time support Israel's cally about Israel, Dam said
request for additional aid from the United States will be
the United States and operating under an "ex-
suggested that Israel must tremely difficult budget
demonstrate a greater com- environment" in which
mitment to helping itself out domestic programs are being
cut and so it will "not be easy"
of its current economic crisis.
Israel, the Times noted in an to increase foreign aid to any
editorial, is seeking 12 times country.
The U.S.-Israeli talks last
the amount of funds that have
been slashed from its national week were d continuation of
budget. "It's no favor to Israel the talks held at the State De-
for the United States to partment last month. One ses-
endorse such a ratio of self sion was on the economic situ-
help to welfare," the Times de- ation, and was conducted as
the first formal meeting of the
clared.
The Times said that while Joint U.S.-Israel Economic
the people in Israel appear Group which was established
ready for austerity, their lead- during the White House talks
ers have been slow to act .. .
between President Reagan
The government is particu-
and Israeli Premier Shimon
larly afraid of the high unem-
Peres last October.