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April 05, 1985 - Image 100

Resource type:
Text
Publication:
The Detroit Jewish News, 1985-04-05

Disclaimer: Computer generated plain text may have errors. Read more about this.

100

Friday, April 5, 1985

THE DETROIT JEWISH NEWS

CAPITOL
REPORT
1.•• ■■

WOLF BLITZER

U.S. Officials Are Still Waiting On Israeli Economic Moves

Washington — The Reagan
Administration is waiting to see
whether the Israeli Cabinet ap-
proves a proposed series of strict
economic recovery benchmarks
worked out last month during a
visit to Israel by two senior State
Department economic consul-
tants.
The benchmarks were dis-
cussed at the professional level
during the visit to Israel by U.S.
Profs. Herbert Stein and Stanley
Fischer. They held extensive dis-
cussions with Emmanuel Sharon,
the director-general of the Fi-
nance Ministry, and other senior
Israeli officials.
Stein and Fischer returned to
Washington in recent days clearly
more encouraged that the Israeli
economic recovery will eventually
succeed if the proposed bench-
marks are actually approved and
then quickly implemented by the
Israel Cabinet.
According to informed sources
in Washington, Stein and Fischer,
in their report to Secretary of
State George Shultz and other
senior Reagan Administration of-
ficials, were prepared to support a
supplementary economic aid
package for Israel if the approx-
imately 10 steps included in the
benchmark arrangement worked
out with Sharon in Jerusalem are
enacted.
U.S. officials have once again
noted that the original bench-
mark concept was an Israeli pro-
posal aimed at winning greater
U.S. economic assistance for Is-
rael.

The Administration has been
waiting for additional Israeli eco-
nomic recovery measures before
submitting a supplementary eco-
nomic aid proposal for Israel to
Congress.
Israel is seeking $1.5 billion in
extra grants over the next two
years — beyond the $1.8 billion in
military and $1.2 billion in eco-
nomic grants already supported
by the Administration as part of
the regular 1986 fiscal year
budget.
The benchmarks worked out by
the two U.S. economists and Sha-
ron- are said to include such steps
as the enactment of pending legis-
lation in the Knesset to provide
complete independence to the
Bank of Israel and to impose
legally-mandated and very strict
spending restrictions on gov-
ernmental agencies and minis-
tries.
Beyond that, the benchmarks
would set all sorts of technical
targets on Israel's monetary and
fiscal policies, including the
money supply.
U.S. officials have made no
secret, in addition, of their desire
to see Israel allow the shekel to
float so that it would reach what
Washington regards as a more
"realistic" exchange rate, thereby.
making Israeli exports more com-
petitive on the European market.
The Americans are also un-
happy with Israel's elaborate
cost-of-living indexation system,
which they feel merely prolongs
very high rates of inflation.
Last week, the House Foreign.

Best Wishes for a Happy and Healthy Passover
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U.S. officials noted
that the original
benchmark concept
was an Israeli
proposal aimed at
winning greater U.S.
economic assistance
for Israel.

emerged from meetings last week
with two State Department offi-
cials, Deputy Secretary Kenneth
Dam and Under Secretary for
Political Affairs Michael Arma-
cost, encouraged by what he heard
of the Stein/Fischer report to
Shultz.
But clearly, informed sources
here said, the Administration is
going to continue to delay intro-
ducing a supplementary economic
aid proposal for Israel until the
targeted benchmarks are ac-
cepted by the Israeli Cabinet and
then met.
There was no indication in

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domestic budget concerns.
"The Reagan Administration
has managed so far to hold off the
request for nonmilitary aid," the
Journal said in its editorial. "But
among Israeli economic reformers
there is fear that Congressmen
wanting to look like friends of Is-
rael might push the aid package
through. This will only make it
more dependent on half-measures
and threaten Israel's long-term
chances for real prosperity. Ulti-
mately, it would endanger Israel's
security. It's never going to be
easy to break the habit of foreign
aid and subsidies Israel acquired
during its first turbulent genera-
tions. That's all the more reason
for Congress not to flinch now."
The editorial backed up its
points by quoting Dr. Daniel
Doron of the Israel Center for So-
cial and Economic Progress, a
supply-sided economist and fre-
quent contributor to the news-
paper. He has charged that the
supposed budget reductions con-
tain hidden and potentially sub-
stantial overruns.
The government's price and
wage controls included in the
"package deal" with business and
labor indicate that there has been
no serious effort to get the gov-
ernment out of the market, he
said.
"Talk of privatization centers
on selling off only a small per-
centage in the 120 state-owned
companies," the editorial said
baking up Doron. "The central
bank is still required by law to
print money to cover debts."

Happy Passover

Best Wishes for a Happy Passover

To Our Friends & Customers

SUSSMAN'S PRINT SHOP

Washington exactly when the Is-
raeli Cabinet might take up the
proposal, although U.S. officials
are very anxious that this be done
as quickly as possible.
The Wall Street Journal,
meanwhile, has strongly urged
the Reagan Administration and
Congress to continue resisting —
for the time being — Israel's pend-
ing request for additional eco-
nomic assistance.
In an editorial, the newspaper
insisted that such extra foreign
aid would merely be wasted until
Israel enacts more far-reaching
recovery reforms aimed at creat-
ing a more free-market economy.
The editorial was significant
because the Journal is widely re-
garded as probably the most pro-
Israeli major newspaper in the
United States. Its recom-
mendations are considered ex-
tremely influential in the Reagan
Administration and on Capitol
Hill.
Israeli officials agreed that the
views expressed in the editorial
certainly reflect those of many
senior Reagan Administration
policy makers. The timing of the
editorial, they added, was there-
fore important in signalling a con-
tinued delay in any Administra-
tion decision to support extra aid
for. Israel.
During intra-Administration
meetings last week in Washing-
ton, David Stockman, the director
of the Office of Budget and Man-
agement in the White House, was
said to have strongly opposed
extra aid for Israel, citing other

Relations Committee approved
the total $3 billion in combined
economic and military grants for
Israel in the pending 1986 foreign
aid legislation, but took no action
on any supplementary package.
This was the same strategy later
followed by the Senate Foreign
Relations Committee.
Visiting Israeli Deputy Foreign
Minister Ronni Milo (Likud)

922 6567

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342-3252

Meek M. Walker.
District Sales Manager

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