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. 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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 - 321 S. DOBSON Westland, Mich. 342-3252 Meek M. Walker. 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