INFLATION page 34

Ohad Bar-Efrat said that the cen-
tral bank sees great importance
in the Treasury's proposal be-
cause it demonstrates that the
government is taking the prob-
lem of inflation seriously.
He said the inflation goal is fea-
sible and a range was picked in-
stead of a single point because of
uncertainties about the future.
Economists, however, were not
impressed.
"There's nothing here that will
bring down inflation," said
Jonathan Katz, head of the Eco-
nomic Modeling and Forecasting
Company.
According to a Bank of Israel
official, the bottom of the gov-
ernment's inflation goal is plau-
sible only if there is a major
turnaround in the housing mar-
ket.

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Another official admitted that
if housing prices continue climb-
ing at the current rate of 30 per-
cent annually, the higher figure
will be exceeded.
The proposal to allow unlimit-
ed imports of fruits and vegeta-
bles for a year should the price of
an item jump by more than 50
percent in a month is the most
controversial. It has already
raised the ire ofAgriculture Min-
ister Ya'acov Tsur and the grow-
ers' lobby.
The Treasury reiterated that
the inflation goal for next year
will not require an adjustment to
the "crawling peg" exchange rate
mechanism which allows for the
devaluation of the shekel at a rate
of 6 percent a year, with an al-
lowance to deviate 5 percent in
either direction.

A Free Export Zone
')
Will Boost The Economy

New York (JTA) — Get ready, Is-
rael. The capitalists are coming.
After a two-year struggle, a
group of American Jewish busi-
ness executives have succeeded
in obtaining Knesset approval for
a Free Export Processing Zone,
where foreign companies can op-
erate free of Israeli taxation and
bureaucracy.
Now, the group — the Israel
Export Development Co. Ltd. —
is working to sign up tenants.
Access to Israeli workers and
isolation from Israeli ministries,
the group promises, will create a
haven for research and develop-
ment, financial services and light
manufacturing that can compete
with similar zones from Ireland
to Hong Kong.
The group expects to start
building by March of next year,
after a few legal and technical
hurdles are overcome. David
Yerushalmi, IEDC's chairman
and chief executive officer, ex-
pects the first tenants to start
moving in at the end of the fol-
lowing year.
IEDC's board of directors reads
like a who's-who of American
Jewish business executives, real
estate developers and philan-
thropists.
Larry Silverstein, IEDC's pres-
ident, was just named chairman
of the board of directors of the
United Jewish Appeal-Federa-
tion of New York. His company
owns and operates over 10 mil-
lion square feet of office space.
Among IEDC's shareholders
are Laurence Tisch, chairman of
CBS, and Morton Mandel, bil-
lionaire Cleveland industrialist
and past president of the Coun-
cil of Jewish Federations.
Sy Syms, chairman of the New
York-based clothing retailer that
bears his name and a vice presi-
dent of the IEDC, said the project

had two goals: to create jobs for
Russian immigrants, and to
make money for the investors.
"We said, somewhat jokingly,
that this is not charity.
We're ugly Americans who
happen to be Jewish and like ex-
cessive profit. We can give to
UJA" if charity were the goal, he
said.
Looking back on the efforts to
approve the zone, which culmi-
nated this summer, Mr.
Yerushalmi said that "two years
is a long time to fight a govern-
ment bureaucracy.
"But two years to go from an
idea thought up by a think tank,
to a policy, to a draft bill, to ap-
proval by the finance minister
and prime minister, to Cabinet
approval and passage by the
Knesset — two years for this is
revolutionary," he said.
The think tank Mr. Yerushal-
mi referred to is the Institute for
Advanced Strategic and Political
Studies, a Jerusalem-based group
headed by Alvin Babushka, a se-
nior fellow at the Hoover Insti-
tution of Stanford University.
Wielding a scalpel of free-mar-
ket economics, the think tank has
explained how Israel's milk car-
tel results in prices for Israeli
cheese being lower in New York
than in Tel Aviv, and denounced
American loan guarantees as
propping up Israeli bureaucracy.
For Babushka, much of the ap-
peal of the Free Export Process-
ing Zone lay in its elimination of
Israeli bureaucracy, if only from
700 acres in the northern Negev.
If, as Mr. Yerushalmi insists,
the project succeeds, it could put
Israeli bureaucrats on the run.
As now enshrined in Israeli
law, companies doing business
within the export zone will be ex-
empt from customs, tariffs, for-
eign currency restrictions and a