ISRAEL and the world capitalist system.
From the capitalist point of view and this is indeed the point of view of the
Zionist regime - the economic policy applied by the Begin government was
The sad ending of an economic adventure Michel WARSCHAWSKI Three days after his appointment to the new government of Yitshak Shamir had been confirmed by the Knesset, Finance Minister Yoram Aridor announced his resignation.
While financial circles in Israel, including a not inconsiderable section of Aridor's own party, had been calling for his resignation for some time, he had hung on to his post, trying to show that it was possible, within the capitalist laws and satisfy both the bourgeoisie and
It was a leak, in all likelihood orchescircles of the country, about the 'dollarisation' project that finally forced the new head of government to rid himself of his finance minister. Ygal Cohen-Orgad, the strongest opponents Aridor's policies, is going to replace him, thus marking the definitive end of economic adventure that took the Israeli economy to the verge of bankruptey.
THE ECONOMIC POPULISM
Contrary to a widely-held belief, Herut - the party of Menachem Begin, Yitshak Shamir, David Levy and Yoram Aridor - is not and never has been the party of the Israeli big bourgeoisie. The great majority of this class has always been within the Labour Party. The social base of the Herut is petty bourgeois and popular, and its leadership been very sensitive to the pressure from the popular neighbourhoods of the big cities and the immigrants' towns.
The tensions that have surfaced several times within the Likud between the Herut and the Liberal Party - which is closer to financial circies, and particularly to small industry, commerce and land owners - reflect the class differences between the support for these two for-
Some months before the last elections to the Knesset, at the beginning of 1981, Begin replaced finances, Yigael Horovits, who had tried to implement austerity policies around the slogan "The coffers are empty'.
Horovits was replaced with Aridor, former leader of the Herut group in the Histadrut. The new minister immediately undertook a policy of reducing taxes on consumer goods and International Viewpoint 28 November 1983 of raising subsidies on basic necessities. At the same time Aridor blocked all projects likely to lead to an increase in unemployment. This economic policy, while not arousing great enthusiasm in financial circles, was to guarantee the Likud's victory in parliamentary elections.
Advised by a charlatan, Dr. Yakir Plessner, who stated that the number one priority must be the fight against inflation - 120 per cent at the time - and that this was above all a psychological phenomenon, Aridor decided to follow his economic poliey after the elections
Refusal to devalue the shekel and the detaxation of imported goods caused a the balance of payMoreover, it led to a flight of capital from industry to commerce, and to the stock exchange, where one could make spectacular gains of more than 200 per cent per year.
For the workers the Aridor-Plessner tandem had meant more than two years of full employment and a real rise in buying power thanks to the sliding scale, the subsidies and the reductions in taxes on consumer goods, and the stock speculation which was far from being limited to the most privileged sections.
To be sure, the running down of the health, education and social services had been an attack on the living standards of the toiling masses. But it is only in one or two years time that one will be able to see exactly the extent of the disaster in these areas. And, for the great majority, this deterioration in public services will pass unnoticed, overshadowed by their home gadgets, videos, cars, and foreign the number of which are -proportional to the number of inhabitants - the highest in the world.
illustrates the scope of the consumer fever that has hit Israel. One of the biggest Japanese producers of videos sent one of his directors to Israel to find out what his customers did with the enormous number of machines they ordered, and to see if they did not export them elsewhere. It was only after he had seen with his own eyes, that he did in fact accept that this huge quantity was sold within Israel itself.
massive subsidy for consumer goods and the relative guarantee to buying power and jobs are, in themselves, praiseworthy objectives. totally utopian in the framework of the economic reality of the state of Israel
Local industry was unable to compete with foreign products, not only on the market but also on the As a consequence, dozens of factories were closed down and the capital invested in imports.
which for two decades had been the pride of the Israeli economy, and industrial diamond production literally collapsed in the course of the last two years as a result of the reduction in subsidies and the overvaluation of the shekel.
The balance of payments deficit tops 5 billion dollars, and at the end of the year the foreign debt will reach 33 billion
As for inflation, Dr Plessner's theories have turned out to be completely erroneous, as could have been predicted. The present rate will top 200 per cent at the end of the year.
### COHEN-ORGAD'S
DECLARATION OF WAR
Aridor has been succeeded as minister of finance by a fervent supporter of 'rationalisation' in spending appointment, Cohen-Orgad has stated that his objective would be to reduce the budget and balance of payments deficits. How does he intend to proceed? Certainly not by substantially reducing that for the [West Bank] settlements, which comprise more than 50 per cent of the national
Ygal Cohen-Orgad is not only a faithful mouthpiece of the Israeli bourgeoisie, he is also one of the deputies that voted against the Camp David Accords, considering them too defeatist. clared supporter of the far-right settlers movement Gush Emunim. nance minister is on the point of finishish the construction of his new residence at Ariel, a new settlement right on the
Since it is not in the area of guns and settlements, it will be in that of butter and jobs that Cohen-Orgad will announce draconian measures. reduction of subsidies for basic necessities, a 5 to 10 per cent reduction in the social budgets, which will bring about a new deterioration in social services and huge
But the essential axis of the attack by the new finance minister on the workers will be the sliding scale, which he considers as the main cause of inflation, and of the uncompetitiveness of Israeli pro•ducts on the international market.
For the first time in 15 years, it seems that the Zionist government has no other choice than to declare austerity for the
The international banks and the International Monetary Fund have made the Zionist rulers understand that any new loans, which the Israeli economy
the level of sector and region, as the them not only sang but explained the needs, will depend on this. Today the indices - particularly that of the construction industry, which is traditionally at the forefront of any turn in the economic situation in the country - show that we are on the verge of a crisis. In fact this crisis had been deferred for six years, thanks to an increase in American support and at the price of a growing deficit in the national budget and the balance of payments. The time has come to refill the coffers, or at least to plug the holes through which the government has allowed astronomical sums that it did not really have to drain away. (The war in Lebanon has, up till now, cost at least 2.2 billion dollars.)
munist League distributed in the workers
Or will it rather be through Action Committees as happened at the beginning of the 1960s?
Will we once again see the popular neighbourhoods flare up, this time linking social and economic demands to the affirmation of the Eastern identity of speculate on these questions.
One thing is certain. The workers and people's demands will be, from the outset, political. The first demonstrations organised by the organisations from the popular neighbourhoods have all taken up the slogan, *Money for the popular ments'. This illustrates that all economic choices, in the last analysis, come back question that is posed sharply whether the movements that mobilised the masses against the war and the occupation - whose composition was mainly petty bourgeois — will be capable of orienting towards the popular layers in order to unite the anti-war movement with the social layers capable of offering a progressive solution to the crisis of Israeli society. In any case, it is with this perspective that the revolutionary Marxist activists, despite their limited forces, will act within the working class and in the structures of the anti-war movement where they have been able to win a not
THE WORKERS
AND PEOPLE'S REACTION