Correspondents' Correspondence

...rather, it assumes that even if all goes well and peace talks proceed in Geneva as hoped, Israel will still have to keep a large percentage of its manpower on reserve duty...

...Consequently these two Leftist parties, though weak in the national Diet, are almost as strong as the LDP in the Tokyo-Osaka "axis," one of the richest, most productive industrial belts in the world...

...This does not presuppose another period of fighting...

...That in itself is not a new phenomenon...

...Paying for the War Tel Aviv—It sounds incredible, but one of the many bitter truths Israelis have to accept as a result of the Yom Kippur War is that the government's 1974-75 budget will total $8.6 billion—or about 90 per cent of the gross national product forecast for the next fiscal year...

...Yet whether or not the new precedent is pursued, labor's offensive is sure to send tremors through LDP councils and corporate board rooms, and is likely to produce pay hikes of 25 per cent...

...Though this was all done at the expense of the middle-income groups who spend a smaller proportion of their earnings on basic food items, they accepted the gimmick and found compensations elsewhere —for example, in the income tax authorities' fairly liberal attitude toward expense accounts...

...if it does, the government will have a much harder time getting its legislation passed...

...I've been predicting a restructuring of the LDP for the past 10 years, and it hasn't happened," a Japanese political analyst told me...

...At the moment, neither group is strong enough to take on the LDP alone...

...What has been happening is that the JSP and JCP (uneasy allies in many local political campaigns), in a rather quiet way and without much notice from the international press, have been scoring large victories in most of the country's major industrial metropolises...

...But Tanaka's difficulties are far from over...

...The unrest may be further exacerbated by the fact that last year, for the first time, workers defied a law banning strikes against the government and stopped the Japan National Railways system for two days...

...But current polls indicate that only 45 per cent of the voters favor the ruling party, suggesting that a national coalition of the two might eventually be able to challenge Tanaka...

...For decades, the government has kept the price of bread, milk, sugar, rice, vegetable oil, eggs, and meat unrealistically low in a piece of generally recognized and accepted deception: Since those staples weigh heavily in the "typical market basket" from which the cost-of-living index is calculated, subsidizing them kept the index down...

...This may not be up to the country's previous extraordinary record—last year, for example, the GNP climbed approximately 10 per cent—but neither does it signal the end of prosperity...

...This time, however, the offensive promises to be more severe than usual...

...In fact, economists stress that the nation will not be able to afford defense budgets of the size anticipated in coming years unless there is an accelerated economic growth and a spectacular rise in the GNP...

...But with world commodity prices skyrocketing over the past dozen or so months, maintaining the price fiction became prohibitively expensive and the government felt compelled last January to make drastic cuts...

...Consequently, all food items in any way involving the formerly subsidized staples, and of course the staples themselves, have suddenly jumped 50-100 per cent...

...As in every other category, part of this increase will be offset by inflation...

...It occurs annually, as surely as the blossoming of the cherry trees and the appearance of young couples in the Imperial Park...

...Meanwhile, the first real test of the nation's shifting political mood will be an election this June for the House of Councillors, the weaker of the two Diet bodies...

...The second largest item is development, the one bright spot in an otherwise gloomy picture: Despite enormous defense outlays, expenditures for housing, road construction, irrigation, industrial expansion and the like are scheduled to rise from $1.3 to $1.9 billion...

...An even harder pinch for many Israelis —especially those in the lower income brackets—has been the recent large-scale cutback in food subsidies...

...Nonetheless, Israel is determined to prevent war costs from undercutting present and future development projects...

...At the same time, as one of the biggest employers in the country, the government saved itself much larger sums by thus reducing the amount it had to pay in cost-of-living allowances...

...The largest single item, of course, is defense: some $3.8 billion, almost as much as was spent last year, including the costs of the October War and its aftermath...

...Yet that is still a staggering percentage, and it will be acutely felt by every Israeli...

...One measure of this is the projected tax increase designed to yield 25 per cent more in revenues next year...

...Second, about half of the development budget will come from the sale of Israel Bonds abroad and large additional sums will be covered by other foreign loans...

...First of all, more than half of the defense budget represents a purely bookkeeping transaction: entering on both sides of the ledger U.S...

...In sum, when all external resources are taken into account, the government's budget for the coming fiscal period amounts to only about 50 per cent of the nation's total GNP...

...The Japanese far-Left castigates them for joining the "establishment...

...In the interests of preserving the traditional rapport between big business and the Liberal Democratic party (LDP), they will probably comply, at least temporarily...

...Indeed, his biggest headache will come in the very near future, when the spring labor offensive begins...

...Furthermore, huge sums will have to be allocated to arms production and procurement-in addition to materiel received as grants from the U.S.—merely to keep pace with the stream of weapons flowing to the Arabs both from the Soviet Union and from European countries that are now eager to trade arms for oil...

...At a luncheon for businessmen, diplomats and correspondents recently, he reported that Japan's more than $400 billion GNP was expected to grow by 5 per cent in the coming year...

...Fortunately, the 90 per cent figure cited at the outset is somewhat misleading...

...And since the index is the basis for computing the cost-of-living allowance that is added to the salary of every Israeli wage earner, by spending first a few and later a few score million on subsidies, the government held down inflation...

...And over the long run, one can expect a continual growth of the Left, accompanied by demonstrations, heated Diet debates and bitterly fought elections.—Donald Kirk...

...Still, the extent to which the combination of strikes, inflation and consumer discontent will bring about a basic change in the dominant, bland, bureaucratic LDP remains open to debate...

...The JSP and JCP are not exactly radical...

...military aid received under last year's $2.5-billion special grant as well as regular loans and allotments...

...For the consumer, the outcome of all this is predictable: Prices will go up on everything from rent to automobiles to detergents to toilet paper...

...The first public official to suggest that the crisis was not exactly critical was Takeo Miki, the deputy prime minister...

...True, the big, flashy signs are off, a quarter of the elevators in office buildings are not running and the heat has been turned down everywhere, but postwar Japan's economic bubble is hardly about to burst...

...Far from declining, Japanese production continues to rise, and this island-nation's leaders are now acknowledging that they probably overreacted to the Arab oil embargo...

...Businessmen recognize their respectability by giving them campaign contributions (frequently a company will support JSP, JCP, or JSP-JCP coalition candidates on a local level and back the LDP nationally...

...Third, various health, education, and social welfare programs will be financed by roughly $1 billion that the government expects in donations, primarily from Jewish welfare funds, although this obviously cannot be counted as income before it is received...

...Since Japan's real economic problem is not energy but inflation, this raises a critical question: Can the government possibly devote a higher proportion of its budget to social welfare and at the same time keep the lid on jittery prices, which last year leaped up 20 per cent...

...Moreover, as Miki pointed out, at least part of the fall in the growth rate will result from the government's increasing attention to ecological and other social concerns...

...The feeling is that the LDP will probably lose its majority there...

...In pressing their demands for wage increases ranging up to 40 per cent, hundreds of thousands of workers are expected to stage a series of brief sitdowns, and to take part in demonstrations whipped up by the Socialist (JSP) and Communist (JCP) parties...

...The answer is no, despite the efforts of Prime Minister Kakuei Tanaka and Finance Minister Takeo Fukuda, a long-time critic of heavy spending...

...Thus Japanese housewives have taken to hoarding, with some mothers even buying several years' supply of notebook paper for their children...

...This may not be directly related to the latest round of fighting, yet the average Israeli looks upon the rise as part of the bill to be paid for the Yom Kippur War.—Eliahu Salpeter Japanese Spring Tokyo—Japan's energy crisis isn't all it has been cracked up to be...

...Not long ago, the Prime Minister-who is, at present, about as unpopular as a national leader can possibly be—called in a group of corporation heads and asked them to "voluntarily" exercise restraint...