Begin's Dilemma

...In the broad national debate which preceded the Camp David summit meeting, it became quite evident that the consensus on what Israel can and cannot accept extends beyond the Likud-National Religious party coalition well into the ranks of the opposition Labor Alignment...

...This does not mean that an overwhelming majority of Israelis favor the more extreme positions of the Likud bloc, especially on the controversial issue of Jewish settlements in Judea and Samaria: There is no question that if the choice were between peace with the Arabs or Jewish settlements in the occupied territories, a large majority would unhesitatingly choose peace...

...Government expenditures (and deficits), the argument ran, would be curtailed, domestic consumption would go down, and unemployment would reduce real wages—making people willing to work harder and Israeli exports more competitive on world markets...

...One explanation for this rushing after things material is that Israelis are trying to suppress their uncertainties about their situation, suspended as they are between the strong hope of peace and normalcy and the equally strong fear of continued endless conflict...

...This consensus holds that, first, a united Jerusalem must remain the capital of Israel...

...In the Friedmanian order of things, these policies should have produced a healthy and fast economic growth...

...And they see the Likud as their party because they are much more suspicious of and hostile toward the Arabs (among whom they lived as a second-class minority) than are the Jews of European origin...

...Terrorist bombs are routinely discovered and defused in buses and markets thanks to the unprecedented alertness of the public and security organizations...

...When a routine car repair costs more than a month's net salary, or a color TV set almost a year's wages, the Israeli simply loses any idea of the real value of what he is buying...

...For the sum of $250-5300 a month from the United States (or the equivalent in Deutsche marks), say, provides more than a well paid civil servant's monthly earnings...

...It did not take long to realize that a hecticness brought on by uncertain waiting was responsible for the feeling...

...Tax evasion and slipping into the "parallel" (and untaxed) economy has become both easier and more attractive...

...Besides the broad national consensus vis-a-vis the Arabs, Begin has benefited from Israel's rapidly changing so-cio-ethnic composition...

...The daily bustle is ferocious...

...In addition, they see the Likud as having taken the power from the Central and East European elite who constitute the Labor Establishment...

...There are more cars on the road, more people in the streets, and more customers in the shops than ever before...

...Keeping one's money in Swiss francs or German marks is more profitable than investing it productively in equity...

...Politics remains a greater concern here than anywhere else in the world...

...For weeks now the front pages and newspaper editorials have been dealing almost exclusively with one subject: the Camp David summit and the future of Israeli-Egyptian negotiations...

...The Peace Now people, on the other hand, tend to accept the notion of an independent Palestinian state and call for a return to the '67 borders, with only minor rectifications...

...In the light of Begin's wide-ranging support, many political observers here believe that if anything will topple him, it will be the mounting dissatisfaction with his government's inability to break out of the vicious bind of the present economic crisis: To curry favor with its electorate, Likud must continue the policy of subsidies and budget deficits that accelerate inflation...

...Beyond the classic effects of killing the incentive for saving, pushing people to buy things they do not really need but expect to become costlier next month, and creating perpetual unrest on the wage and salary front, inflation here has been harmful in several additional ways: ?Since an unusually large percentage of institutional and individual incomes comes from abroad—in the form of United Jewish Appeal funds, pension payments, or German restitution money—access to foreign currenEliahu Salpkter, who has loni...

...Both because he owed his election mostly to the lower-income classes and because of his own populist philosophy, the Prime Minister never truly considered complementing his new laissez-faire policies with the abolition of subsidies for food, transportation, health care, and social welfare...

...There is, however, another at least equally pressing reason for their preoccupation: inflation...

...When a bomb does go of f, the immediate panic and subsequent excitement seem rather moderate compared to previous reactions to such episodes...

...Unfortunately, being "good" to every segment of society is possible only by printing more money, thereby accelerating the wheel of inflation—which is exactly what has occurred...

...Jews of Oriental origin—those who were born, or whose parents were born, in Asia and North Africa—are already the majority...

...Second, there can be no wholesale return to the extremely vulnerable pre-1967 frontiers...

...Yet unlike two years ago, when such worries predominated, people today seem primarily preoccupied with planning for the next vacation, trading in the old car, buying new furniture, and the widening gap between income and expenditure...

...yet to so much as slow down inflation would require drastic measures that Prime Minister Begin's supporters would be the first to rebel against...

...Starting from the correct premise that the maze of government controls, artificial multiple exchange rates and bureaucratic discriminations were the bane of the nation's economy, the Menachem Begin Administration seized upon some tenets of University of Chicago economist Milton Friedman for what was supposed to be an almost complete liberalization: drastic devaluation of the Israeli pound, floating exchange rates and practically free imports to bring domestic prices to international levels...

...Finally, at least for the foreseeable future Israel itself must be allowed an effective security presence along the Jordan River—i.e., between any Palestinian entity and the Kingdom of Jordan—so as to be able to block the entry of hostile Arab troops into the West Bank area...

...Third, a Palestinian state with full sovereignty on the West Bank would be an intolerable danger to Israel's security...

...In the area of foreign policy, Begin has fared better...

...Some polls indicate that 70 per cent or more of the under-35 group are behind him...

...Inflation has plagued Israel for some years now, but only recently has it reached its present disastrous proportions—and this is directly attributable to the collapse of the Likud government's economic policy...

...cy has become a disproportionately important aspect of wealth...

...But that is not what happened...

...reported/rum Israel for the N I., recently returned there after a two-year stint as European correspondent for Ha'aretz...

...accelerating inflation, in turn, causes growing unrest among the broad masses of the population...

...It does mean, though, that most Israelis still believe the Arabs have not yet accepted the idea of a permanent Jewish State in their midst, and that while few doubt Egyptian President Anwar Sadat's sincerity, he is not only considered the odd man out in the Arab camp but his unconditional demands are viewed as unacceptable...

...Officially said to be running at a rate of roughly 38 per cent, and actually around 50-55 per cent, it is the most destructive factor in the life of the country...

...Politicians and commentators also speak about this on radio and television ad nauseam, diverging occasionally to the related matter of the Syrian occupation of Lebanon and its implications for Israel-Arab relations...

...He becomes the victim of 100 per cent markups in the clothing shops and unques-tioningly pays twice as much as he did last time to the plumber or the electrician...

...Some of these positions even have the agreement of the majority of the Peace Now movement—for example, a united Jerusalem and security that is not dependent on foreign troops or guarantees...

...He seems to have remarkably broad support among the population in general and the younger generation in particular...

...Worst of all, inflation has led to a complete distortion of economic perspective...