Begin Bounces Back

...But apart from Aridor's fiscal policies, the major reason for the turnaround in Likud prospects has been Labor's lackluster performance...

...Gurion out of the Labor Party to form the short-lived Rafi Party...

...Labor insists it is simply pursuing a careful low-key strategy aimed at capturing 51 -3 of the 120 seats in the Knesset...

...But in the aftermath of the raid on Iraq, it does not seem likely that the most effective canvassing could head off Begin...

...A farmer turned entrepreneur, he specialized in buying near-bankrupt companies and making them profitable by mercilessly paring their expenses...

...But Begin's greatest boon, if not the country's, resulted from his naming Yoram Aridor to replace Hurwitz as Minister of Finance...

...This turnabout is more remarkable than the surprising 1977 ouster of Labor for the first time since Israel's rebirth...

...The government has been channelling funds to projects likely to improve Likud's election chances, too...

...Even the opposition Labor Party, considered certain to return to power when thecurrent Parliamentary election campaign began, conceded that Prime Minister Menachem Begin's Likud coalition seemed on its way to scoring an upset victory in the June 30 balloting...

...Out went the talk about budget cuts, reduced consumption, higher taxes and other unpopular measures...

...Begin reached the peak of his popularity within a relatively short time of taking office-thanks to Egyptian President Anwar Sadat's unexpected visit to Jerusalem, the Camp David agreements and the conclusion of a peace treaty with Egypt...

...Hurwitz' harping on the need to economize, moreover, served as a constant reminder of the failure of Likud's economic policies during the first three and a half years of Begin's term...

...To the warnings of economists, Aridor cites supply-side theories and keeps a firm eye on the June 30 election date...

...In the '60s, Hurwitz had joined his cousin Dayan and Shimon Peres in following David BenEliahu Salpeter, a regular NL contributor, is a correspondent for Ha'aretz, one of Israel's leading newspapers...

...These departures, however, were to prove a blessing in disguise for Begin's election prospects...

...In an attempt to slow inflation by cheapening imported goods, Aridor is subsidizing them by means of an artificially low foreign exchange rate...

...By the end of May, Labor was behaving more like a lethargic "in" than an eager "out" bent on reclaiming power...

...A premiership unfettered by coalition compromises, something even Ben-Gurion had not been able to achieve, seemed within the grasp of Shimon Peres...

...Labor strategists say they can reach their goal if the party retains the loyalty of all those who voted for it in the Hista-drut elections, woos about 50 per cent of the Histadrut members who abstained in the spring, and obtains the backing of roughly 25 per cent of the non-Histadrut electorate...

...Although the charge is exaggerated, there is at least some truth to it...

...Neither is a likely eventuality...

...THE MAKINGS OF AN UPSET Begin Bounces Back BY ELIAHU SALPETER MENACHEM BEGIN Tel Aviv Several weeks before the June 8 bombing of an Iraqi nuclear reactor by Israeli jets set of f a chorus of approval here that virtually drowned out the criticism from abroad, it already was clear that the impossible was happening on the domestic political front...

...With elections only a few months away, the Cabinet refused to approve cuts in the defense budget, which were also a de facto condition for reductions in other ministries' budgets, because it feared widespread unemployment...

...He had cut government subsidies, resisted wage-hike demands and trimmed the public budget...

...He is confident that his critics have been overestimating the difficulty of repairing the economy once Likud is assured of another four years of power...

...This has had the double effect of devouring hard-earned export income and making the exports themselves unprofitable...

...Economists have been wringing their hands over the fact that in just a few months Aridor has exhausted all the funds budgeted for the entire fiscal year...

...Dayan was not present to warn from inside that Begin's settlement policy and his stalling the autonomy talks were undermining the Israeli-Egyptian peace...

...Ironically, shortly before his resignation Hurwitz' efforts were beginning to produce both a renewed narrowing of the trade deficit and a non-accelerating inflation rate...

...Its hopeful logic supposedly prompted one of his period-icswingsof mood-changing him from a broodingly passive candidate apparently resigned to defeat to an optimistic, hyperactive, super aggressive campaigner...

...It would be unfair, though, to lay at Aridor's feet all the credit (or all the blame) for Likud's resurgence...

...There were no heated quarrels to be reported in the press the morning after Cabinet meetings...

...Labor's last hopes would appear to be that Aridor's opening of the Treasury floodgates will suddenly drown Likud, or t hat a government misstep in the Syrian missile crisis will arouse theire of Israelis...

...And mild, party-line faithful Moshe Nissim at the Ministry of Justice steered clear of any prickly legislative proposals...

...Appliance stores were mobbed, supermarkets were crowded, and restaurants (in Israel a reliable indicator of people' s subjective sense of their purchasing power) were full again...

...The government's capitulation to the West Bank settlement drive of the Gush Emunim extremists drew increasing criticism and Supreme Court rebukes...

...Instead, Aridor initiated massive subsidies, not only of basic items such as food, but of luxuries as well: imported cars, color TV sets, washing machines, etc...

...Farmers have nevertheless been demanding more supports, claiming that inflation has been pushing up production costs...

...The inflation rate doubled and then doubled again, reaching three digits...

...Then the tide began to turn...

...Likud has convinced its formerly dejected followers (and a significant part of the general public) that the losses it suffered last spring in the Histradrut elections actually were a mark of success: If the Labor Party, polling 65 per cent, gained only a few percentage points in Israel's huge confederation of trade unions, co-ops and collectives despite inflation and unemployment, this surely was a sign that the bulk of the electorate has not been rushing to Labor...

...In addition, a number of corruption scandals in Labor's ranks had contributed to a feeling that it was "time for a change...

...Unlike Weizman, moderate Deputy Defense Mordechai Zipori was no match for the hawkish Chief of Staff, General Raphael Eytan...

...And this, they insist, can only be achieved by house-to-house canvassing, an activity Labor's large active membership performs much better than Likud supporters, most of whom come from the unorganized and floating vote...

...Israelis are paying a mere 35 per cent of the real price of milk, 20 per cent of poultry and 15 per cent of bread...

...Former Prime Minister Yitzchak Rabin, although named number three on the Labor ticket, has remained vindictively bitter over being repeatedly beaten by Peres, and has stayed away from the campaign for the most part...

...Surrounded mostly by yes-men willing to accept whatever he chose to report to them, he could keep controversial issues off the agenda...

...Hurwitz quit in protest and was replaced by bright, young Yoram Aridor, whose loyalty to the Likud's interests is unquestioned...

...Labor, meanwhile, has complained that the government-controlled television has been carefully avoiding certain topics that could embarrass Begin...

...More importantly, Peres has displayed little of the charisma needed to counter the Begin-Aridor attack...

...The political costs were high, though...

...After that Likud's performance was a downhill affair...

...That would enable them to lead a stable coalition with one or two of the smaller parties, instead of requiring the participation of the National Religious Party, now much more hawkish and "fundamentalist" than in the past...

...According to insiders, the man most persuaded by this argument early on was Begin himself...

...Other factors have helped to reverse Begin's fortunes...

...Consequently, Israelis found themselves with less money to buy goods that cost more, and they resented this bitterly...

...Indeed, polls early last January indicated that if elections were held then, Labor would not only return to power but accomplish the unprecedented feat of winning an absolute majority in the Knesset...

...At the Finance Ministry his dour expression and unfailing "I don't have any money" response to any budget request became the symbol of his desperate, unsophisticated fight against snowballing inflation...

...Four years ago, the electorate was registering a delayed reaction to its shock at the surprises of the Yom Kip-pur War...

...The public loved it...

...Squabbling among Cabinet members also reached embarrassing proportions, until one by one the most able men quit: Foreign Minister Moshe Dayan, Defense Minister Ezer Weizman, Justice Minister Shmuel Tamir, Finance Minister Yigal Hurwitz...