Face-Off in Israel

...The first is that although the polls now give Labor as much as a 10-point lead over Likud, the same has been true in the past and has not been reproduced in the actual voting...

...An estimated 20 per cent of Israel's industries are directly or indirectly military-related...

...When Shimon Peres was the Prime Minister, during the first two years of the scheduled four-year ruling arrangement, he became convinced that Jordan's King Hussein would come to the negotiating table with Israel in the name of the Palestinians only under the aegis of an introductory meeting that included all the permanent members of the UN Security Council...

...After January 1989 there will be a different man in the White House and in the State Department...

...Things reached the point where Peres traveled to Spain to canvas support for the conference, while Shamir sent a note ahead informing Madrid that this was not the agreed policy of the Israeli government...

...Coffeehouse conversations and public opinion polls appear to confirm that the average Israeli is getting more and more fed up with these antics: Peres' ratings as Foreign Minister are way below his high popularity as Prime Minister, and Shamir has not reached Peres' ratings in that post...

...The unexpected difficulties of some companies indicate that economics of scale can present severe competition problems: Successes registered in foreign markets as a consequence of innovative technologies have slipped away where American or Japanese companies have then entered the scene before Israel could recoup past investments and spend additional millions on research and development to stay in the race...

...The danger is heightened, as political commentators here are beginning to point out, by the very fact that relations between the two countries have been extremely close in recent years...

...The feeling, therefore, seems to be that elections would probably result in another stalemate obliging Labor and Likud to renew their unnatural marriage...

...Moreover, the overall economic boom has not slackened, as shown by the accelerated business activity and growth in the import of raw materials and capital goods...

...But many economists see trouble ahead...

...Beyond Shamir's obvious interest in minimizing such a threat, it is quite possible that he does not appreciate the nuances of America's attitude because he is being misled by the politeness and courtesy of American officials and Jewish leaders...

...Shopping sprees are once more pushing consumption way above what Israel can afford...

...American foreign policy may become more Africa and Third World oriented —to Israel's detriment politically and in terms of financial assistance...

...Notwithstanding a recent 10 per cent devaluation of the shekel, the cost-of-living index went up only 1 per cent in February and 1.3 per cent in March...

...Military-related industries have also been hit by severe cutbacks in the defense budget...

...Israelis recognize, though, that circumstances could change in the not too distant future...

...And so it has gone from there, until Shamir was sending an emissary to Washington to head off his predecessor's attempt to enlist the backing of the Reagan Administration...

...Both Labor and Likud insist that there has been no change...

...PEACE PARLEY MANEUVERS Face-Off in Israel By Eliahu Salpeter Tel ?viv One of the basic differences between Israel today and Israel 10-15 years ago is that in the past troubles came mostly from the outside, and governments were measured by their ability to evade or confront them...

...Curiously, the government in Jerusalem is not taking any steps to prepare the country for the potential consequences of a situation markedly different from the one that exists...

...Peres nevertheless continued to pursue it vigorously from the Foreign Ministry...

...Once Shamir became the Prime Minister, however, he hastened to denounce the conference as "a mad idea born out of a nightmare...

...Second, talk about replacing the old guard with the younger generation of politicians has been greatly dampened by the impression that there are very few, if any, among them who promise to be better than their elders...

...By contrast, the figures for 1987 already clearly show a considerable excess of expenditures over income, and this may produce accelerated inflation toward the end of the year...

...Even the least politically sophisticated Israelis are keenly aware of their crucial importance...

...U.S.-Israel relations are an example...

...Statistics further confirm that the rate of inflation is directly related to the rate of government expenditures...

...Indeed, the public's weariness with the present leadership's capacity for falling from oneself-inflicted mess into another is almost palpable...

...Peres, who was largely responsible for turning around Israel's economy, believes strongly that some resolution of the Palestinian problem is now vital...

...Perhaps a third saving grace for the coalition has been the fact that, on the surface, the economic picture this spring looks good...

...Eliahu SALPHTFR, a regular ?L contribulor, is a correspondent far Ha'aretz...

...In part this is due to Ronald Reagan and George ?. Shultz, who unquestionably constitute the most pro-Israel team in the White House and State Department since the Jewish State's rebirth 39 years ago...

...Under the circumstances one might expect public pressure for new elections, yet that is not the case for at least two reasons...

...But Israeli officials and academicians with long-standing contacts in Washington and New York have been returning from their visits to the United States expressing warnings not to underestimate the danger of deterioration...

...This is attributable to an entirely new generation of young adults and students born and educated under the Israel occupation, which they hate more than their parents hated the preceding Jordanian rule...

...Several high-tech industries—upon which Israel is pinning high hopes for economic expansion—are a source of worry too...

...One of the major worries brought to the fore by the Iran arms deal and the Pollard affair concerns the status of America's strong friendship with Israel...

...In short, a more active civil disobedience has been developing...

...Objective international developments also supported the trend...

...The situation has been made still more difficult by the Washington-compelled decision not to renew arms contracts with South Africa, and by pressure on several South American countries to buy U.S...

...Likud did not like the idea, but then Vice Premier and Foreign Minister Yitzchak Shamir, eager to avoid providing any excuse that might torpedo the planned rotation of offices, kept silent even as Peres presented it to the UN General Assembly...

...It matters little that they are enjoying privileges unknown before 1967, including a relatively free Arab press of all political colorations, and five Arab universities—hotbeds of Palestinian nationalism—where none existed under the Jordanians...

...No doubt they realize that should a serious shift become apparent, the public would hold them responsible and bring about their downfall...

...The fall in the demand for and the price of oil, not to mention the Iran-Iraq war, greatly reduced the economic and political power of the Arabs...

...But no one here is convinced at the moment that an election will resolve anything...

...Meanwhile, theconsiderableincrease in America's global stature during the Reagan era brought a stronger U.S...

...This created the absurd situation of the coalition having two completely contradictory official positions on one of the most fundamental questions facing the country...

...Yet how far and how fast the ground rules can change was demonstrated by the dramatic switch in American policy toward South Africa, despite Reagan's presence...

...weapons instead of those offered by Israel...

...Tourism is doing well again, and one of the pleasant surprises has been the continued slowdown in inflation...

...The latest speculation about an impending split in the uneasy Likud-Labor coalition reflects a growing mutual hostility over the issue of an international Middle East peace conference...

...But the current mood might very well change as people come to believe that total novices could not make worse mistakes than Shamir, Peres, Defense Minister Yitzchak Rabin and other seasoned old-timers have been making...

...now, most of the troubles seem homemade...

...presence to the Middle East and broadened the base of cooperation with Israel...

...The conflict between Yitzchak Shamir and Shimon Peres on how to deal with the festering issue of the West Bank and Gaza may shortly bring down Israel's coalition government...

...If the high demand has thus far not led to sharp price increases, that is because the rise in the standard of living is occurring at the expense of a widening trade deficit: Israel is spending more of its dollar reserves and consuming at home what should have been exported...

...Last year there was a decrease in overt terrorist attacks in the occupied territories, but there was an increase in demonstrations, strikes, stone-throwings, the blocking of highways with burning tires, etc...

...In 1986, thanks to the stringent restrictive measures taken in 1985, the treasury collected hundreds of millions more shekels than it spent...

...Events on the West Bank and in Gaza would seem to support his view...