A Long Step Back

After more than a decade of sizzling national growth, Israel's planners decided late in 1965 that it was high time for mitun--which is Hebrew for slow down, and has become the government's slogan for a slew of measures designed to put the brakes on the economy. "The objective," explained Israeli Finance Minister Pinhas Sapir, "is simply to step back a pace in order to leap forward." So far, that step back has been bigger than anyone expected.

Like Britain's deflationary freeze, Israel's mitun was designed to right a lopsided economy living far beyond its means. Fueled by inflationary wage increases along with a demand for foreign TV sets, autos and other frills that Sapir calls sheer "gluttony," Israel's imports until recently have soared far beyond its exports. So large is its trade deficit that the Israeli pound is threatened with devaluation. In an effort to stave off that embarrassment, Sapir moved to cut consumption by raising import duties and holding down wages. He also tried to force more workers into crucial export industries by holding off on new pump-priming public-works projects.

Hello, Dole. Such mitun has proved too muscular, even for a country that has boasted an astounding average annual growth rate of 10% since 1951. Instead of easing to a planned-for 7 1/2%, growth plunged to a slim 1.2% last year. Corporate profits fell 15%, while unemployment, once virtually nonexistent, has risen to 10% of the labor force, or 99,000 workers. Population growth virtually halted as 12,000 Israelis, in the biggest exodus since the country was founded, emigrated in search of work. Even more startling were the queues at unemployment offices, when some 2,000 dispirited workers were handed monthly checks of up to $78 under the first dole in Israel's history.

Many Israelis complain that the slowdown has been too abrupt. Last month 7,000 jobless marched through Tel Aviv shouting "unemployment is no solution" and demanding "bread and work." Even Bank of Israel economists are charging that the country is "in a state of paralysis." Defending mitun, Sapir points out that his policies have cut the growth of consumer spending by more than half, narrowed the balance of payments deficit by 14% to $450 million. "Had we gone on for three more years as before," he insists, "we would have ended up in a catastrophe."

So Long, Shalom. Though the Israeli government is unfreezing some $50 million in construction projects work to put 20,000 unemployed back to work, it still seems determined on more mitun. Last month it was announced that the government-backed Zim Lines' gleaming liner Shalom, long a money loser even though she is the pride of Israel's fleet, would soon be sold to a West German shipping line. "We have got to make the economy pay its own way," says Finance Ministry Director-General Jacob Arnon. "We lived for ten years without paying anything."

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