World Notes ISRAEL

When Israeli Labor Party leader Shimon Peres traded the foreign affairs portfolio for the Finance Ministry, he also traded headaches: curing the country's ailing economy won't be much easier than making peace. Israel's highly socialized economy suffers from double-digit inflation, lagging exports, shrunken tourism and the high cost of dealing with the Palestinian uprising. Last week Peres set off a storm of protest when he unveiled an austerity plan that affronted many, including members of his own party.

The plan calls for deep budget cuts, lower wages and sharply higher prices for food, education and health care. At the same time the shekel has been devalued by 13%. The measures, approved by the Cabinet last week, drew acrimonious opposition from the Histadrut labor federation and Defense Minister Yitzhak Rabin. So vociferous was the army in protesting a proposed $193 million cut in the military budget that Peres ultimately agreed to trim only about $66 million.

But the new Finance Minister is determined to make austerity stick. Said Peres: "I came to the Treasury to carry out a task, not to look for approval."