Crisis of the Zionist economy
With respect to the latter, the trend is toward direct cuts, as was indicated during the last visit to the US by Israeli premier Shimon Peres. The plans tor opening up a "free trade zone" between the two countries, which supposedly
With the annual rate of inflation already at 450% and a balance-of-payments deficit that will exceed 5 billion dollars for 1984, Israel has plunged into the deepest economic crisis in the history of the Zionist state, falling to the level of the most economically unstable countries in the world. (1) The following article was written in November 1984. M. WEKSLER
The present crisis, whose origins lie in the economic maladjustment from the war of October 1973, has been acknowledged The gravity of the situation was already recognized under the Begin gov-
Nonetheless, the succession of Likud governments that continued until the last elections refused to face up to the problem by instituting an austerity program that might have stabilized the economic situation in the medium term.
Alarmed by the economic disaster, the Israeli bourgeoisie put the pressure on all the political factions that represent it to form a government of "national unity" that could implement an austerity pro-
Thus, a coalition government was formed including the two big bourgeois parties, Likud and Avoda [the Labor Party]. Although these two parties have different notions about the terms of an economic cleanup, they were the need for taking drastic
The new government, like its predecessors, turned to the imperialists for help, seeking renegotiation and broadening of economic aid to Israel. By its own the Israeli economy could have financed the development of major military power in the region, at the same time as offering the Jewish masses an average standard of living higher than anywhere else in the area. have been impossible without massive aid from the imperialists (English and French up to the end of the 1960s and mainly
This aid has tended to change from loans to grants in order to subsidize the Israeli balance of payments. But even these measures, which demonstrate the imperialists' appreciation of the role that Israel plays in the region, have barely been sufficient to cover old debts. Thus, the grant of 900 million dollars last year for nonmilitary aid was used to meet short-term debts, mainly to the US. In 1983 one third of all US foreign aid and one fourth of all its overseas military aid went to Israel. (The evolution of US economic aid to Israel is shown in Table
Over the last decade, the Israeli state has become imperialism's most expensive
It is on this basis that the Israeli bourgeoisie has fattened and magniInternational Viewpoint 14 January 1985
Us Military and Nonmilitary Aid to Israel
(Ministry of Defense Data) * Re-equipping after October 1973 war ** Withdrawal from the Suez Canal **** Re-equipping after the Lebanon war fied its economic power and on which it hopes to be able to reabsorb at least part of the country's economic crisis. Washington is not prepared to keep pouring money into a bottomless pit. crisis that world capitalism is experiencing makes necessary a revision of the economic relations between imperialism
• The pressures from the IMF and various American financial have shown this clearly enough. The imperialists are not prepared to go on subsidizing the Israeli state unless it cleans up its economy by drastically reducing its
The subordination of the Israeli state to imperialism is not reflected, as in the case of underdeveloped countries, by the exploitation of its raw materials, the use of cheap labor or the export of capital. That is, it is not the classic form of subordination to imperialism. this sort of relationship exists, it is directly linked to the imperialists' need to maintain the Zionist state as an armed bastion in the Middle East, in order to block the advance of the anti-imperialist struggles of the Arab masses and in particular of the Palestinians. Thus, the renegotiation of economic relations cannot take the forms it does with respect to "Third World" countries.
Through its military aid to Israel, Washington has managed to subsidize would favor Israeli exports, is really designed to recoup the US subsidies to the Israeli civilian economy. In the long run, it will mean the destruction of the sector of Israeli industry dependent on imported raw materials, since the plan requires ending the subsidies for rawmaterials imports presently extended by the Israeli government.
Moreover, Reagan's economic advisors have made their position clear with respect to any economic plan that might be drawn up by the Israeli cabinet. US will not accept subsidizing the Israeli budget deficit through an increase in the balance-of-payments deficit, which ultimately would mean subsidizing the defi-
However, both Washington and Jerusalem recognize that any economic cleanup that seeks to reduce the budget deficit would have to attack the military appropriations first of all, and there is where the big dilemma lies.
The need for constant confrontation with the Arab world has led the Israeli bourgeoisie to arm to such an extent that direct and indirect military spending absorbs nearly two thirds of the national
The growing demands of the Israeli army have led the Zionist bourgeoisie to set in motion an uncontainable growth of military industry, which has grotesquely deformed the economy of the country. War industry has become the vital center of Israeli economic life. Most of the loans and subsidies granted by the government are in the province of the Ministry of Defense.
This situation has created common interests linking the various governments, the bourgeoisie and the top army officers. All are joined by their common need to increase military spending and thereby to increase their profits and to build up the whole monstrous machine.
A few examples can indicate the burden of the military machine on the coun try's economy. In 1981, military spending amounted to nearly a third of GNP. But while this figure was astronomic enough, in the period from June 1982 (the start of the Lebanon war) to the beginning of 1983, military spending rose by 11%, and by the onset of 1984 it had
The following sources have been used for Israeli Economy" (a pamphlet of the RevoluFourth International in the Israeli state) by M. Weksler (the Hebrew title is "Hameshber habinyoni shel hamesheq hayisraeli"): of Power," the Israeli Ministry of Defense: the
Rashit and Asakim ("'Business"); the Israeli statistical annual.
----- photo credits and running heads -----
g g
risen again by 16%. According to "optimistic estimates, by the end of 1984, military spending will amount to 40% of the GNP. (See Table 2.)
Table 2
Military Budget (Local Spending) as a Percentage of GNP
(Source: Israeli Statistical Annual)
1966
6.9
1967
10.3
1970
13.9
1972
12.3
1975
16.8
1978
14.2
1980
14.6
1982
16.6
Despite these alarming figures, the Israeli bourgeoisie has committed itself to the ruin of the local agriculture, it has proved impossible to make any such gains in other sectors. In general, it can be said that the economic possibilities accruing from the occupation of the have been exploited to the fullest.
The structural deformation Israeli economy cannot be "cleaned up" by means of the methods classically employed on the world scale. do that, the government would have to wage an open battle against the state bureaucracy, the high army officers, and the key groups in the bourgeoisie. other words, it would have to restructure its essential interests as a ruling class and drastically change its strategy with regard to the Arab Israeli conflict. That is, it would have, in the final analysis, to strug gle against its own class interests.
This is the main contradiction of Israeli capital. It is why when the government spokespersons talk about the need for implementing an austerity program, in positive effect on the budget. That is, whatever is saved in Lebanon would have to be invested to reorganize the army along the northern frontier, especially in the face of the threat from Syrian military forces on Lebanese territory, after an Israeli withdrawal.
"...Obviously, the military and government bureaucracy can always find ex cuses to justify a continuing increase in military spending."
As pointed out above, the austerity program planned by the bourgeoisie, directed mainly against the standard of living of the masses, cannot solve the basic problems of the Israeli economy. But it can cut away the "fat" in the civilian society.
With respect to its junior partners. the Israeli bourgeoisie has opened up an offensive against the small businessmen who prospered over the preceding decade in the shadow of "big capital" They are concentrated in the peripheral branches of the economy - textiles and food, gigantic military projects, such as build- fact they mean drastic cuts in those areas ing the "Labih" fighter bomber, for they consider possible to chop (educawhich the initial budget is 2 billion dollars. Although this is a large-scale project, it is not certain that the Labih can compete on the world market with imperialist technology. This fighter bomber will only start coming off the production lines in 1990, and by that time it might be militarily and technologically outdated.
In a direct way, the Ministry of Deuses one third of the country's industry and one fourth of its workforce (about 445,000 workers).
However, it is not only state capital that has gone into investments in military industry. Both the private bourgeoisie and Histadrut have been concentrating their investments in recent years military industry, in particular in products and high technolare mainly destined for the
The military budget has, moreover, accelerated the concentration of capital in the country, tranforming the "Kur" and "Klal" consortia (belonging respectively to the Histradrut and the Insurance Diskont Bank financial combine) into two giants that, along with the state military industry, dominate the key sectors of the Israeli economy.
All these factors demonstrate that even if the present government tried to cut the military budget, it would inevitably lead to a clash with the interests of the bourgeoisie and the military bur-
But there is no other way out of the blind alley.
In 1967, the occupation of the West Bank and the Gaza Strip made possible an economic boom in Israel, after several years of crisis. This boom was owing to the opening up of new markets, in which Israel held an absolute monopoly and in which there was a large reserve of very cheap labor. This sort of Zionist "primitive accumulation of capital" cannot be repeated. The occupation of southern Lebanon has clearly shown that. While Israeli agricultural exports to this area have constantly increased, bringing about 16 tion, health, municipal budgets, civil construction, etc.) and in credits to civilian industry. They mean an offensive against the living standard of the masses.
What was said before does not mean that there are no sections of the bourgeoisie that recognize the need to cut the military budget, at least somewhat, as part of an austerity program. October 24, 1984, issue, one of the most serious weeklies in Israel, Koteret Rasheet ("The Top Stories"), which is the representative of groups close to the Labor Party, published some "proposals" for cutting the military budget: there are about 100,000 recruits in the army, about 15% of the workforce the country and about 50% of the workforce between the ages of 18 and 25....Cutting the military budget by 40% would make it possible to reduce compulsory military service from three years to two and a half, and even, in the longer run, to two years. A reduction of a half a year in military service would release about 15,000 youth for the labor market, and this would have a positive effect on the economy..." Militarism and unemployment
What the writer of these lines trying to say in a subtle way was that not only would a cut in the military budget benefit us but in the long run the consignment of more youth to the reserve army of labor would have a depressing effect on the workers' struggles and on the morale of the masses.
Another significant example is the fol-
"The annual cost of keeping the army in Lebanon amounts to 500 million dollars, which amounts roughly to 15% of the account obtained by the Ministry of Defense for purchases on the internal market....The withdrawal of the army would mean a big saving....Nonetheless, the ministry claims that withdrawing our forces from Lebanon would not have a civil construction, private agriculture, insurance, consumer-goods importers, brokerage companies operating on the Telto a drastic reduction in bank credit and culminated in the fall of trading stocks on the Tel-Aviv exchange and its closing in September 1983. Those who have suffered most from this offensive have been the productive sectors, farmers organized in Moshavim (agricultural cooperatives). In fact, the crisis has led to disarray in the agricultural economy and the bankruptcy of several
(It is interesting, in this context to note that the emergence and growth of parasitic businesses concentrating on consumer-goods imports and financial speculation are a reflection of the parasitism and deformation of the Israeli economy, an economy based on constant imperialist subsidies.)
The offensive against the masses standard of living waged through cutting the nonmilitary budget has thus far been successful. Since 1977, when Likud came to power, the share of the GNP invested in health and education has steadily declined. Moreover, last year, the construction of low-cost housing decreased by 50% within the pre-1967 borders of
Several municipalities have gone bankrupt, owing millions of shekels to banks (the situation of Arab municipalities such as Nazareth is even more disastrous, since aid has been cut by 50%.
The universities have had to postpone the start of classes for lack of state funds, and have increased tuition to a thousand dollars per student. sidies for basic food items have been constantly decreasing since 1978, some of them having been removed entirely, as was also the case for subsidies to public which is monopolized by cooperatives belonging to the Histadrut.
With respect to real wages, the Zionist bourgeoisie's offensive has accelerated since the end of last year. There has been
International Viewpoint 14 January 1985
a steady rise in direct taxes, which percentage-wise are the highest in the world. This has been accompanied by astronomic inflation and cutting automatic cost-of-living increases. (In November, the adjustment made up for only 80% of inflation.) From the end of 1983 to early 1984, the drop in real wages was 15%, and, according to various sources, it may reach 40% or 45% by the end of 1984.
The offensive against the workers reached its high point with the signing of a price-and-wage-freeze agreement in
November by the government, Histadrut and the private employers. This accord, which is stipulated to run for a period of three months, expiring in February 1985, will make it possible to the average wage abruptly by At the same time, it permits businessmen to adjust their prices at the beginning and the end of the period
(The night before the accord the government granted
Both the government and the Histadrut are anxious to fire the Palestinian workers so that their jobs can be taken by Jews. But in reality, that is not so easy. The Jewish workers are not ready to work in the conditions and wretched pay that the Palestinian workers have had to accept. Moreover, the Israeli capitalists are taking advantage of cheap Arab labor and are not ready to give that up, in particular for Jewish workers who are organized and have higher expectations.
In the government's offensive, the Histadrut has played a key role. recent months, it has been the Histadrut leadership that has stressed the need for signing a freeze pact, and in that way it prepared the ground inside the working class for such a deal. But even so, the general secretary of the organization, Israel Keisar, found it necessary to try to justify agreeing to the draconian measures included in the pact.
they had no intention of leaving the Histadrut, this organization clearly dynamic leading Its formation qualitatively changed the relationship of forces between labor and
The Group of 13 made its power felt independent organization of the wage earners, who could, if they chose, paralyze the country's economy. why the Histadrut saw it as a real danger to its domination of the workers, and tried by every means, along with the gov. ernment, to break it up. For their part, the 13 made a big mistake in sizing up forces relative to the class enemy, refusing to organize other workers commissions that wanted to come in. On the one hand, they were afraid of becoming the leadership of an independent workers' organization. On the other, they wanted to remain an exclusionary grouping representing the workers' aristocracy of the country, in order, as they general price increases running between brought him growing criticism from his saw it, to be able to better put pressure 100% and 200%.) It is for these reasons fellows in the Executive Committee of on the employers. that the three signatories have rushed to declare their readiness to renew the agreement for another three month period.
While the government spokespersons have tried by every means possible to prove that the freeze will benefit wage earners by bringing about a significant reduction in the rate of inflation, the reality is very different. The inflationary process cannot be brought under control without a drastic reduction in government spending, in particular in the military budget. Days before the freeze agreement was signed, the Ministry of the Economy proposed a new reduction in the budget of 500 million dollars, 150 million of which were to be absorbed by the Ministry of Defense. But the army chiefs are claiming that it is almost impossible to accept this cut "without endangering the security of the state and the strength of the Tsahal [the Israeli ready mentioned are being compounded by a constantly growing rate of unemwhich by the end of 1984 will extend to 7% of the workforce, that is, 100,000 persons. Some 40% of the unemployed are concentrated in the frontier cities in the north and south of the country. Their ranks will be swelled by 15,000 public employees who are to be laid oft in 1985 as a result of the cutbacks in administrative staffs and the projected sale of some state enterprises to private capital.
The situation of the Palestinian workers in the occupied territories is still more desperate. They will suffer most from the wave of layoffs, since they are not organized in the Histadrut and are not covered by social security. comes on top of the fact that 17 years of Israeli occupation in the Gaza Strip and the West Bank have finally strangled the weak local industry. And at the same time, the confiscation of land has left a large part of the agricultural population without any means of making their living International Viewpoint 14 January 1985 the Histadrut. The representatives of the Likud in this body have taken advantage strengthen claims to being defenders of the interests of the working class, in particular since new elections are coming up soon for the Executive Committee, in April 1985. The need for a real union
In its role as employer and owner of the biggest consortia in the country, the Histadrut has stressed its "responsibility" facing the need to put the Israeli economy in order, and that is why - confronting an emergency situation - it has neglected its alleged function of a trade union. Over the past year this state of affairs led various groups of workers to refuse to ratify the contracts signed by Histadrut and the employers and threaten to break away from the control of this body.
Under the second Likud government, in 1981, 13 workers commissions were organized to negotiate independently new wage agreements with the Ministry of the
Among these workers commissions, were some representing several of the country's most important enterprises - the Electricity Company, the National Telephone Company, television, the mineral works on the Dead Sea, the National Airline El-Al, the docks and so on. The Group of the 13 arose because of the lack of agreement that existed with Histadrut on the points to be renegotiated. Although its leaders said early on that
The government, in particular the Ministry of the Economy, quickly realized the need for smashing these organizations by a decisive attack. campaign was launched to supposedly clean up the airline El-Al. The workers' commission in the company fought for several months against the plan, which included the idea of dissolving the workers'
The government won, in particular because the 13 did not solidarize with their fellow workers at El-Al. The 13 did not pass the test of fire, and the impact of this was such that the or-
The example of the 13 shows how much the crucial problem for the Israeli workers remains the necessity to achieve their independence as a class by forming their own organizations.
The lack of real unions reduces the possibility for wage earners to accumulate the necessary historical experience for facing up to the government's offensive. The lack of a tradition of independent struggles, and in general the lack of any organizational means for organizing of class solidarity are the Achilles Heel of the working-class resis-
While the position of the Israeli working class at the trade-union level is desperate, it is still worse in the political arena. The working class remains tied politically to the big parties of the Zionist bourgeoisie. This leads it into a blind alley and to a basic failure to understand its class interests. It must not be forgotten that the Jewish working class, which is the majority of the industrial working class in Israel, was formed in the process of Zionist colonization itself and as an integral part of this colonization. That led it to confuse its own interests with those of the Zionist state.
While all these factors point up the problems in the workers' struggle and its natural tendency to be a defensive one, that does not mean that the fight is lost. The big tests are still ahead. •
17
the major big-business newspapers - an unprecedented occurrence.
Nevertheless, Hawke did not get the expected landslide victory.
This has given the Liberals, who had been staring at the prospect of a record defeat, some new confidence. Their