Israel Declares 3-Month Economic Emergency; Trade Union Reacts With 24-Hour Strike Call

The Israeli government Monday declared a three-month state of economic emergency, and the country’s giant Histadrut trade union federation responded by ordering a 24-hour general strike to protest stringent austerity measures imposed under the plan.

The nationwide strike, scheduled to begin at 6 a.m. local time today, threatens to paralyze the country.

The government’s unprecedented decree followed one of the longest Cabinet meetings in Israeli history--a stormy marathon session that began Sunday morning and did not finally break up until 10 a.m. Monday.

Emergency measures include an immediate 24% average increase in the prices of goods and services, to be followed by a three-month wage-price freeze, an 18.8% devaluation of the Israeli shekel, a 3% cut in public-sector employment and new cuts in the government budget. The twin goals are to curb inflation and protect Israel’s dwindling reserves of foreign currency.

‘Very Difficult Period’

Prime Minister Shimon Peres conceded that Israelis are in for “a very difficult period” but added that if the government had not acted, “there would have been a risk of total collapse.”

“If you want to recover, sometimes you have to undergo surgery, and we have no one to operate on except the people of Israel,” said Finance Minister Yitzhak Modai.

However, union leaders called the measures discriminatory and illegal and vowed to fight. Yisrael Kessar, secretary general of Histadrut, said the measures will mean a one-third cut in worker incomes, and he urged the government to reconsider.

Peres met with Kessar on Monday evening to try to persuade the union leader against any further protest action, but the mood here indicated a bitter struggle. Kessar told an Israel radio reporter that there were already reports of scattered wildcat shutdowns, and union leaders scheduled a meeting for today to decide on their next step.

80% of Work Force Organized

More than 80% of Israel’s entire work force is organized under the Histadrut union federation.

Today’s planned strike is expected to silence factories, disrupt flight schedules, close the ports and shut down the nation’s newspapers. Radio and television will broadcast only news reports, and public transportation is expected to work on a sharply curtailed schedule if at all. The electric company announced that it will operate on a reduced level, such as it does on the Sabbath.

“Anything that’s nonessential isn’t moving tomorrow,” an Israeli journalist summed up.

Modai expressed “surprise and sorrow” over Histadrut’s call for a strike. “I can’t see to what end they have declared this strike,” he said.

The head of the Israeli Manufacturers Assn., Eli Hurvitz, welcomed the austerity program and condemned the strike plan. “When the country is fighting for every million, they are wasting $80 million to $90 million,” Hurvitz charged. “This door-slamming and throwing away the key has no place here.”

Manufacturers Concerned

Hurvitz said the manufacturers are also concerned over the price they are being asked to pay under the plan. “But we want to give it a chance,” he added.

The one-time price increases under the program are expected to push the rate of inflation this month to about 26%, which would mean an annual inflation rate of more than 1,500% if it continued for 12 months. However, government officials expressed the hope that the monthly inflation rate will drop to 15% by August and to 2%-3% by September.

Since the economic plan was approved as an emergency measure, the Knesset, Israel’s Parliament, does not have to approve it. However, Modai presented the program to the legislators at an evening session Monday.

Three motions of no confidence in the government were offered and are expected to be voted on today. However, political analysts here saw no immediate danger that the government would fall.

The emergency decree--part of what a Cabinet communique described as a one-year economic stabilization program--was approved by a two-thirds majority, with 15 ministers voting for it, 7 against and 1 abstaining.

Peres said as the ministerial session began Sunday morning that once the Cabinet acted, any minister who opposed its decision should resign.

Little Public Criticism

Cabinet opponents of the plan--including most, but not all, of the rightist Likud bloc ministers--refrained from any serious public criticism of the government action Monday, although the ultimate political fallout of the move could depend on the course of public protest against it.

Asked during a meeting with foreign journalists Monday how he thought the Reagan Administration will react to the emergency decree, Finance Minister Modai responded, “I think they’ll love it.”

The United States has been pressing Israel to take tougher measures to control inflation, bring its budget under control and protect its foreign currency reserves. In the meantime, Congress has approved more than $7 billion in economic and military aid to Israel for the two fiscal years ending in October, 1986.

Will Cut Budget Deficit

Modai said Israel will cut its budget deficit by $750 million under the emergency plan, including a $250-million reduction in government activity, a $250-million cut in economic subsidies and the addition of $250 million in increased revenues from new taxes.

“The measures we have taken are very harsh,” Peres said in an interview with Israel radio Monday. However, he added, “as far as I understand the situation in the economy, the decisions were made at the last possible minute.”

He asked “every housewife, every citizen, to keep the nation, its needs and problems, in view” and to “lend a hand so that together we will all be able to overcome the tremendous difficulties we face.”