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Israel and the Arabs: Israel's Economic Plight

Courtesy Reuters

With the signing of the Egyptian-Israeli agreement, the focus in the troubled Middle East has turned to the West Bank, and negotiation of a wider peace settlement. What is rarely discussed in the context of these critical talks is the deterioration of the Israeli economy and the increasing economic pressures on the coalition government of Prime Minister Menachem Begin. Plagued with the greatest military burden per capita of any country in the world, pushed by its Zionist mission to perpetuate an inefficient state presence in the economy, and dependent upon American assistance for its basic needs, Israel is entering into the most difficult economic phase in its history.

A brief rundown of Israel's current economic problems highlights the seriousness of the situation. Prices are rising faster than almost anywhere in the world, by almost 50 percent last year and by more this year. The balance-of-payments deficit in 1978 was $3.25 billion, equal to

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