By ordinary economic rules, Israel ought to be in receivership. After more than a decade of living beyond its means, the country skidded into a deep recession in 1965 when Premier Levi Eshkol's anti-inflationary slowdown proved too abrupt. Unemployment jumped to 10%, and the government for the first time in its history was forced to put the jobless on the dole.
Then came the Six-Day War. It cost the nation of 2,669,000 people more than $1 billion, and Israel is still paying the price of victory. Since the war, the military budget has...
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