Israel: A $500 Million Misunderstanding

Doubt over debt, but smiles about weapons

Prime Minister Shimon Peres returned to Israel early last week after a highly successful trip to the U.S. He carried with him the assurances of strong U.S. economic backing, possibly including a postponement of the $500 million in Israeli debt that comes due early next year. But disturbing news awaited him as he resumed work on Israel's economic problems. Inflation, which had already been roaring along at 500%, jumped last month to around 900% on an annual basis.

The Reagan Administration seemed taken aback by the Israelis' claim of a U.S. offer on the...

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