Israel: Bitter Pill For Peres

Bitter Pill For Peres

When Israeli Labor Party leader Shimon Peres traded the foreign affairs portfolio for the Finance Ministry, he also traded headaches: curing the country's ailing economy won't be much easier than making peace. Israel's highly socialized economy suffers from double-digit inflation, lagging exports, shrunken tourism and the high cost of dealing with the Palestinian uprising. Last week Peres set off a storm of protest when he unveiled an austerity plan that affronted many, including members of his own party.

The plan calls for deep budget cuts, lower wages and sharply higher prices for food, education and health care. At the same time...

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