Israel Battling an Enemy At Home

Austerity measures spark a one-day national shutdown

Prime Minister Shimon Peres took office ten months ago determined to reform Israel's out-of-control finances. But when he tried to put the brakes on inflation last week, the country came briefly to a halt. With the U.S. pressuring him for action, Peres became the first Israeli leader ever to bypass the Knesset (parliament) with economic restrictions imposed by emergency decree.

In response, Israel's powerful labor federation, the Histadrut, called a one-day strike that forced Peres to delay implementation of key parts of the package.

The Prime Minister insisted that drastic reform was necessary "to prevent an actual collapse" of the Israeli...

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