Menachem Tochner, whose family has operated a small grocery store on King David Street here for the last 50 years, was musing out loud the other day about the state of the Israeli economy.
"You know, Yaccobi," he said, referring to the Labor Party minister of economic planning, Gad Yaccobi, "he said before the election that they had a complete plan for the economy ready to go.
"So where is the plan?"
Last night, after six weeks in power, the national unity government headed by Prime Minister Shimon Peres provided a partial answer to the question that Tochner and other Israelis have been asking with increasing frequency. Peres and top economic officials agreed to proposals for a four-month freeze in prices beginning Nov. 1, a cut in the monthly cost-of-living pay raises provided to Israeli workers from 80 percent of the inflation rate to 67 percent during the same period, and another cut in the government budget in addition to an earlier announced cut of $1 billion.
At the same time, the government slashed subsidies on basic food commodities and fuel by 24 percent, setting off a consumer rush to stores that were still open to empty the shelves of the products at the lower prices.
For Peres, last night's decisions marked the beginning of a critical phase in his tenure as the head of a government that, divided between his own Labor Party and the rival Likud bloc, is united in name only. During the brief term of the national unity government, the annual inflation rate in Israel has skyrocketed from 400 percent to almost 1,000 percent. Peres has exhorted his countrymen to acts of "economic patriotism" such as working harder and spending less. Now he will have to sell the public on accepting steps that, according to some calculations, could mean a 40 percent drop in real wages for Israeli workers.
Negotiations to implement Peres' proposals, or a version of them, began today among the government, the Histadrut, the trade union federation that represents the vast majority of Israeli workers, and representatives of Israeli manufacturers.
Agreement by the unions and business is necessary for the price freeze and wage cuts to be implemented. It will also be necessary to gain the approval of the full Cabinet, and to persuade Cabinet ministers who have balked at implementing the full amount of the first announced budget cut to accept even more austerity in their departments during the next two to three years.
Peres' proposals were greeted with skepticism today by critics who questioned how a price freeze would be enforced, whether the Histadrut would agree to a drastic cut in the cost of living payments and whether these and earlier steps taken by the Peres government would cure Israel's underlying economic problems.
The earlier steps taken by the government included a first cut in government subsidies on food and fuel, a six-month ban on imports of "luxury" products, including automobiles and television sets, and new restrictions on foreign currency use by Israelis.
Despite the doubts and criticism, last night's decisions by Peres at least had the virtue of taking the prime minister momentarily off the defensive. He has been under increasing pressure for action on the deteriorating economy, the one issue on which the bitter rivals of the Labor Party and the Likud bloc said they could work together.
"The major failure of the national unity government in its first month in office has been its inability, and even resistance, to infuse itself with a sense of urgency appropriate to the severity of the economic crisis that is upon us," columnist Yosef Goell of The Jerusalem Post wrote last week.
While Peres has been preoccupied with the economy, squabbles have broken out in his divided government over other issues. Ariel Sharon, former defense minister in the Likud government and now minister of industry and trade, has urged a hard line in any negotiations for an Israeli troop withdrawal from Lebanon.
Partly as a result of pressure from Sharon and others on the right, the Peres government's attempt to initiate military talks with the Lebanese on security arrangements in southern Lebanon have become bogged down in procedural disputes.
Sharon, joined by Vice Prime Minister and Foreign Minister Yitzhak Shamir, has also sharply criticized Peres for agreeing to encourage Arab economic development in the Israeli-occupied West Bank and Gaza Strip.
The Likud, Sharon said in a recent radio interview, did not agree to formation of a national unity government "in order to be used as a fig leaf to cover Labor programs in the political-defense sphere."
The differences over the West Bank, the continued stalemate in Lebanon and uncertainty about the direction of Israeli policy there, and, above all, the inaction on the economy have not served to give Peres an image of a man who is gaining control over the large, unwieldy national unity government.
The prime minister is said to be aware of rising pressures for action, but to have counseled nervous aides that what will count in the end is not the time it takes to implement an economic plan or arrange a troop withdrawal from Lebanon, but the results.
On the economy, the issues appear to be coming to a head. Whether, in the next few days or weeks, Peres can win approval of the economic course he has charted, and whether the latest proposed steps will be perceived as workable and accepted by the public, will clearly affect Peres' credibility as prime minister and his ability to deal with the other issues Israel faces.
"If Peres does not break the back of the problem of getting his government to act in unison on the economic crisis," columnist Goell wrote, "his position as prime minister might indeed be shaky by the time a withdrawal from Lebanon becomes feasible."