Israel needs more US aid to spur economy and immigration, economist says

Amos Rubin, recently installed economic adviser to Israeli Prime Minister Yithzak Shamir, is a soft-spoken man with a radical vision. Mr. Rubin dreams of drastically reforming Israel's nominally socialist economy to raise the standard of living so high that Israel will again attract Jewish immigrants.

In the past, Israeli leaders depended, at least rhetorically, on Zionist ideology - the belief that every Jew belongs in Israel - to propel Jews to move here. That ideology, Rubin says candidly, no longer offers a strong enough pull. The proof, he says, lies in statistics that show that each year, more Jews are leaving Israel than are coming in as immigrants. Rubin says he believes Jews no longer come to Israel because the economic price they pay for living here is simply too dear. And he's counting on the United States to turn that trend around.

Rubin says he wants the US to help restructure the Israeli economy by at least sustaining, if not increasing, its current level of grants, which this year will total $3 billion in civilian and military aid.

That the US should help Israel is self-evident to Rubin. The US and Israel are partners, he says, linked by their common beliefs in democracy, by their willingness to defend the West from any threat posed by the Soviet Union, and by shared values and their Judeo-Christian heritage.

But there is another, more pragmatic reason why the US should continue to ease the burden Israel bears in fielding massive conventional forces, Rubin says.

``If left to its own, [Israel] will have no choice but to fall back on a riskier defense which will endanger itself and the world at large.''

That defense, Rubin explains, is nuclear defense.

It is only through the US's continued support that Israel can afford not to introduce nuclear arms into its arsenal, he says. ``What brought the US to cooperate with Israel on defense orginally was the realization that it [Israel] will have to willy-nilly fall back on unconventional defense without the aid,'' Rubin insists.

``To enable Israel to abstain from dependence on nuclear arms calls for $2 billion to $3 billion in US aid.'' Rubin says the US should actually increase what he prefers to call ``direct payments.''

``On the one hand, the US has come forward and has done better in sharing the extraordinary defense burden Israel bears by going over from loans to direct payments,'' Rubin says. ``It has enabled the Israeli economy to keep from sliding down into the abyss. But on the other hand, [the amount of aid] does not allow the economy to lunge ahead.''

Rubin's logic is basically simple.

Throughout its troubled history, Israel has been forced to shoulder a massive defense burden that has been funded largely by imposing punishing taxes - reaching 60 percent in some cases - on its population. In Israel's infancy, Jews were willing to pay the economic price of living here either because there was nowhere else for them to go, or because they were motivated by a pure ideological commitment to building a Jewish state.

Today, however, Jews do have a choice. And recent waves of emigrants from the Soviet Union or South Africa have chosen overwhelmingly to head for the US or other Western nations rather than come to Israel. In effect, Rubin says, young Israelis and Jews living outside the nation are voting with their feet. Young Israelis are leaving, and Jews who might move here do not because they are intimidated by the financial sacrifices entailed in moving to Israel.

``What price do you exact from Jews who want to come to Israel? The price we exact now is too high,'' Rubin says. ``And as they say, the proof of the pudding is in the eating. As long as we could count on Jewish immigration from waves of people who didn't have free choice, we could push harder on our people. But for the last 15 years at least, Israel is in open competition with the United States for Jews on the move. In such a competition, we do not do well.''

Rubin says he realizes that Israel cannot offer Jewish immigrants as high a standard of living as that of the US. What he hopes to do is to ``diminish the gap gradually, slowly, over the years,'' so that Jews who would like to rear their children in a Jewish state will not feel they must make a tremendous economic sacrifice to do so.

To entice such potential immigrants, he says, Israel must reform its tax system, reduce government spending, and produce an atmosphere conducive to entrepreneurship.

It is a controversial concept in this nation. The first Jewish immigrants to Palestine in the early years of this century were dedicated, idealistic bands of East European socialists who believed they could create a new Jewish, socialist man by redeeming ``dunam [ acre] by dunam and goat by goat'' the land of ancient Israel.

The Labor-Zionists, as they called themselves, established the collective, egalitarian agricultral enterprises of the kibbutzim (collective settlements) and moshavim (individual leaseholds farmed collectively) and structured the Histadrut, a mammoth trade union federation that today not only counts as its members some 85 percent of the work force but also owns some of the nation's largest industries.

What does Rubin's plan to cut back government and encourage a liberal economy do to the nation's socialist-Zionist dream?

``Socialism here was created by a very small minority,'' Rubin insists. ``It was foisted on the large masses who came over and didn't have a choice.''

Observers here say it is too early to tell how much influence Rubin will have on Prime Minister Shamir. The post of economic adviser to the prime minister was created by Prime Minister Shimon Peres when he took office in September 1984. Mr. Peres installed Amnon Neubach, an economist who quickly earned a reputation as a key go-between, coordinating negotiations between the prime minister's office, the Treasury, and other ministries who hammered out the economic recovery program that was adopted by the government in July 1985.

Mr. Neubach's performance persuaded Shamir's aides that the economic advisory post was valuable, and Rubin was plucked from the Bank of Israel's research department. The first indication that Rubin might be influential on at least an ideological level came during Shamir's opening speech to the Knesset after he became prime minister last October.

``Economic growth signifies, first of all, creating the conditions that will allow us to fulfill the country's Zionist goals - and above all, aliyah [Jewish immigration],'' Shamir said in his speech. ``This means that we must concentrate on those changes that will permit new immigrants to live and earn a living in this country.

``We will have to struggle to cut back on every nonessential government expenditure,'' Shamir continued. We must place the emphasis on a concrete effort to reduce the burden of taxation - a taxation which hinders the emergence of new places of employment for our young people, for demobilized soldiers, and for new immigrants....''