Tuesday, June 30, 2015
How Israel avoided its Grexit moment
30 years ago today, on June 30th 1985, Prime Minister Shimon Peres convened the Cabinet for a dramatic meeting. Israel had been living with monthly double-digit inflation for a number of years; now, less noticed by the populace but more dangerous, the money had run out. Within days the economy was expected to collapse. It was essentially the last possible moment to avert catastrophe. For weeks Labor PM Peres, and Likud Finance Minster Yitzchak Modai, had been overseeing the formulation of a complex package of measures, some of them quite harsh and most of them politically explosive or worse, and now the Cabinet was called to adopt them.
The meeting went on, almost unbroken, for 20 hours until the early morning of July 1st, at which point the ministers, most of them visibly exhausted, narrowly voted to adopt the plan.
On the anniversary of the event the Israel State Archives has declassified and published the transcript of the meeting (300-some pages). We have also put online recordings of some of the meeting, so you can hear the deliberations, not only read them. And we've asked two economic historians to write their impressions of the documents. If you know Hebrew it's worth your time to peruse some of this.
I've put all the links here.