Israeli Economic Crisis Deepens

Caroline Hawley
BBC correspondent in Jerusalem
August 12, 2002

Public services in Israel have been hit by a three-hour strike by workers demanding an increase in wages in line with inflation.

The action comes as the Israeli economy is in crisis after almost two years of conflict with the Palestinians.

Meanwhile, a senior United Nations official is starting a mission to assess the humanitarian situation in the Palestinian territories.

For three hours flights in and out of Israel were suspended as government services shut down on Monday.

Radio and television broadcasts were interrupted and health workers only dealt with emergencies.

Israel's main union says 1.5 million workers took part in the action, which it described as a warning strike - with threats of more to come.

The union wants salaries to match soaring inflation as the Israeli economy reels from the effects of the past 22 months of conflict.

The government says it cannot afford to pay the workers more with increased defence spending, rising unemployment and plummeting investment.

It is determined to pass a new austerity budget that would cut social welfare spending at a time when ordinary Israelis are already feeling the pinch; few can remember it being this bad.

Humanitarian crisis

And on the Palestinian side, it is worse.

Checkpoints and curfews imposed by the Israeli army have brought all normal economic life to a halt.

Aid workers are now talking of a humanitarian crisis, with families forced to cut back on what they eat.

A newly appointed UN humanitarian envoy, Catherine Bertini, is now beginning a mission to assess just how serious the problem is, and to determine how the United Nations should respond.