Knesset Finance Unit Balks at Compensation Offer to Sinai Settlers, JTA, Jan. 11, 1982.

The Knesset Finance Committee is expected to recommend to Premier Menachem Begin that the government attach certain conditions to the 4.4 billion Shekels ($250 million) it has offered Sinai settlers in compensation for homes, farms, or businesses they must abandon when Israel completes its withdrawal from Sinai next April.

Committee chairman Shlomo Lorincz will see Begin tomorrow to report on today’s debate on the compensation offer within the committee. He told reporters that the general feeling among members was that the sum which the Cabinet approved last week was too “large and open-handed.” Fear has been expressed in many quarters that it could touch off a new inflationary trend affecting the entire economy.

According to Lorincz, the committee feels part of the sum should be payable in long term non-negotiable government bonds which could not be cashed in until maturity and that income tax should be paid on most of the balance. The government previously agreed that the compensation should be tax exempt. Begin personally rejected the idea of payment in bonds when it was raised at the Cabinet meeting last Thursday. But there were indications that he might reconsider his position.

Feels Cabinet Should Reconsider The Offer

Interior Minister Yosef Burg said today that he thought the Cabinet should reconsider its offer in view of the widespread opposition to the very large sums involved. One of the principal opponents was Finance Minister Yoram Aridor whose task it will be to find the money to pay the settlers.

Aridor left for London yesterday on a trip on behalf of Israel Bonds. Although he expressed “shock” over the amount offered, he is apparently backing away from a confrontation with Begin on the issue. According to Treasury officials, Begin’s strong personal intervention was responsible for the Cabinet’s 5-4 vote in favor of the 4.4. billion Shekel offer proposed by Deputy Premier and Agriculture Minister Simcha Ehrlich. Ehrlich argued that the high price was necessary to ensure a peaceful withdrawal from Sinai.

Considering Ways To Raise The Money

Treasury officials spent the weekend considering ways to raise the money. The government could print more currency, but that would only intensify inflation. Higher taxes would cause an angry public reaction. Further cuts in the budgets of the various ministries would mean a bitter fight within the Cabinet. Treasury sources said there was no choice but to submit a supplementary budget to the Knesset to cover the additional expenditures to which the government has committed itself in recent weeks.

These include not only compensation to the Sinai settlers but hefty grants to Agudat Israel yeshivas which Begin promised his Orthodox coalition partners when he was forming his new government last summer. The government also plans to spend more on price support subsidies than originally anticipated.

Meanwhile, the Sinai settlers themselves are not entirely satisfied. The Yamit Residents Action Committee which had been pressuring the government for months on compensation, charged yesterday that farmers will receive more than householders and businessmen under the plan approved by the Cabinet. They accused the government of misleading the public by announcing only the average sum to be paid each family.

Although the committee disbanded, it held a press conference yesterday. According to a spokesman, residents of Yamit township will receive just over 2 million Shekels (about $150,000) while even small farmers in the Sinai villages would be getting twice that sum.

The Agriculture Ministry called a press conference of its own yesterday at which it was claimed that the figures quoted by the settlers were incorrect. The settlers, for their part, indicated that they would advise individual residents and shopowners committees to refuse the sums offered and to remain in Yamit until the last minute in order to embarrass the government.

A more serious situation may develop when the government tries to evict some 100 squatter families who have been occupying abandoned houses in Yamit and Rafah. The squatters, mostly Gush Emunim militants from outside the region, are not interested in compensation. They say their intention is to prevent the Sinai withdrawal at all costs.