24 January 2006
Israel's Labor party will this week try to reassure international investors after a critical bank report suggested its victory in general elections in March would be bad for the economy.
Avishai Braverman, the party's economics spokesman, travels to the World Economic Forum in Davos on Tuesday to assure business leaders and bankers that a Labor government would maintain fiscal stability and pursue pro-market policies.
Mr Braverman last month attacked a report by Deutsche Bank that suggested a Labour victory was the greatest risk to fiscal policy. The generally bullish report said Israel's present policies would continue under a government lead by Kadima, the centrist party founded by the ailing Ariel Sharon.
The former World Bank economist told the FT: "We will talk to the financial markets and tell them we will have sound fiscal policies and will not increase the current 3 per cent deficit. There will be no new taxes, including inheritance tax."
He blamed market nerves on a misperception of Amir Peretz, Labour's new leader, as a firebrand left-wing union leader. Mr Braverman joined Labor after Mr Peretz won a leadership primary in November and last week came third in a vote for the party's list for the March 28 election.
He was speaking shortly after Mr Peretz announced an election platform that included a pledge to raise the minimum wage, award student loans and guarantee pensions.
Mr Braverman said Labor would finance its programme in part by slashing the cost of maintaining Israel's occupation of the West Bank. What he described as massive investment in territory that would not be included within Israel's future borders would be scrapped.
"I want to tell the markets we will be more competitive," he said. "At the moment, the capital market is too thin and there is a dangerous link between capital and the political rulers."
He said the policies pursued by Benjamin Netanyahu as finance minister of the former Likud government, and those likely to be followed by former Likud leaders who moved to Kadima, had contributed to an additional half million Israelis falling below the poverty level in the past five years.
Labor is trailing Kadima in opinion polls but might be invited to join a coalition government if Kadima secured the largest number of seats in the 120-member Knesset.
Harvey Morris in Jerusalem
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