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l Benjamin Netanyahu

The sigh of relief could be heard all the way to Tel Aviv. It came from Benjamin Netanyahu's office in Jerusalem, rolled over the hills and across the valleys, and echoed across the entire country. Because only on Wednesday, after endless delays, was the agreement signed granting Israel U.S. guarantees for $9 billion that it will be raising over the next three years. Three billion will be secured by the end of this year.

Netanyahu knows full well that these billions, not his "supply-side economics," will save the day. Without these guarantees, the finance minister would be unable to maintain the relative stability we still have. Without them, it would be impossible for Israel to raise even a single dollar abroad - which would force it to get all the money domestically.

Because the deficit this year is an incredible NIS 30 billion, doing so would send long-term interest rates skyrocketing; the shekel-dollar exchange rate would break the NIS 5 benchmark; Israel's major borrowers and the banks would all be on the verge of insolvency; and the entire economy would spiral into a much worse financial crisis than that of June 2002.

Under the agreement with Uncle Sam, Israel commits to lower the deficit to 3 percent in the budget plan for 2004. However, the Finance Ministry has been toying with the idea of asking the Americans for an extension that would allow them to implement this cut over two years, hoping that growth will resume and fill up the coffers with tax money.

But here's the catch: Without a peace agreement and the cessation of terror, growth cannot be resumed; so it all boils down to the conflict with the Palestinians.

l Shmuel Halpert

Something else just as important happened on Wednesday: The cut in child allowances became effective. As of now, families with eight children (your average ultra-Orthodox household) gets NIS 3,025 from the National Insurance Institute instead of the NIS 4,063 it used to get before. This figure will continue to drop until it reaches NIS 1,152 in 2009 - thereby forcing the ultra-Orthodox community to stop living on benefits and start earning their keep.

For years, this community has pushed to increase allowances for the fourth and fifth child and onward, cutting the benefits paid for the first, second and third child. All limits were broken when in November 2000 the Knesset, supported by the Likud, passed what was dubbed the Halpert Law, which increased the allowance for the fifth child to NIS 885 - five times the allowance that a family with a single child got. This absurdity broke the camel's back, and led to the decision to put all allowances on par, so that the same benefits are paid for each child: NIS 144 a month.

Consequently, new tunes are being sung by the ultra-Orthodox community. Dudi Zilbershlag, editor of Bakehila, said recently: "Social benefits have drastically decreased the incentive in our community to take jobs, and have thus corrupted ultra-Orthodox society... What will sustain us is work, not poverty."

Either way, the Halpert Law will from now on be seen not as a curse, but as a blessing in disguise.