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The Israeli birthrate dropped last year for the first time in years, from 144,936 births in 2003 to 143,538 in 2004, according to figures Haaretz has obtained. The average growth of the birth rate until 2004 was 2.5 percent a year.

The drop results chiefly from a decline in the number of births in the Arab sector, as opposed to a trend of many years of growth. The birthrate among Arabs declined by 3.4 percent, between 2003 and 2004, from 41,337 to 39,938 births.

At the Soroka Medical Center in Be'er Sheva, a significant drop in the birthrate - 4.5 percent - was registered (from 13,251 births in 2003 to 12,661 in 2004) after a continual rise for many years.

The Finance Ministry says this is proof of a decline in the birthrate among Bedouin, since most of the births at Soroka are from the Bedouin sector.

In the Jewish sector, on the other hand, there was no change in the number of births in 2004, compared to 2003. Both years registered 103,600 births. But even this signals a change, since until 2004 the yearly growth of the birthrate was high.

The data pertaining to the Jewish sector makes no distinction between ultra-Orthodox, religious and secular sectors of the population, therefore the source of the change cannot be discerned.

According to the Finance Ministry, the drop in birthrate is a clear result of the cutbacks in child support allocations over the past two years, although the cutbacks were driven by economic, not demographic reasons.

A senior Finance Ministry official said Israel is subject to an internal demographic threat, and that now "we are reversing the graph, to defend the Jewish majority in the country." The same official said he was concerned about the high birthrate of the Arabs, and especially the Negev Bedouin, and that if the child support allocations are returned, we will again see families with 20 children in the Negev who live off the state and undermine the Jewish majority.

Eli Yishai, chairman of Shas does not believe the figures: "The truth is that it is the Jews who are having fewer births, and that is the Finance Ministry's contribution to the state. The Bedouin are continuing to have the same number of children as before. They don't care about allocations. If you live in in a tent, you don't have the same expenses as someone in a city."

MK Ahmed Tibi responded: "The purpose of taking away the allocations was to hurt Arab families. It is racism, and it's terrible, because it is Jews who are the racists."

Yigal Ben Shalom, director general of the National Insurance Institute (NII) said he supports the policy of equalizing the child support allocations, i.e. paying an identical sum for each child, rather than an incrementally higher sum for every additional child. However, he says that the bulk of the money the state saves should be used to improve services to the same children: health, absorption, education and welfare.

Leah Ahdut, deputy director general of the NII said no conclusions could be drawn from one year's data, and that demographic studies require a longer term, of 20 years.

Dr. Yitzhak Kadman, chairman of the National Council for the Child yesterday denounced the claims as though the allocation cutbacks were meant to curtail the birthrate in the Arab and Bedouin sectors.

"The argument is racist in tone, whether Haredi or Arab children are in question," Kadman wrote to Eli Yishai. "The attempt to pit one minority group against the other is an old trick," he said, referring to the Finance Ministry's reasoning for rejecting Shas' demand to stop the cutbacks, in the coalition negotiations with Netanyahu.

Kadman also noted that ever since the allocations were legislated almost 30 years ago, the average number of children per family went down from 2.8 to 2.3. "Punishing people for the size of their families is something that exists in China, but not anywhere else," Kadman said.