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One of the two founders of Birthright Israel last night blasted the government's proposal to withdraw financial support for the program, which brings thousands of young Diaspora Jews to Israel each year.

Multimillionaire philanthropist Michael Steinhardt labeled the cuts "an extradordinary shame" and "singularly unwise" in a telephone conversation with Haaretz. Funds for the three-year-old program, which has brought some 40,000 Diaspora youth to Israel on heavily subsidized educational trips, will be slashed by a third if the government agrees to cuts proposed by the treasury.

Steinhardt, who initiated Birthright Israel (Taglit) with philanthropist Charles Bronfman, said the program has "singlehandedly" begun to turn the relationship between Diaspora youth and Israelis youth from "one of relative ignorance and disregard to one where there is some real interest and excitement." Until now, the program's funding has been split three ways in a unique agreement among philanthropists, Diaspora Jewish communities and the Israeli government.

Steinhardt said that while he "understood and sympathized" with Israel's budgetary situation, the cuts should be made with "considerable forethought, rather than across the board and in an unthinking way."

He added that "Israel has been rather shortsighted in ignoring this problem until now, and [the cuts will] suddenly, in a painfully wholesale and unthinking way, debilitate the program, which is vital to the future of the state," he said.

Birthright Israel's Chief Operating Officer Gidi Mark yesterday said that the Israeli government would be "breaking a legal agreement" with the Birthright philanthropists and the Jewish communities that contribute to the program. He said that the initial "binding agreement" was for five years, and the program is only in the middle of its fourth year.

Mark said the cuts, which came as a surprise to staff at the program's Jerusalem HQ, will lead to the cessation of the program once this summer's planned trips are completed. According to Mark, the project has contributed two dollars to the Israeli economy for every dollar spent by the Israeli government, and would likely result in hundreds of unemployed people: Birthright Israel has been the largest source of tourism to the country since the outbreak of the intifada two-and-a-half years ago.

"In general, it sends a very bad message to those who the Israeli government is particularly trying to attract to invest in the Israeli economy," Mark added.

Zionist movements and organizations also reacted sharply to the government's planned cuts, which would eliminate several immigrant absorption programs.

The leaders of the Reform and Conservative movements, together with the heads of all organizations belonging to the World Zionist Organization, have approached Prime Minister Ariel Sharon, Finance Minister Benjamin Netanyahu and other cabinet members to retract the decision to abolish the Student Administration and the reduction on mortgages for new immigrants.

The planned cuts are causing the most concern among the United Jewish Communities of North America, which conducted - at the request of the government of Israel - a special campaign to raise funds for the absorption of Jews from Argentina. During the campaign, American Jews donated tens of millions of dollars above donations passed on by the organization to Israel each year.

In a letter to Sharon, the UJC leaders wrote: "When you invited us to your home to discuss the need to raise special aid for the Jews from Argentina, we told our donors that the matter was one of special priority from your point of view." Now, however, it appears, the letter continues, that the government is planning to take steps "that will lead to the collapse of immigration from countries in distress, and will make the immigration and absorption processes almost impossible."

Jewish Agency Chairman Sallai Meridor said yesterday that the proposed cuts "directly contradict the most basic interests of the State of Israel."

He added that the economic measures will "halt the aliyah of young adults, and will deal a mortal blow to the young immigrants who are presently in Israel, since the problems with which they are presently coping in Israel are most difficult." He added that it will result in a reversal of the trend in aliyah, with more elderly, and fewer young, immigrants coming here.