Symptoms of the crisis include rising unemployment (now nearly 11% of available manpower), rampant poverty and deteriorating conditions at public institutions, including hospitals.

On Wednesday, Shas leader Eli Yishai castigated the government for "turning its back on the poor and unprivileged in this country". Shas is the third largest political party in Israel and mainly represents Middle Eastern Jews known as Sephardim.

The Israeli state-run public radio, Call Yisrael, quoted Yishai as telling Vice-Prime Minister Shimon Peres that "the socio-economic situation the country has reached [is] the lowest level ever".

Yishai suggested that Jews of Middle Eastern origin and other non-Ashkenazi Jews were bearing the brunt of the current socio-economic crisis.

Overcrowded hospitals

Public hospitals in Israel, once among the best in the Middle East, are also in the grip of an acute crisis, with patients forced to wait weeks, some times months, for an appointment with a specialist or for a badly needed surgical operation.

According to Israeli public radio, patients have even been made to stay in corridors due to overcrowdedness.

Public hospitals are among the
worst affected by budget cuts

On Tuesday, as many as 90 hospital officials and doctors in internal medicine and paediatric divisions called on Israeli Prime Minister Ariel Sharon to establish an official commission of inquiry to investigate "the crisis in the health system".

The Israeli newspaper Haaretz on Wednesday quoted the protesting doctors as warning that the internal medicine wards in Israeli public hospitals were collapsing under the "catastrophic burden" of the seriously ill and those under respiration.

"Paediatric wards are overflowing and intensive care units are blocked to capacity. Behind these numbers lie people in flesh and blood. The situation is claiming victims."

The crisis in Israeli public hospitals stems mainly from the serious cuts in public spending effected by Israeli Finance Minister Benjamin Netanyahu.

Glaring disparity

The finance ministry argues that the cuts were vital to revitalise the Israeli economy, hit hard by the Palestinian intifada and also by the pumping of billions of dollars to Jewish-only settlements in the occupied territories.

However, some health officials scoff at the ministry's rationale, accusing the government of turning its back to the elderly and poor.

"The finance ministry needs to change its priorities and to give preference to those
older and elderly patients who built this state and now who
the state is turning
its back on"

Yoram Blachar,
Chairman,
Israel Medical Association

"I saw patients lying in the corridor with no modicum of privacy," Yoram Blachar, chairman of the Israel Medical Association, said. "The finance ministry needs to change its priorities and to give preference to those older and elderly patients who built this state and now who the state is turning its back on."

Meanwhile, hunger continues to win more territory in Israel as a result of rising unemployment and budget cuts affecting social and welfare services.

According to statistical figures released by the National Bureau of Statistic recently, over 30% of Israeli children were living below the poverty line.

The Israeli government privately argues that cuts in subsidies to large families are necessary to discourage high birth rates, especially among the non-Jewish population, particularly the Arab community, which makes up to 20% of Israel's population.

Religious factor

The Haredi religious sector, which too has high birth rates comparable with and, in some cases exceeding, those of the Arabs, has also borne the brunt of the cuts in social and welfare services.

Cuts in social services affect both
the Arab and Jewish communties

Interestingly, this presents the Israeli government with a real dilemma.

On the one hand, the cuts, to the chagrin of many politicians and lawmakers, affects and impoverishes Jews, thus generating intense social pressure and potential political instability.

On the other hand, preferential treatment for Jews (for example, in giving subsidies to Haredi families but excluding Arab families) could invite charge of racism from the outside world.

Some observers say the socio-economic crisis explains the Israeli government's willingness to revive the stalled peace process with the Palestinians.

If true, this would be a vindication of the theory that Israel's economic well-being is contingent upon a resolution of the Palestinian-Israeli conflict.