Yoram Aridor

Yoram Aridor was born in Tel Aviv in 1933 as Yoram Liberman.[8] His father changed the family surname to Aridor in 1948, following the establishment of the State of Israel.[8] He pursued academic training in both economics and law at the Hebrew University of Jerusalem, earning a first degree in economics and a master's degree in law.[1][8]

Aridor joined the Herut movement in 1961 and began practicing law around the same time.[8] He was first elected to the Knesset in 1969, and continued working as a lawyer for years after entering parliament.[8] Before his ministerial career he was active in the General Histadrut and chaired the Blue-and-White faction, which was aligned with Herut.[8]

After the Likud's landmark 1977 election victory, Aridor became a deputy minister in the Prime Minister's Office.[8] During a period in which Prime Minister Menachem Begin delayed appointing permanent ministers, Aridor was temporarily assigned responsibilities across several ministries—holding responsibility for five ministries at one point and later serving as deputy minister across six.[8] He was described at the time as a close associate of Begin and as chairman of the Herut Party Executive.[4]

In January 1981, Aridor became Minister of Communications. On January 19, the government decided to appoint him Minister of Finance as well, following the resignation of Yigael Hurwitz.[1][8] Prime Minister Begin announced the appointment in the Knesset on January 21; the Knesset approved it by 59 votes to 33, with four abstentions.[1] Aridor retained his communications portfolio alongside the finance role.[8]

As communications minister, Aridor abolished the television "color eraser," a technical restriction that had prevented Israeli viewers from receiving color broadcasts, opening the way for color television in Israel.[8] His young daughter had reportedly urged him to make children's films available in color.[8] Despite championing the policy that encouraged color-television purchases, Aridor himself later watched a color broadcast in black and white because he had not bought a color set.[8]

Aridor called his economic approach "the correct economy"; political opponents labelled it "election economy."[8] Its components included broad reductions in taxes and customs duties on consumer durables—color televisions, refrigerators, washing machines, and cars—alongside subsidies on food, cooking oil, and gasoline intended to reduce the cost-of-living and wage index.[6][8] The government also maintained an artificially strong shekel and cut taxes on other imported goods.[5][6]

The consumer response was immediate and dramatic. Roughly 30,000 new cars entered the Israeli market from the start of 1981 to early August, with sales in the first seven months exceeding all of 1980 by 10,000 vehicles.[9] Television imports surged, household savings were withdrawn to finance purchases, and foreign-currency reserves declined.[9] Real private consumption rose 10.5 percent in 1981, while the trade deficit grew from $1.4 billion in 1981 to $2.1 billion in 1982.[10] One contemporary observer remarked: "Aridor started the craziest boom I ever lived through."[6]

In the June 30, 1981 election, the Likud won 48 Knesset seats to the Ma'arach's 47, and many observers attributed the narrow margin partly to Aridor's policies.[8] Aridor defended the measures by noting that annual inflation fell from 133 percent in 1980 to 102 percent in 1981.[9] A 1984 account argued, however, that because the measures were not accompanied by tighter fiscal policy or wage restraints, three-digit inflation resumed after only a brief dip.[6]

The underlying imbalances became acute in the summer of 1983, when trade figures made the balance-of-payments imbalance public and indicated that a substantial devaluation of the shekel was unavoidable.[6] Israelis began seeking hard goods and real estate or converting shekels into dollars.[6] The government eventually devalued the shekel by 23 percent and cut subsidies, causing many prices to rise roughly 50 percent overnight; subsequent wage indexation drove further price increases.[6] Simultaneously, shares in all major Israeli banks except First International collapsed and came to be held by the government—a crisis that became a defining episode of the Tenth Knesset period.[11]

In response to spiraling inflation, Aridor and Bank of Israel deputy governor Yakir Plesner developed a secret proposal to link the shekel to the U.S. dollar or a basket of currencies.[12] The plan would have allowed the dollar to circulate alongside the shekel in domestic transactions, linked wages to the exchange rate, and barred the government from issuing shekels without foreign-currency backing.[12] Its proponents said it was intended to break the cycle of monthly inflation, wage increases, and further devaluation.[12] Discussions had been secret for six months, with 70 to 80 people aware of the plan in its final stages.[12]

On October 13, 1983, Yedioth Ahronoth published details of the plan amid the bank-share crisis.[12] Aridor had discussed the proposal with Begin and later with Prime Minister Yitzhak Shamir, explored emergency regulations as a fallback if a Knesset majority could not be secured, and pursued contacts with the United States over a proposed $1.5 billion guarantee.[12] Public critics argued that the proposal threatened Israeli economic independence.[13] Aridor resigned that evening; he later said that the decisive reason was the government's withdrawal of support after the disclosure.[12][7]

Prime Minister Shamir formally announced in the Knesset on October 17 that Aridor had submitted his resignation on October 13 and that, under law, his ministerial tenure ended on October 15.[2] He was succeeded as finance minister by Yigal Cohen Orgad.[9] The Israel Ministry of Finance records Aridor's term as running from January 19, 1981, to October 15, 1983, across the 18th, 19th, and 20th governments.[14]

After leaving the Finance Ministry, Aridor continued as a member of the Knesset.[9] He subsequently served as Israel's ambassador to the United Nations from 1990 to 1992.[3][9] In that capacity he addressed the UN General Assembly on December 7, 1990, speaking on the agenda item "Situation in the Middle East."[15]

On December 16, 1991, Aridor was present in New York City when the General Assembly voted to repeal its 1975 resolution equating Zionism with racism. A U.S. Department of State photograph shows him embracing Foreign Minister David Levy after the vote.[16]

Aridor's public legacy spans communications policy, economic debate, and diplomacy. His abolition of the television "color eraser" helped open Israeli broadcasting to routine color transmission and became one of the most visible achievements of his communications ministry.[8] His phrase "the correct economy," meanwhile, became closely associated with the pre-election consumer boom of 1981 and with later arguments over the economic and political effects of tax cuts, subsidies, and stimulated consumption.[5][8]

Aridor maintained that the dollarization plan had been the only viable response to the inflationary spiral and argued that some of its principles reappeared in the July 1985 stabilization program, although he criticized that program's reliance on high interest rates.[7] His later diplomatic service included Israel's successful 1991 campaign for repeal of the UN resolution that had equated Zionism with racism.[16]

The dollarization proposal was roundly criticized when it became public. Aridor later argued that he resigned not simply because the plan had been exposed, but because cabinet members withdrew support they had previously promised.[5][7] He described the proposal as "the only possible plan" available at the time and contended that its central principles were later incorporated into the 1985 stabilization program.[7]

Responsibility for the 1983 bank-share crisis was sharply debated in the Knesset after his departure. Opposition speakers linked his policies to the collapse; other participants noted that bank-share regulation had begun in 1972 and developed across successive governments, arguing that responsibility was broader than Aridor alone.[17] Aridor said that after learning of the banks' practices from the Finance Ministry director-general, he asked bank heads to cease regulating their share prices and later proposed a voluntary wind-down accompanied by a safety net.[7] The Beisky Commission cleared him of participating in or encouraging the regulation, but criticized him for failing, as the responsible official, to force an end to the practice—a judgment Aridor disputed.[7]

Assessments of the broader economic program also diverge. Aridor called the 1981 measures "the correct economy" and pointed to the short-term decline in annual inflation; critics characterized them as election economics that produced a consumption boom and worsening external imbalances.[5][8] Reports also use different dates for his departure: a Ynet caption labels it October 14, while the official Knesset record states that he submitted his resignation on October 13 and that it became legally effective on October 15.[2][13]