What Next for Israel?

By James Kelly

Yaacov Zvieli squints at the cotton fields prospering under the sun and remembers what it was like at the beginning. How, as a skinny youth barely 20, he left his parents in Poland and in 1932 came to what was then called Palestine, carrying the Zionist dream of a Jewish homeland. How he and other fervid believers founded the Negba kibbutz in 1939, digging wells and building huts on an arid patch 30 miles south of Tel Aviv. How he and his comrades, armed only with Molotov cocktails and a handful of shells, held off a dozen Egyptian tanks in 1948, that exhilarating year in which the state of Israel was created.

Today Israel is 36 years old, and Zvieli is 72. He proudly describes how Negba, like his country, has flourished. The kibbutz now covers 2,500 acres and is home for 330 adults and 600 children. Negba boasts not just pear orchards, 300 dairy cows and a computer-run irrigation system, but factories that make clothes and plastic bags. Zvieli, an accountant for one of the factories, is asked how things are going. "Not bad," he responds, "but the high interest is eating up profits." Zvieli pauses, pondering the larger dimensions of a question that could be asked about Israel itself. "I prefer not to get into politics," he says cautiously. "But I am disappointed by what is happening to our state."

How are things going? Ask that question, and no two answers will be exactly alike. Behind the replies, however, there is disquiet, a nagging sense that somehow the country has lost its way, that its biblical promise to be a "light to the nations" has dimmed. The recurrent theme is that a nation born of ideals has, in its attempt to survive and flourish, lost its grip on the destiny that made it special; that Israel has become just another nation, flawed and fallible. In kibbutzim and Tel Aviv apartments, army posts and Jerusalem cafes, Israelis echo what one of their best-known novelists, Amos Oz, plaintively asked in his book In the Land of Israel: "What will become of us? What can be done?"

Israel has, with good reason, always been an anxious nation. It has had to contend with neighbors at times so viciously hostile that the young country's existence was constantly threatened. Now, paradoxically, Israel is physically more secure than ever: of its four Arab neighbors, only Syria is a military menace. Yet that has not translated into psychological security. Three dozen years after its birth, Israel faces problems never imagined by Yaacov Zvieli and other founders. "We now disagree among ourselves on everything," says Major General Israel Tal, the father of his country's tank industry. "It is not the environment that has changed or the political realities. It is we who have changed." Says Knesset Speaker Menachem Savidor, a member of the Liberal Party: "It appears as if we have returned to the tribal period, to the days of Joshua and the Judges, when each tribe stressed the dividing line."

Israelis look inward and wonder.

How independent is a country whose economy is sustained by a vast infusion of foreign aid? What are the consequences for a people, so often the victims of terrorism, when a few of their own are discovered resorting to similar ugliness? How does a country that was founded as a Jewish homeland best govern itself, by parliamentary law or through a minority's interpretation of holy writ?

There are other, more enduring questions. After five major wars in less than 40 years, how do 3.4 million Jews live in the midst of more than 150 million Arabs, many of whom remain sworn to Israel's destruction? Can a nation expand its borders in the pursuit of greater security? Will such expansion gain security? How long can a state that rules 1.4 million disfranchised Arabs remain what it set out to be: a Jewish homeland as well as a democracy. Is it this state's destiny to be an isolated island in the Middle East, or can it become an integrated part of the region?

It is a tribute to Israel that such questions, which are not new but which have taken on greater urgency in the past few months, can be debated so passionately. Only in a nation secure in its status as a democracy can politicians, the press and ordinary citizens openly discuss possible offenses against that democracy. The contrast is all the more obvious in the Middle East, where Israel's willingness to raise doubts about itself is perhaps the best guarantee of its long-term survival.

The questions serve as the backdrop of the parliamentary election campaign that is now in full swing. If its tone occasionally seems subdued, and if the two main candidates do not always make their differences clear, there is nonetheless a wide philosophical gap between their approaches. The battle is not only over who will be the next Prime Minister but over what kind of society Israel will be ten, 20,100 years from now. "It is a struggle for Israel's soul," says Meron Benvenisti, former deputy mayor of Jerusalem. "It is a question of values, of what to do with our power, our land, our people."

Prime Minister Yitzhak Shamir, 68, who came to his position after Menachem Begin abruptly resigned ten months ago, found his fragile Likud coalition crumbling in March, forcing the Knesset to call the July 23 elections. Shamir faces Shimon Peres, 60, the Labor Party leader who lost twice to Begin (in 1977 and 1981). The two men share a quiet, unruffled style, but their views diverge sharply (see interviews). Neither candidate leaves any doubt as to what is at stake. "It is not that the ship of Israel fell apart, but that it is sailing in the wrong direction," says Peres. Declares Shamir: "We shall tell every voter that it is in his hands to decide the fate of the land of Israel."

For all its importance, the campaign has been strangely tame so far, with both men drawing sparse crowds and tepid applause. When Shamir arrived at a Tel Aviv suburb for a rally, he discovered that local party officials had failed to spread the word. The Prime Minister kept a fixed smile, but later he snapped at the organizers, "You should have told me!" Shamir had better luck at a branch of Bank Leumi in Givatayim, where several dozen customers clustered around him. "Tell your clientele," he said to the bank's manager, "that they should not worry about their savings. We will secure them and never touch them."

Peres also received a lukewarm response wherever he went. On a walking tour through Rishon LeZion, a Tel Aviv suburb, he exchanged a few polite words with those he met, but no one greeted him effusively. When Peres spoke, he talked in generalities, carefully refraining from any criticism of Shamir that would alienate the Likud voters he is trying to woo.

Israel's economic troubles, ironically, may be partly responsible for the restrained public reaction. Television and radio workers were on strike for most of last week, forcing cancellation of all news shows as well as entertainment programs. The campaign's momentum began to pick up last week after the Supreme Court ordered Israeli TV to broadcast 45 minutes of political commercials every night at 9:30. Left with nothing else to watch, citizens settled down to view clips of Peres playing with his grandson and Shamir wearing a construction helmet.

Polls last week found Labor leading with 44% to Likud's 28%. That voting pattern would give Peres as many as 52 seats in the 120-member Knesset, vs. 33 for Likud. However, one-fourth of the electorate is undecided, and Likud may have an edge with that group. Israelis remember that Likud at first trailed badly in the polls in 1981, only to emerge victorious. But there are important differences. In 1981, Likud began to close the gap ten weeks before the election, and Begin helped his chances by cutting taxes on luxury goods and staging a lightning attack against an Iraqi nuclear reactor only three weeks before the vote.

The campaign is about much more than policies and personalities. It reflects the collision between the two main camps of Zionism that narrowly avoided civil war at the time of independence: the socialist party of David Ben-Gurion, the first Prime Minister of Israel, and the far more militant Herut Party, founded by Begin. The last election was so bitter that this time both sides signed a sort of clean-campaign pact. The agreement banned tomato-throwing, punching, spitting and any "incitement to violence."

The election is also a referendum on the legacy of a man who has virtually vanished from public sight: Menachem Begin. Whether proclaiming his dream of Eretz Yisrael, whose biblical boundaries include the West Bank and Gaza Strip, or defending the controversial 1982 war in Lebanon, Begin hewed to a pugnaciously righteous course that evoked passionate reaction from supporter and foe alike, at home and abroad. Without disavowing Begin's policies, Shamir has tried to steer a course that appears more moderate, at least in tone. Peres, who, like Shamir, possesses little of Begin's fiery charisma, opposes much of what Begin stands for.

The outcome will be influenced by a significant demographic trend: the growing political strength of the Sephardim. Unlike the Ashkenazim, who came from Germany, Poland, Russia and other areas of Eastern Europe, the Sephardim migrated to Israel from such diverse places as Morocco, Greece, Yemen and Iraq. Initially a minority (17% in 1948), the Sephardim now make up 55% of the population and about half the electorate. It is the Sephardic votes that in 1977 swept Begin to power. In the past seven years, the Sephardim, says Author Oz, "have risen from the emotional position of second-class citizens into the emotional state of owners of the country" (see following story).

The most immediate election issue is Israel's precarious economy. In May alone, prices rose 14.3%, or an annual rate of about 400%. The shekel has lost a third of its value just since the election was called; to keep up, many shopkeepers now state their prices in U.S. dollars. The black market has become active as panicky Israelis look for ways to protect their savings. Last week the dealers who operate out of cafes and phone booths on Tel Aviv's Lilienblum Street drove the price for a U.S. dollar to a new high of 320 shekels, an increase of 65 in only one week and 87 more than the official rate. Says a disgusted Israeli: "People must think we have become a banana republic."

Businessmen complain that they are losing money because they cannot raise prices fast enough. The exchange rate, for example, is modified daily at 1 p.m. "We don't alter our prices accordingly, so on every sale we automatically lose between 1/2 % to 1 1/2% a day," says Avram Kalisky, owner of a Jerusalem computer store. Many Israelis make ends meet by overdrawing their checking accounts between paydays, but the privilege can cost up to 19% interest a month. Others juggle their money from one account to another to avoid the costly bank charges. The inflationary cycle is self-perpetuating, since there is no incentive to save. Thus, instead of tightening their belts, Israelis have gone on a buying binge: last year they purchased record numbers of video recorders, automobiles and washing machines.

Israelis are shielded from rocketing prices by an elaborate system of indexation that adjusts not only wages but personal savings and pensions. The increases are made monthly, but they do not make up the full difference. Wages in the military, for example, have not kept up, forcing career soldiers to leave for civilian life. The real (i.e., inflationadjusted) salaries of civil servants have dropped by 14% in the past seven months, causing strikes or slowdowns that have hampered services ranging from mail deliveries to issuing passports. The government averted another rash of strikes by agreeing on a two-year contract with public workers last week. Nonetheless, some unions rejected the proposed 15% wage hike and may still walk out before election day.

In addition, the country has been suffering from a huge trade deficit ($5.1 billion in 1983). Finance Minister Yigal Cohen-Orgad tackled the problem last fall by devaluing the shekel and slicing government expenditures by 6%. That harsh remedy began to work: the trade deficit for the first five months of 1984 was 25% less than for the same period of 1983. Unemployment remains low by Western standards (5.7%), but many Israelis fear that it will continue to rise if measures are taken to cool inflation.

Though some Israelis remain unperturbed by the inflationary helix ("So what if hamburgers cost trillions of shekels in 500 years?" asks a Jerusalem restaurant owner. "It's all relative."), most seem resigned to the fact that whoever wins the election, drastic action is now a must. "The party will have to end," said a government official last week.

Israel's persistent economic woes became more severe after the 1973 war, when the country was forced to replace as much as $20 billion in military equipment. After taking office in 1977, Begin attempted to spark the economy by allowing each Israeli the right to hold up to $3,000 in foreign currency. The nation embarked on a spending splurge, causing inflation to spiral. In 1979, the rate broke 100%, and in 1980 it hit 133%. During the 1981 campaign, Finance Minister Yoram Aridor played what his opponents called "election economics" by cutting excise taxes and import duties on foreign items like autos and color TVs. The Begin government then tried to ease the pain of inflation by broadening indexation and encouraging spending. Losing confidence in the shekel, Israelis increasingly turned to the American greenback. "Our national currency is now the dollar," Ezer Weizman, Begin's former Defense Minister, who is now heading his own ticket, charged last week. "This is a disgrace."

For fear of losing votes, both candidates are deliberately avoiding a detailed discussion of the austerity measures that must go into effect after the election. Shamir and Peres agree that, in the long run, one way out of the current economic predicament is to develop the country's promising high-tech industries, which are derived in large part from weapons research; they did $1.5 billion in foreign business last year, up from $103 million in 1972. The Israeli arms industry is pinning its hopes on two big-ticket items. The Merkava tank is a new, wedge-shaped machine that can hold up to ten soldiers. Israelis like to point out that its $1.6 million price tag makes it the cheapest tank in the world. According to U.S. experts, the Merkava (Hebrew for chariot) outperformed the older U.S. M-60 tanks during the 1982 invasion of Lebanon.

In the early 1990s, Israel's new fighter-bomber should be ready. Called the Lavi (young lion in Hebrew), the jet is touted by Israelis as the most potent in the Western world, complete with state-of-the-art weapons delivery systems and electronic warfare devices. Israel Aircraft Industries began designing the Lavi in 1980. After several U.S. firms turned down Israel's offer of a co-production deal, the Begin government approached the Reagan Administration. Eventually, Washington not only agreed to share U.S. technology with Israel but earmarked nearly $1 billion in development funds for the Lavi. When it finally comes on the market, it may be in direct competition with several U.S. jets, including the F-20 fighter plane designed by Northrop.

Economic optimists note also that although Israel may have the world's highest per capita foreign debt ($5,350, compared with $1,540 for Argentina), only $5.6 billion of the $22.5 billion total has been borrowed from commercial banks. The remainder is owed to more forgiving lenders: the U.S. and Jewish benefactors around the world.

Since 1948, Washington has given more than $28 billion to Israel, just over half in grants. To alleviate Israel's debt burden, the U.S. Congress is planning to turn the $1.7 billion military portion of this year's aid package, half in loans, into an outright grant of $ 1.4 billion. But Israelis are getting increasingly concerned that such financial dependence could compromise their sovereignty. Israeli Finance Ministry officials, for example, meet frequently with U.S. Government officials to discuss their economic problems. "We are losing our independence," complains Gad Yaacobi, a Labor member of the Knesset.

The newest and, to many Israelis, most disturbing development in their country today is the rise of Jewish violence against Arabs. Twenty-two Israelis are on trial in Jerusalem on a variety of terrorist charges, including the planning and execution of a 1980 bombing attack that crippled the Arab mayors of two cities in the occupied West Bank. Three others have already pleaded guilty, and two army officers of the West Bank military government are being tried separately. Israelis have been shocked not only to learn that an underground Jewish terrorist movement exists but by the list of those accused of taking part. Most of the suspects belong to Gush Emunim, the nationalistic religious group that has spearheaded the Jewish settlement movement in the occupied West Bank. Some are reserve paratroopers and tank commanders in the armed forces. One is a rabbi. The sight of these men, a few in their early 20s and most of them bearded and wearing skullcaps, being led into court has profoundly unsettled the country.

The trial points up the emergence of a new kind of zealot: the West Bank settler who feels that the best way to fight Arab violence is with Jewish violence. The vengeful cycle began in May 1980, when Arabs ambushed and killed six Jewish settlers in the city of Hebron. One month later, two car bombs went off on the same morning, severing both legs of Mayor Bassam Shaka'a of Nablus and blowing off part of the left foot of Ramallah Mayor Karim Khalaf. Every few months fresh blood was shed: a settler would die after being knifed or hit by a rock, then an Arab would be killed by a booby-trapped grenade hidden among stones. In 1983, three Arabs stabbed a Jewish student to death in Hebron's marketplace; three weeks later, two men opened fire on Arab students at Hebron's Islamic College, killing three people and injuring 33.

The pattern took on a new dimension in January, when Muslim guards scared away intruders from Jerusalem's Temple Mount, site of the Dome of the Rock and Al Aqsa mosque, two of the Islamic world's most hallowed shrines. Explosives were discovered near by. Following a two-month investigation by Shin Bet, Israel's internal security force, three men were arrested. They turned out to belong to a fanatical Jewish group, with headquarters in the Lifta Valley near Jerusalem, that believes the mosques on the Temple Mount must be razed and the Second Temple, which was destroyed in 70 A.D., rebuilt before the Messiah can come. A fourth man was captured last week. Had the attack succeeded, it would have had violent repercussions throughout the Middle East.

Israelis did not know how extensive the network was until April, when it was announced that 27 people had been arrested in a plot to plant bombs under five Arab buses in the West Bank. Shin Bet agents had infiltrated the group to the point where they even videotaped clandestine strategy sessions. Because the deadly devices were timed to explode at the height of rush hour, casualties would have gone into the hundreds. As the probe continued, officials concluded that they had arrested not just the men who had planned the bus infernos but those responsible for the attacks on the West Bank mayors and the students in Hebron.

Rabbi Moshe Levinger, the spiritual leader of Gush Emunim, insists that his followers acted only because the government failed to safeguard the West Bank settlements. "The arrested will yet go down in history as dear boys who worked for the state at a time when it did not do enough on their behalf," he said. Explained one of the men on trial: "We were groups of guys who, under certain circumstances and grave events, organized to defend our brothers." Paul Eidelberg, a professor at Bar-Ilan University outside Tel Aviv, argues that there is a difference between Israeli and Arab terrorism: "Arab violence against Jews is ultimately against the very existence of the Jewish state. In contrast, when Jews resort to violence against Arabs, they are not denying Israel's right to exist as a sovereign state." That sentiment reaches right into the government. Science and Technology Minister Yuval Ne'eman said in May that while he condemned "blind terror," the assaults on the mayors had "positive results" because the mayors had collaborated with the Palestine Liberation Organization.

Many Israelis disagree. In a poll published last month in the Tel Aviv daily Ha 'aretz, 60% said that the anti-Arab violence was unjustified, though 32% felt it was "totally justified" or had "a certain justification." Says Gerald M. Steinberg, a professor at Jerusalem's Hebrew University: "Self-appointed avengers weaken the state and reduce us to the level of other perpetrators of terror."

The furor raises a larger question: To what extent does the government's West Bank settlement policy create the conditions for Israeli violence? Shamir has gone to great lengths to distinguish between the terrorists, who he has suggested were "crazies," and the vast majority of the settlers. He is understandably defensive. Although a modest program was initiated after Israel captured the West Bank from Jordan in the 1967 war, it was Likud's Begin who launched a major settlement plan after taking office in 1977. His aim was to create "facts on the ground" that would guarantee that Judea and Samaria, as he preferred to call the West Bank, would permanently remain in Israeli hands. Apartment complexes, looking like college dorm towns and housing 400 families or more, sprang up on once bare hillsides. Couples faced with paying $85,000 for a two-bedroom apartment in Jerusalem could buy the same home in the West Bank for as little as $55,000, complete with a government-subsidized mortgage. As a result, the number of Jewish settlers in the West Bank rose from 13,000 in 1977 to 28,000. If the trend continues, the Jewish population will reach 40,000 by 1987.

In a report published in April, former Jerusalem Deputy Mayor Meron Benvenisti concluded that Israel had effectively absorbed the West Bank and that "the whole political discussion, which is based on the premise that things are reversible, is irrelevant." According to Benvenisti, the Israelis have taken over one-fifth of the West Bank for military purposes and are in the process of assuming control of another one-fifth for settlements, farms and grazing. The West Bank is also being integrated into the Israeli economy: 90,000 West Bank Arabs work in Israel or for Israelis in the West Bank. Roads crisscross into the occupied territory, as do water pipes and power lines.

The area is ruled by a military government headed by Colonel Freddy Zach. He is responsible for the day-to-day running of the West Bank, from maintaining sewage lines to posting guards around Jewish settlements. His duties include imposing curfews on Arab villages whenever trouble arises, which usually takes the form of rockthrowing at passing Israeli vehicles. Israeli officers may question and detain Arabs at will, though residents may also appeal what they regard as unjust or illegal actions to the Israeli Supreme Court.

Even those who promote the settlement policy have not offered a satisfactory solution to the real dilemma: how to treat the West Bank's 800,000 Arabs. Shamir favors a form of "limited autonomy," to be negotiated with Jordan, under which the West Bank and Gaza Arabs would have control over taxes and police, for example, but not over such matters as water, security and immigration. Though Peres is less specific, he has promised to suspend the construction of new settlements immediately. He would also turn limited administrative powers over to the Arabs without waiting for Jordan to join any talks. Although Peres has hinted in the past that he might be willing to give up some West Bank land in exchange for peace, he has avoided directly addressing the question in the current campaign. Israelis are almost evenly divided on the subject. A poll published last month in Ma'ariv, a Tel Aviv newspaper, showed that while 43% backed a peace agreement in which Jordan conceded some West Bank territory, 41% were opposed to giving up any land whatsoever. "Those who call themselves Palestinian Arabs should be grateful that we permit them to live in our homeland," says a West Bank settler. "They belong in the Arab nation located in the rest of the Middle East. Why don't they leave us alone?"

For many Israelis, the government's policies present Israel with its most serious moral dilemma. Counting the Gaza Strip's 450,000 Arabs, Israel now rules more than 1.4 million people who do not enjoy full rights and have no loyalty to the state. If Israel continues to deny those rights to what amounts to 25% of the people under its control, it will erode its democratic principles. But if Israel accepts them as citizens, the country will become a Jewish-Palestinian state, erasing its heritage as the Jewish homeland. "When you think of this situation in the light of Jewish history and the struggle of Jews for equality of right and status, the paradox becomes agonizing," says former Foreign Minister Abba Eban.

The question of how Israel deals with its Arab neighbors arises in an| other context: the continuing occcupation of Lebanon, which Israel invaded in June 1982. Some 124,000 troops remain in the southern third of the country, where they face the Syrian army in the Bekaa Valley and try to keep the coastal region free of the P.L.O. The occupation costs $1.2 million a day, but there is a human toll as well. Since the Israeli army withdrew from the Beirut area to Lebanon's Awali River last September, 55 soldiers have been killed and 436 wounded in terrorist attacks. Most of the violence is caused by the Shi'ite Muslims, who make up more than half of the almost 1 million population in southern Lebanon and deeply resent the continuing Israeli presence. Assaults have declined in the past month, but an Israeli patrol was ambushed near a Shi'ite village last week, and one soldier was killed.

Although army bases have been fortified and new roads built in recent weeks, the Shamir government would like to withdraw from southern Lebanon. What keeps the Israelis there is the absence of a central authority able to guarantee that P.L.O. fighters will not filter back and threaten Israel's northern border again. Israel sometimes goes to extraordinary lengths to ensure its safety. Israeli gunboats intercepted a ferryboat on its run between Cyprus and Beirut last week and brought it to the Israeli port of Haifa. Authorities detained nine passengers, most of them Lebanese Shi'ites who had just returned from Iran. Israeli officials insist Israel will not turn southern Lebanon into a "North Bank," but Defense Minister Moshe Arens admits that a complete pullback is "going to take a little time."

Underscoring Jerusalem's complex defense problems, a pair of Israeli fighter-bombers attacked an island off the northern Lebanese coast last week. Israeli officials contended that the island was being used by the P.L.O. as a training base for sea assaults. The next day brought cause for celebration, however. Israel and Syria exchanged prisoners of war for the first time in a decade. In a tear-soaked ceremony in the Golan Heights town of Quneitra, Israel released 291 soldiers captured during the invasion of Lebanon, along with 20 Arabs who had been arrested for protesting the Israeli occupation of the Golan Heights. Syria gave up three Israeli soldiers caught during the invasion and three security agents seized in May after they drove into a Syrian-controlled sector of Lebanon. The Syrians also delivered the bodies of what were believed to be five Israeli soldiers, while Israel returned the remains of 72 Syrian troops.

The invasion sparked a tempest within the Israel Defense Forces, reflecting both the lack of national consensus about the operation and the controversial decision to bombard West Beirut. Most Israelis supported the initial move to clean the P.L.O. out of southern Lebanon, but opinion shifted when Israeli forces pushed north to encircle Beirut. The war also fell short of achieving its larger goals. Lebanon's Christians failed to win control over the country, as Israel had hoped. After suffering a stinging military defeat, Syria has emerged stronger than ever.

Since the invasion, 585 Israeli soldiers have been killed in Lebanon and an additional 3,049 wounded. And there has been major political damage as well. In February 1983, opponents of the Lebanon policy converged angrily outside Beghi's office. Suddenly, a hand grenade was thrown into a crowd of Peace Now demonstrators, killing one person and injuring nine others. For an Israeli citizen to be murdered in such a way and at such a time stunned the nation. Deputy Prime Minister David Levy sadly called the death "the casualty of us all."

Today the invasion has become for many Israelis what the Viet Nam War became for many Americans: something to be ashamed of, something not talked about. Morale is low among some troops in Lebanon, both because they feel the hostility of the region's inhabitants and because they feel they lack support at home. "We are slowly becoming the forgotten people," says an Israeli colonel, fresh from a tour of duty in Lebanon. "We fight there aware that the Israeli public does not back us."

Peres promises to remove most of the troops from southern Lebanon within 100 days of taking office. He would substitute patrols and electronic warning outposts to protect Israel's northern border. One political figure who defends the invasion is its architect, former Defense Minister Ariel Sharon, a candidate for the Knesset on the Likud ticket. As the most charismatic of his party's politicians, Sharon still draws cries of "Arik! Arik!" when he campaigns. He remains immensely popular with the more hawkish elements of his party, many of whom feel that he did not have a completely free hand during the invasion and thus should not be blamed if it did not succeed.

On the home front, the next Prime Minister will have to deal with the growing friction between Orthodox and non-Orthodox Jews. Tensions have arisen over issues ranging from burial practices to bus service on the Sabbath. In Petah Tikva, near Tel Aviv, a dispute has broken out over whether restaurants and cinemas could be opened on the Sabbath. The "ultraOrthodox" Jews, as they are known in Israel, have repeatedly battled police in their protests against archaeological digs outside Jerusalem's Old City. When a university professor inadvertently drove through one of their neighborhoods in Jerusalem on a Friday night, thus violating the Sabbath, his windshields were smashed and he suffered a severe concussion. Another group ransacked a Jerusalem census office claiming it was against God's will to be counted.

Orthodox rabbis already have wide civil powers. They approve all marriages, divorces and adoptions. Their political clout, moreover, grew during the Begin years. In order to win the support of Agudat Yisrael, the religious party that had four sometimes crucial seats in the Knesset, Begin made several concessions. He forbade El Al flights on the Sabbath, losing an estimated $30 million a year, and pushed through a law limiting autopsies, which violate Orthodox beliefs. Begin also agreed to push the highly controversial "Who is a Jew?" legislation, which would amend Israeli law to ensure that the only converts granted citizenship are those who undergo Orthodox rites. Though the bill is not likely to pass, it has angered Jews around the world.

What concerns many Israelis is that some Orthodox Jews want to regulate daily life according to Halakhah, or religious law. Coed swimming would be outlawed, only kosher food would be served, television and radio programs would be banned from sundown Friday to sundown Saturday. For former President Yitzhak Navon, 63, the dilemma cuts to the very heart of what Israel should be. "Are we going to live according to the laws of Moses or to the laws of Parliament?" he asks. "And who decides that?" Amos Oz argues that as a Jew, "I am free to decide what I will choose from this great inheritance, to decide what I will place in my living room and what I will relegate to the attic." Since the religious strains stem from such passionately held beliefs, they will never completely vanish. In deed, Israel has never had a written constitution precisely because its people could not agree on the proper role of religion in the state. Some see the conflict, in fact, as a healthy process that renews Judaism. "The Orthodox Jews have a lot of nuisance power but no real power," says David Hartman, a philosophy professor at Hebrew University in Jerusalem. For Hartman, the real question is how Judaism can be practiced in a pluralistic society. "How does Judaism accommodate people in a state where 90% of its citizens do not accept Halakhah?" he says. "The Orthodox Jews have not begun to know how to do it."

The very fact that Jews have a country of their own where they can ardently argue such issues is nothing short of miraculous. The vision of Theodor Herzl, the father of Zionism, has been realized: Israel exists as a place where, as Herzl wrote in 1896, "the offensive cry of 'Jew' may become an honorable appellation like German, Englishman, Frenchman." The country has become home to Jews from some 100 nations, many of them refugees from religious persecution. Its citizens enjoy the only genuine democracy in the Middle East. For better or for worse, Israel has in one generation gone from an agrarian society to a miniature superpower.

Israeli society has long been known for the richness of its debate. The diversity of opinions is carried into the polling booth: no fewer than 27 parties are running in these elections. Israelis have never given a majority of the Knesset's 120 seats to a single party. Instead, the country has been run by a series of coalitions made up of one major party and a clutch of tiny groups, some with as few as one or two seats, that exert influence far beyond their numbers. Some Israelis argue that government by coalition holds the country hostage to the whims of single-interest groups. Others hail the process for ensuring that no one party grows too powerful.

Only once have major opponents banded together to confront a national crisis: in 1967, on the eve of the Six-Day War, Labor joined with other parties to form a Government of National Unity. Headed by Prime Minister Levi Eshkol, the Cabinet included Begin, Eban and Moshe Dayan. The united front broke up three years later, but it helped bring Israel through a war and its aftermath. Shamir and Peres discussed a similar arrangement last fall, but could not agree on details. Some Israeli politicians suggest that a Likud-Labor coalition after this year's elections would offer the best hopes of resolving the country's economic problems.

Despite their differences, Shamir and Peres face limited options at home and abroad. Whoever wins will have to administer the same unpalatable economic medicine: pare the $20 billion annual budget, trim the government bureaucracy, and reduce the standard of living by keeping wage settlements below the level of inflation. Any change in the status of the West Bank will depend as much on the attitude of Jordan's King Hussein as on the Israeli leadership. In southern Lebanon, Israel will have to retain some sort of presence, if only by surrogate, to project its northern border. The Arab world will stay defiant. As for the U.S., history shows that the same fundamental areas of agreement, and the same tensions, remain regardless of who is in power.

Israelis are fated always to be slightly disappointed with themselves, since reality can never match the bright-eyed hopes of 1948. "We dreamed too high," says Eban. What the Zionist pioneers hoped to create in 1948 was not simply another country, but an exemplary society that would inspire the world. David Ben-Gurion, Israel's first Prime Minister, envisioned a nation whose people found redemption by tilling the soil and becoming self-sufficient. The dream found its reality in the kibbutz, the farming commune where Zionism and socialism intermingled. "We came to build the land and be built by it," went the Hebrew song.

As Israel aged, change was inevitable. An agrarian economy became industrialized, the pioneer vision lost some of its blaze. The 1967 war turned the country into a proven military power, while the 1973 war demonstrated how precarious its fate remained. The fact that after so many years the Arab world, save for Egypt, still has not made peace with Israel induces a certain weariness. "We have to carry on with the march," goes a popular new song in Israel. "The road is very long." For some Israelis, the road seems never ending.

In his final Independence Day address as President last year, Yitzhak Navon talked about the dispute between Orthodox and non-Orthodox Jews. "The question is not if there will be arguments among us, but if we will know how to conduct them," he said. "This question has become a central factor in our lives, in our ability to sustain democracy and, quite simply, to live with each other." Those words are worth heeding, but Israelis must be concerned not just about the tone of the debate but its translation into precise plans for easing the country's very real troubles. The time for talk is swiftly giving way to the time for action.

--By James Kelly

-- Reported by David Halevy and Harry Kelly /Jerusalem

With reporting by David Halevy, Harry Kelly