Israel can achieve Maastricht economic standards by 2003, Prime Minister Ehud Barak told a conference of businessmen at Israel's Chamber of Commerce in Tel Aviv, ahead of prime ministerial elections brought forward from 2003 to February 6, 2001.

"I predicted it would take seven to eight years to achieve Maastricht treaty standards. But I now predict this can be achieved within just two and a half years, that is, by the end of my original term in 2003," Barak said. But, he added, Israel is still bearing a huge foreign debt burden due primarily to enormous defense expenses over the years.

The Maastricht treaty sets standards for participation in the European Union. These include a reduction of inflation below a set level, a reduction of the trade deficit to no more than 3% of the gross national product, and a debt/GNP ratio of 60%. The

Bank of Israel

predicted in October that Israel will not meet Maastricht treaty standards for another 20 years.

Barak reviewed his administration's achievements in depth, first and foremost the withdrawal from southern Lebanon, pulling the economy out of recession, he said, and boosting it to 6% annual growth. Barak said that economic growth would have been even higher if not for the Al-Aqsa

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, which broke out in late September, and if not for the early prime ministerial elections, which increased the uncertainty factor.

The prime minister emphasized Israel achieved growth while slashing inflation to a low not even seen in Europe. The deficit had also been reduced to European levels. Exports had soared and most economic sectors posted growth.

In the 16 months of my premiership, 130,000 jobs were created. But unemployment levels did not decrease because the workforce expanded, Barak said. Barak added that his government will next week approve recommendations made by a public panel to reduce university tuition fees by 50% over the next five years.

On tax reform, the prime minister said its creators had bitten off more than could be chewed, and that it got lost in the fog surrounding the peace process. Barak said the reform would have simplified procedures and helped Israel adjust to economic norms in similar modern countries.

Barak further promised to act towards amending the Companies Law to encourage economic growth. The PM said that the state ought to reduce its involvement, by both alleviating the tax burden and by making the bureaucracy more flexible. To whoever asks me why we haven't done it in the previous year and a half, I say that we did what can be done in a year and a half, Barak said.

With Udi Ben-Shach