Shamir & Peres Governments (1983-1992)

In September 1983, **Begin resigned** and was succeeded by **Yitzhak Shamir** as prime minister.

In July 1984, elections were held for the Eleventh Knesset, following which a national unity government was formed and it was decided to rotate between the leaders, Shimon Peres and Yitzhak Shamir, as prime ministers.

In 1984, continual discrimination against Sephardi Ultra-Orthodox Jews by the Ashkenazi Ultra-Orthodox establishment led political activist Aryeh Deri to leave the Agudat Israel party and join former chief Rabbi Ovadia Yosef in forming Shas, a new party aimed at the non-Ashkenazi Ultra-Orthodox vote. The party won 4 seats in the first election it contested and over the next twenty years was the third largest party in the Knesset. Shas established a nationwide network of free Sephardi Orthodox schools.

Between the end of the austerity years (1955) and the Yom Kippur War, the Israeli economy grew considerably. After the war, partly due to the oil boycott, Israel's economic situation deteriorated. In the early 1980s, the Israeli economy deteriorated to large inflation, which peaked in 1984, when inflation in Israel reached more than 400%. The already difficult situation of the economy was further undermined by the Stock Market Crash, which erupted in 1983 and led to the nationalization of the major banks in Israel. This economic period ended following the economic stabilization plan of 1985, led by Finance Minister Yitzhak Modai and Prime Minister Shimon Peres. As part of the implementation of the plan, a new legal mechanism called the Arrangements Law was proposed.

In 1984, during a **severe famine in Ethiopia**, 8,000 Ethiopian Jews were **secretly transported to Israel**.

In May 1985, the "Jibril deal" was carried out in which 1,150 prisoners and security detainees who were imprisoned in Israel were released in exchange for three Israeli prisoners (Hezi Shai, Nissim Salem and Yosef Groff) captured by Ahmad Jibril's terrorist organization during the First Lebanon War. During "Operation Wooden Leg", in October of that year, the Israeli Air Force bombed the PLO headquarters in Tunisia.

In 1986, **Natan Sharansky**, a famous Russian human rights activist and Zionist refusenik (denied an exit visa), was **released from the Gulag** in return for two Soviet spies.

In June 1985, Israel withdrew most of its troops from Lebanon, leaving a residual Israeli force and an Israeli-supported militia in southern Lebanon, in an area known as the "**security zone**" (or the "Security Belt"), as a buffer against attacks on its northern territory. Since then, the IDF fought for many years against the Shia organization **Hezbollah**, which became a growing threat to Israel.

Growing Israeli settlement and continuing occupation of the West Bank and Gaza Strip led to the **Palestinian Intifada (uprising)** in 1987. The Intifada, which was initially a popular uprising against Israeli control of the Palestinian territories and consisted mainly of mass riots, later became an ongoing terrorist activity that actually ceased only with the convening of the Madrid Conference in 1991, and is considered one of the main causes of the Oslo Accords. **Human rights abuses** by Israeli troops led a group of Israelis to form B'Tselem, an organization devoted to improving awareness and compliance with human rights requirements in Israel.

In August 1987, the Israeli government cancelled the IAI Lavi project, an attempt to develop an independent Israeli fighter aircraft. The Israelis found themselves unable to sustain the huge development costs, and faced US opposition to a project that threatened US influence in Israel and US global military ascendancy.

In September 1988, Israel launched an Ofeq reconnaissance **satellite into orbit**, using a Shavit rocket, thus becoming **one of only eight countries possessing a capacity to independently launch satellites into space** (two more have since developed this ability).

In the 1988 Knesset elections, the Likud won by a margin of only tens of thousands of votes, and was even able to form a right-wing religious government. Shamir, the head of the Likud, felt uncomfortable in this government and formed a national unity government, without rotation. On March 15th, 1990, Shas and the Alignment overthrew the unity government, in an attempt to form a left-wing religious government, in what became known as the "Dirty Trick", after the nickname given to it by Yitzhak Rabin, one of the Labor Party leaders. The attempt failed, and Shamir formed a narrow right-wing-religious government.

In 1990, the Soviet Union ***finally permitted free emigration of Soviet Jews to Israel***. Prior to this, Jews trying to leave the USSR **faced persecution**; those who succeeded arrived as refugees. Over the next few years some ***one million Soviet citizens*** migrated to Israel. Although there was concern that some of the new immigrants had only a very tenuous connection to Judaism, and many were accompanied by non-Jewish relatives, this massive wave of migration slowly transformed Israel, bringing large numbers of highly educated Soviet Jews and creating a powerful Russian culture in Israel.

In August 1990, **Iraq invaded Kuwait**, triggering the **Gulf War** between Iraq and a large allied force, led by the United States. Iraq **attacked Israel with 39 Scud missiles**. Israel did not retaliate at request of the US, fearing that if Israel responded against Iraq, other Arab nations might desert the allied coalition. Israel **provided gas masks for both the Palestinian population and Israeli citizens**, while Netherlands and the United States **deployed Patriot defence batteries in Israel as protection against the Scuds**.

In May 1991, during a 36-hour period, 15,000 Beta Israel (Ethiopian Jews) were **secretly airlifted to Israel**. The coalition's victory in the Gulf War **opened new possibilities for regional peace**, and in October 1991 the US president, George H.W. Bush, and Soviet Union Premier, Mikhail Gorbachev, **jointly convened a historic meeting in Madrid of Israeli, Lebanese, Jordanian, Syrian, and Palestinian leaders**. Shamir opposed the idea but agreed in return for loan guarantees to help with absorption of immigrants from the former Soviet Union. His participation in the conference led to the collapse of his right-wing coalition.

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