By the mid-1970s, economic grievances, corruption, and the perceived haughtiness of the Labor elite led to a major shift in the voting patterns of Oriental Jews (those of African or Asian origin). During the first twenty years of Israel's existence, Oriental Jews voted for the Labor Party mainly because the Histadrut, the Jewish Agency, and other state institutions on which they as new immigrants depended were dominated by Labor. But even during the early years of the state, Labor's ideological blend of secular-socialist Zionism conflicted sharply with the Oriental Jews' cultural heritage, which tended to be more religious and oriented toward a free market economy. As Oriental Jews became more integrated into Israeli society, especially after the June 1967 War, resentment of Labor's cultural, political, and economic hegemony increased. Most unacceptable to the Oriental Jews was the hypocrisy of Labor slogans that continued to espouse egalitarianism while Ashkenazim monopolized the political and economic reins of power.
Despite Labor's frequent references to closing the AshkenaziOriental socioeconomic gap, the disparity of incomes between the two groups actually widened. Between 1968 and 1971, Minister of Finance Pinchas Sapir's program of encouraging foreign investment and subsidizing private investment led to an economic boom; GNP grew at 7 percent per year. Given the persistent dominance of Labor institutions in the economy, however, this economic growth was not evenly distributed. The kibbutzim, moshavim, and Histadrut enterprises, along with private defense and housing contractors, enriched themselves, while the majority of Oriental Jews, lacking connections with the ruling Labor elite, saw their position deteriorate. Furthermore, while Oriental Jews remained for the most part in the urban slums, the government provided new European immigrants with generous loans and new housing. This dissatisfaction led to the growth of the first Oriental protest movement--the Black Panthers--based in the Jerusalem slums in early 1971.
Oriental Jews, many of whom were forced to leave their homes in the Arab states, also supported tougher measures against Israeli Arabs and neighboring Arab states than the policies pursued by Labor. Their ill feelings were buttressed by the widely held perception that the establishment of an independent Palestinian entity would oblige Oriental Jews to accept the menial jobs performed by Arab laborers, as they had in the early years of the state.
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