Israels cradle-to-grave protection shaky

Outside the examination room, a dozen Jewish and Arab women wearing headscarves wait in a sunny hallway with peach walls and "Little Mermaid" posters. They're here for Pap smears, birth control, fertility testing and prenatal care.

The well-equipped, modern clinic is the model of efficiency. Its setting contrasts sharply with the lingering image of its former parent, the 76-year-old Histadrut federation of 40 trade unions that once controlled vast chunks of Israel's economy and social-welfare system.

Histadrut has been under attack since the early 1990s when disclosures of debts totaling more than $1 billion came to light in Israel.

In some cases, the government bailed out the union federation to maintain the nation's stability. But Histadrut has also been forced to reduce its workforce, divest assets and raise more money. The restructuring and downsizing continues today.

"We are in a perpetual transformation," said Jacob Lidar, head of Histadrut's financial campaign department.

Caught in the upheaval, Histadrut's social-service divisions that once covered three-quarters of Israel's population have been struggling with shifting priorities and uncertain futures.

Its health-care division, Kupat Cholim Clalit, which oversees 1,259 health clinics and 15 hospitals, gained independence from its long-time patron last year as a result of the shake-up. Now on its own, Kupat Cholim Clalit serves 3.5 million Israelis and is the largest of the nation's four HMOs.

The other social-service arms that remain under Histadrut's control — schools, youth villages, retirement homes and pensioner clubs — have faced budget cuts of varying degrees. So far, they've managed to hold their own, and even innovate in some cases.

Amid the pungent odor of garlic and dill, seventh-graders at the top academic levels are formulating hypotheses about the impact of light, heat and chemicals on cucumber pickling.

"It's fun, like scientists," 12-year-old Reut Eshcoly said.

Next door, classmates at the lowest academic levels plop down in front of computers with color screens, speakers and CD-ROMs. They're here to improve their English using specially designed computer programs.

These 40 children are bused twice a week to He'Amit high school in the Tel Aviv suburb of Rishon LeZion. He'Amit is one 106 schools and vocational training centers in Histadrut's Amal education network.

The new program targets both "gifted" and "weak" students who might otherwise get lost in the shuffle in regular classes.

"The school system in Israel is usually unable to deal with the un-average effectively," principal Shimon Schieber said.

Educators hope the extra attention will prevent the underachievers from dropping out of high school and will accelerate the gifted students into graduating one to two years early. If the children show results from this attention, officials said, the experiment will expand.

A few miles away at Amal's national headquarters in Tel Aviv, Ami Salant and his staff are building an online computer network to provide databases, e-mail and Internet access to teachers and students.

Salant, a director at Amal's Pedagogical-Technological Center, envisions Israeli students carrying CD-ROMs to class instead of textbooks someday.

"We cannot prove that this will improve scores," Salant said, "but we believe it will motivate children."

Regardless of such innovation, Amal's schools have faced shrinking budgets since Histadrut's financial crisis came to light.

Unlike those in the United States, many Israeli schools are administered and owned by organizations such as Histadrut. The Amal schools, which serve about 50,000 students, are part of Israel's public education system and get 60 percent of their budget from the government.

Two years ago, Histadrut provided about $3.3 million annually — or 5 percent of Amal's operating budget. Today, Histadrut's contribution is zero.

"Amal is trying to find her way," said Haim Ayalon, Amal's chairman.

The problems that led to Histadrut's enormous debt and crisis exemplify how far the organization has evolved from its modest origins.

In 1920, about 90 Zionist pioneers in pre-state Israel formed a mutual-aid society to organize workers, offer medical care, provide schooling and build the land.

As the Jewish population grew over the decades, the tiny association grew into one of Israel's most powerful organizations — the Histadrut.

Known as the cradle-to-grave protector of the worker and virtually indistinguishable from Israel's Labor Party, Histadrut's empire has touched nearly every Israeli via medical services, schools, pension funds, industrial operations, banking, media, youth villages and old-age homes.

But the combination of Israel's evolution from socialism to capitalism, and Histadrut's acknowledged mismanagement and corruption, led to a deficit estimated in late 1994 at $650 million — aside from Kupat Cholim's $1.3 billion debt.

"This system failed," said Amir Peretz, a Labor Party Knesset member and Histadrut's newest chairman.

Some Israelis don't believe Histadrut's reforms have gone far enough and question the reasons for a union federation's involvement in schools, old-age homes and hospitals in modern-day Israel.

"Why should the Histadrut be running these?" asked Steven Plaut, a University of Haifa business professor and conservative think-tank member.

But Histadrut leaders said their 700,000-member organization won't ever completely relinquish the ideology that led to its original involvement in the social service arena.

"The stiff socialism…doesn't any longer exist in Israel," said Jacques Neriah, who heads Histadrut's international department, "but we believe we have a social mission we can't deny and the state can't replace."

Among green lawns and cream-colored buildings with red-tile roofs, Israelis in their 80s and 90s move slowly along the sidewalks.

About 1,100 of them live in this senior village lo-cated on a former kibbutz in Ramat Efal, east of Tel Aviv. The seniors are also part of Histadrut's Mishan social-welfare network.

The network includes five children's villages, nine senior citizen residences and 45 pensioner clubs. Each of Mishan's retirement complexes care for a range of seniors — with apartments for those who require little assistance, and hospital wards for those who need full-time nursing care.

Histadrut's money woes have dramatically impacted Mishan, acting director-general Esther Yacovitz said.

"Mishan today is in the most difficult days we've ever known," she said. "There is much uncertainty about us."

Two years ago, Histadrut supplied about $16 million toward Mishan's annual operating budget. That accounted for about 20 percent of the budget, Yacovitz said.

Today, Histadrut is contributing no money.

Despite repeated reassurances from top Histadrut officials, Yacovitz fears that the union federation may sell off Mishan. If a for-profit group buys Mishan, Yacovitz said, "many people would not be able to afford it."

Individual residents aren't as worried as Yacovitz appears to be about Mishan's future.

"They can't do anything because we have a contract" for services, said Zvi Arzi, a member of the residents advisory council.

As Histadrut's financial shake-up continues, its diaspora fund-raising arm called the Israel Histadrut Foundation is being asked to take on more of the burden for financing social-service projects — renovating health clinics, buying computers for schools and completing buildings in senior-care villages.

To handle the increased load, the 36-year-old nonprofit foundation has begun to reorganize its fund-raising efforts.

"They told me: `You simply have to get us more money. We're not getting enough from Histadrut,'" said Stanley Abrams, the foundation's new executive vice president.

Until now, the foundation has relied primarily on "deferred giving," or trusts and bequests in wills.

That method has resulted in 3,000 trusts holding about $20 million — but only leads to about $1 million heading to Israel each year.

Abrams has decided to test the potential of direct cash fund-raising events in cities where it has offices –New York, Miami and Los Angeles. He hopes those efforts will send an additional $4 million to Israel each year.

The pressure on Abrams will likely grow only heavier.

Histadrut chief Peretz, who took over the organization in December when former chairman Haim Ramon became Israel's interior minister, plans to continue paring down.

He eventually wants Histadrut to supply only basic worker representation and social services — admittedly reducing funds to the latter.

By the end of the year, Peretz said, he expects to reduce his organization's outstanding debt to $130 million. This means even more belt tightening and selling off of assets.

"The Histadrut of the past is gone," Neriah explained. "It's dead."