As exit polls began to indicate an astonishing landslide for Israel's Labor Party in general elections June 23, supporters at the party's victory celebration in Tel Aviv's Dan Hotel wept for joy. But some of the loudest cheers are coming from Israel's business community. The day after the polls closed, a tidal wave of buy orders caused the Tel Aviv Stock Exchange to surge by close to 8%. "There is a good chance now to have real peace, real defense, and real economic growth," says Benjamin D. Gaon, chief executive officer of Koor Industries Ltd., Israel's largest company.

Businessmen such as Gaon are optimistic that a government led by Yitzhak Rabin would be much less beholden to the special-interest groups that have typically paralyzed Israeli politics. For the first time in years, an Israeli government does not have to depend for its survival on the support of fringe religious or extremist parties. Rabin, the dour, 70-year-old general who gversaw Israel's victory in the 1967 Six-Day War, has indicated that he will appoint ministers based on qualifications rather than political ties when he presents a government to the Knesset in mid-July.

The dollars-and-cents payoff could follow quickly. Rabin's promise to freeze the controversial and costly building of Jewish settlements in the West Bank is likely to result in the Bush Administration swiftly unblocking some of the $10 billion in long-term loan guarantees that Israel has requested to resettle former Soviet Jews. A green light from the U.S. would also improve Israel's international credit rating and trigger similar loan deals from Germany.

But some economists worry that the money will just delay economic reform. Israel is way behind other countries in privatizing state enterprises. Unless it speeds up its privatization program, the new funds will be squandered on a wasteful public sector.