Only soup kitchens are booming in an Israel devastated by the intifada

When Eliahu Bahima started working as head cook at the soup kitchen behind the glossy Jerusalem central bus station a year and a half ago, he served 50 free lunches a day. Now he is feeding 500 of Israel's poor – unemployed, homeless, pensioners and immigrants.

"People are having a very hard time," he explained. "They can't manage without us."

As the economy sinks deeper into recession and unemployment is running at 10.3 per cent, the new Finance Minister, Binyamin Netanyahu, has threatened to slash welfare benefits and dismiss thousands of public sector workers. Demand for Mr Bahima's help is growing every week.

The Jerusalem kitchen, one of a voluntary chain of 12 across the country, also delivers 250 packed lunches a day to the old and infirm. At the beginning of this year, it began offering evening meals. About 300 hungry Jews accept the offer every day, in addition to the lunchtime 500.

"Some come with children," Mr Bahima said. "Some take food home for the rest of the family. There are people around here with 10 kids and no way to feed them."

Chaim, a veteran tour guide with an unruly grey beard, comes three or four times a week. Business has been bad for the past 10 years, he says. Since the Palestinian intifada broke out in September 2000, he has had no work at all.

At the next table, Yosef, a 68-year-old Ukrainian immigrant in a leather cap, complained: "It's very hard in Israel." In Kiev, he was a building engineer. Since migrating 11 years ago, he has been jobless.

Yosef, who speaks Yiddish and Russian but no Hebrew, eats at the kitchen every weekday. A typical menu features vegetable soup, turkey rissoles with rice, carrots and peas, followed by fresh fruit.

Apart from the cook, most of the staff are volunteers. A dozen young soldiers turn up regularly from an army base, serving the meal, then mopping the floor after the customers have left.

Mr Bahima said: "We get nothing from the government." They buy the food with private donations raised by support groups.

Soup kitchens used to be the preserve of ultra-Orthodox communities, where large families are the norm and many of the fathers study into their thirties and forties. Now they have become a growth industry for secular as well as religious Jews. Latet, a nationwide charity (its name is Hebrew for "To give"), supplies foodstuffs to 100 centres. As with the Jerusalem cook, they report a tenfold increase in demand.

Another soup kitchen, in Beersheba, serves 250 lunches a day and donates hot meals to run-down inner-city schools. "Whoever comes, gets," said Shmuel Litmanovitch, a volunteer supervisor. "No questions asked."

One in five Israeli families, Jewish and Arab, lives below the poverty line. The economy, which grew by 6 per cent a year in the 90s, is in its third year of negative growth. Bank of Israel researchers predict that unemployment will continue to climb, reaching 12 per cent with 305,000 in the dole queue by the end of the year.

Mr Netanyahu's proudly Thatcherite economic rescue plan is marking time, with the trade unions accusing him of robbing the poor to feed the rich. They are threatening to stage a summer of industrial discontent.

Government economists, who tended to blame the world recession, now acknowledge the role played by the security crisis. Tourists, Israel's main source of foreign currency, have stayed away.

The swift and, for Israel, painless overthrow of Saddam Hussein, as well as the appointment of Mahmoud Abbas as the first Palestinian Prime Minister, have rekindled hope of economic recovery. The shekel is rising against major currencies. The depressed Tel Aviv stock exchange is bouncing back.

Israeli cities already feel safer. Israel's pre-emptive strategy of taking the battle to the bombers reduced the number of suicide attacks there from 40 in the first quarter of 2002 to five in the same period this year.

As foreign investors trickle back, they – like everyone else – are waiting to see whether peace really is around the corner.