SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934 (Amendment No. )

Filed by the Registrant (x)

Filed by a Party other than the Registrant ( )

Check the appropriate box:

( ) Preliminary Proxy Statement
( ) Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
(x) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

PEC Israel Economic Corporation
- ---------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

- ---------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):
(x) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or from Item 22(a)(2) of Schedule 14A.
( ) $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.

1) Title of each class of securities to which transaction applies:

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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):

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5) Total fee paid:

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( ) Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.

1) Amount Previously Paid:

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4) Date Filed:

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PEC ISRAEL ECONOMIC CORPORATION
-------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 4, 1996
-------------------

To the Shareholders of PEC ISRAEL ECONOMIC CORPORATION:

The Annual Meeting of Shareholders of PEC Israel Economic Corporation will
be held at 511 Fifth Avenue, 17th Floor, New York, New York on June 4, 1996 at
2:00 P.M., for the following purposes:

1. To elect 12 directors for the ensuing year;

2. To transact such other business as may properly come before the
meeting.

The close of business on April 19, 1996 has been fixed as the record date
for the meeting. All holders of common stock at such date will be entitled to
vote at the meeting.

By Order of the Board of Directors,

JAMES I. EDELSON,

Executive Vice President and Secretary

New York, New York
April 29, 1996

IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING. PLEASE
SIGN, DATE AND MAIL YOUR PROXY PROMPTLY WHETHER OR NOT YOU EXPECT TO ATTEND THE
MEETING.

PEC ISRAEL ECONOMIC CORPORATION
511 FIFTH AVENUE, NEW YORK, N.Y. 10017
PROXY STATEMENT
-------------------

The accompanying form of proxy is solicited on behalf of the Board of
Directors of PEC Israel Economic Corporation ("PEC" or the "Company") for use at
the annual meeting to be held June 4, 1996. Proxies in the accompanying form
which are properly executed and duly returned to PEC and not revoked will be
voted as directed. Proxies may be revoked at any time before they are voted by
delivery of a written notice of revocation or a subsequent proxy, or by
announcing such revocation at the meeting. Under Maine law and the Company's
Articles of Incorporation and By-Laws, if a quorum is present, directors are
elected by a plurality of the votes cast by the holders of the shares present in
person or represented by proxy at the meeting and entitled to vote on the
election of directors. A majority of the outstanding shares entitled to vote,
present in person or represented by proxy, constitutes a quorum. Shares
represented by proxies or ballots withholding votes from one or more directors
will not be counted in the election of that director but will be counted for
purposes of determining a quorum.

The only securities which are entitled to vote at the meeting are the shares
of common stock of PEC, each share of which has one vote. Only shareholders of
record at the close of business on April 19, 1996 are entitled to vote at the
meeting. As of April 19, 1996, there were outstanding and entitled to vote
18,758,588 shares of PEC common stock. This proxy statement is being distributed
to the shareholders commencing on or about April 29, 1996.

As of April 19, 1996, IDB Development Corporation Ltd. ("IDB Development")
owned 13,193,592 shares of PEC common stock, representing approximately 70.3% of
the outstanding shares. Approximately 71% of the voting securities of IDB
Development are owned by IDB Holding Corporation Ltd. ("IDB Holding"). For
information concerning these shareholdings and persons who, by reason of their
relationships to IDB Holding, may also be deemed to be beneficial owners of
these shares, see "Information as to Share Ownership."

ELECTION OF DIRECTORS

At the meeting, management will present a proposal to elect as directors the
12 nominees named below for the term of one year, and until their respective
successors have been elected and qualified. All of the nominees other than Mr.
Oudi Recanati are currently serving as Directors of PEC for terms expiring in
June 1996. It is intended (unless such authority is withheld) that votes will be
cast pursuant to proxies hereby solicited for the nominees named below. If for
any presently unknown reason any of the nominees are unable to serve as a
director, another person or persons who may be nominated will be voted for at
the discretion of the proxy holders.

The following chart sets forth certain information with respect to each of
the nominees, including beneficial ownership of PEC common stock as of April 15,
1996.

NOMINEES FOR ELECTION

NUMBER AND PERCENTAGE OF
SHARES OF PEC COMMON
NAME, PRINCIPAL OCCUPATIONS YEAR FIRST STOCK
DURING LAST 5 YEARS; BECAME A BENEFICIALLY OWNED AS OF
OTHER DIRECTORSHIPS* AGE DIRECTOR APRIL 15, 1996**
- ---------------------------------------------------- --- ---------- ------------------------

RAPHAEL RECANATI, Chairman, PEC Israel Economic 72 1962 13,193,592 --70.3%(1)
Corporation; President, Finmar Equities Co.,
Shipping and Finance; Chairman and Managing
Director, IDB Holding and IDB Development;
Chairman, Discount Investment Corporation Ltd.;
Director, Overseas Shipholding Group, Inc.(4)

FRANK J. KLEIN, President, PEC Israel Economic 53 1994 1,000
Corporation since January 1, 1995; Director, Elron
Electronic Industries Ltd. and Scitex Corporation
Ltd.; For more than 20 years prior to 1995, an
officer of Israel Discount Bank of New York (Executive
Vice President from December 1985 to December 1994)

ROBERT H. ARNOW, Chairman of the Board, Swig, Weiler 71 1988 1,900
and Arnow Mgt. Co., Inc., Real Estate

JOSEPH CIECHANOVER, President, Atidim-Etgar Nihul 62 1980 2,000
Kranot B.M., General Partner, Investments;
Chairman, El Al Israel Airlines Ltd.; Director,
IDB Holding and IDB Development; From 1980 through
1994, President, PEC Israel Economic Corporation

ELIAHU COHEN, Joint Managing Director of IDB 63 1995 -0- (2)
Holding and IDB Development; Director of Discount
Investment Corporation Ltd.

ROGER CUKIERMAN, Chief Executive Officer, La 59 1986 -0-
Compagnie Financiere Edmond de Rothschild Banque;
Managing Director, Isrop Participations Ltd.;
Deputy Chairman, Israel General Bank Ltd.

ALAN S. JAFFE, Partner, Proskauer Rose Goetz & 56 1995 -0-
Mendelsohn LLP, Attorneys, counsel to PEC

HERMANN MERKIN, Member, New York Stock Exchange, 88 1966 5,000
Inc. and American Stock Exchange, Inc.; Director,
IDB Holding and Discount Investment Corporation
Ltd.

HARVEY M. MEYERHOFF, Chairman, Magna Holdings, Inc., 69 1985 10,400 (3)
Investments

OUDI RECANATI, President, Y.L.R. Capital Markets 46 -- -0-
Ltd., Investment Banking; Director, IDB Holding,
IDB Development and Overseas Shipholding Group,
Inc.(4)

ALAN S. ROSENBERG, Private Investor; From 1967 66 1992 3,000 (5)
through 1994, Partner, Proskauer Rose Goetz &
Mendelsohn LLP, Attorneys, counsel to PEC

RICHARD S. ZEISLER, Private Investor 79 1949 6,000

- ------------

(1) Represents shares of PEC common stock as to which Mr. Raphael Recanati may
be deemed to share voting and dispositive power. See "Information as to
Share Ownership."

(2) Mr. Cohen owns options to acquire 80,700 Ordinary "A" Shares of NIS 1.00
each of IDB Development, of which one-half are exercisable until May 11,
1997 and one-half are exercisable until May 11, 1998.

(3) Mr. Meyerhoff is the sole trustee of a charitable income trust which owns
13,070 Ordinary "A" Shares of NIS 1.00 each of IDB Development.

(4) Mr. Oudi Recanati is a son of Mr. Raphael Recanati.

(5) Includes 1,000 shares of PEC common stock owned by Mr. Rosenberg's wife. Mr.
Rosenberg disclaims beneficial ownership of these shares.

* IDB Development and IDB Holding are parent companies of PEC. Discount
Investment Corporation Ltd., Scitex Corporation Ltd. and Elron Electronic
Industries Ltd. are or may be deemed to be affiliates of PEC.

** Except as indicated for Mr. Raphael Recanati, none of the nominees
beneficially owns as much as 1% of the common stock of PEC. Except as indicated
for Messrs. Recanati and Rosenberg, the amounts shown represent shares of PEC
common stock as to which the person has sole voting and dispositive power. Five
nominees for election to the Board of Directors are presently members of the
Board of Directors of IDB Holding. Except for Mr. Raphael Recanati, none of
these five nominees are considered by PEC to share voting and dispositive power
with respect to the shares of PEC beneficially owned by IDB Holding.

As of April 15, 1996, there were 37,666,364 Ordinary Shares of NIS 5.00 each
of IDB Holding issued and outstanding. One NIS (New Israel Shekel) was
equivalent to approximately $.32 on April 15, 1996. As of April 15, 1996, Mr.
Ciechanover beneficially owned 500 Ordinary Shares of IDB Holding, Mr. Cohen
beneficially owned 20,960.2 Ordinary Shares of IDB Holding, Mr. Merkin
beneficially owned 20,865 Ordinary Shares of IDB Holding, and Mr. Recanati may
be deemed to have shared the power to vote or direct the disposition of (and
therefore to have beneficially owned) 19,754,005.4 Ordinary Shares of IDB
Holding (52.4% of the outstanding Ordinary Shares).

Following a lengthy trial in Israel of 22 defendants, including IDB Holding,
the four largest Israeli banks, and members of their senior managements, IDB
Holding, all the banks, including Israel Discount Bank Limited ("IDBL") of which
IDB Holding was the parent, and all the management-defendants were convicted by
a district court of contravening certain provisions of that country's laws in
connection with activities that arose out of a program related to the regulation
of bank shares. Messrs. Raphael Recanati, Eliahu Cohen and Oudi Recanati, who
were among the management-defendants, and IDB Holding categorically denied any
wrongdoing and appealed to the Supreme Court of Israel, which found that the
share regulation had been authorized and encouraged by high officials of the
Israeli Government, overturned the principal count of the indictments of the
management-defendants, and acquitted IDB Holding of all charges. The Court left
standing the lower court's finding that Messrs. Raphael Recanati and Eliahu
Cohen, who were principal executive officers of IDBL, and Mr. Oudi Recanati, who
was a member of that bank's senior management, caused improper advice to be
given in connection with the sale of securities and that Messrs. Raphael
Recanati and Eliahu Cohen caused false entries in corporate documents, in
contravention of Israeli laws. None of the activities in question, which
occurred more than 12 years ago, relate to or involve PEC or its business in any
way.

Messrs. Merkin and Raphael Recanati are members of the Nominating Committee
which recommends persons to the Board of Directors for nomination as members of
the Board of Directors and election as officers of PEC. The Nominating Committee
had one meeting during 1995. The Nominating Committee will consider nominees
recommended by shareholders. Recommendations should be submitted in writing to
the Secretary of PEC prior to December 31 in each year. PEC has a Compensation
Committee of the Board whose principal functions are to determine the salaries,
bonuses and other compensation, if any, to be paid to the officers of PEC. The
present members of the Compensation Committee, which held one meeting in 1995,
are Messrs. Raphael Recanati, Cohen and Meyerhoff. PEC also has an Audit
Committee of the Board. The principal functions of the Audit Committee are to
recommend the independent auditors for the Company, review the planned scope and
results of audits and other services performed by the auditors, review the
auditors' recommendations with regard to internal controls of the Company and
review and make recommendations to the Board of Directors with respect to
financial and accounting matters generally. The present members of the Audit
Committee are Messrs. Merkin and Rosenberg. The Audit Committee held one meeting
in 1995. PEC also has a Pension Committee of the Board. The principal functions
of the Pension Committee are to administer the Employees' Retirement Plan of PEC
and the investment of its assets. The present members of the Pension Committee
are Messrs. Klein and Rosenberg. During 1995, the Pension Committee held two
meetings. Two meetings of the Board of Directors and ten meetings of the
Executive Committee of the Board of Directors were held in 1995. The present
members of the Executive Committee are Messrs. Raphael Recanati and Klein. All
members of the Board of Directors, except Messrs. Arnow, Ciechanover, Cohen,
Cukierman and Meyerhoff, attended during 1995 at least 75% of the meetings of
the Board of Directors and the Committees on which they serve.

Directors of the Company serve in that capacity without compensation.

EXECUTIVE COMPENSATION

The following table sets forth the compensation paid to, or earned by, the
executive officers of the Company during each of the Company's last three fiscal
years:

SUMMARY COMPENSATION TABLE

ANNUAL COMPENSATION
----------------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($)
- --------------------------------------------------- ---- ---------- --------- ----------------

Frank J. Klein..................................... 1995 400,000 53,000 159,889(1)
President

James I. Edelson................................... 1995 195,000 10,000 6,240(2)
Executive Vice President, Secretary and General 1994 185,000 10,000 1,476(3)
Counsel 1993 170,000 10,000 1,457(3)

William Gold....................................... 1995 160,000 10,000 6,240(2)
Treasurer 1994 155,000 10,000 1,476(3)
1993 150,000 10,000 1,407(3)

- --------------

(1) Consists of $150,361 that the Company expensed pursuant to the supplemental
retirement arrangement described below, $4,908 of insurance premiums paid by
the Company for term life insurance and $4,620 of matching contributions by
the Company under its Savings and Investment Plan.

(2) Consists of $4,620 of matching contributions by the Company under its
Savings and Investment Plan and $1,620 of insurance premiums paid by the
Company for term life insurance.

(3) Represents the amount of insurance premiums paid by the Company for term
life insurance.

Messrs. Klein, Edelson and Gold are participants in the Employees'
Retirement Plan of PEC. Under the Employees' Retirement Plan, an employee is
entitled to annual benefits equal to 2% of (a) his average salary for the five
highest consecutive years of credited service preceding retirement or (b)
$150,000 for 1995, whichever is lower, multiplied by the number of years of
credited service and without reduction for Social Security benefits received.
Mr. Klein has 28 years of credited service, all but one year of which is service
with a former affiliated employer (for which he received benefits under that
employer's plan which offset and reduce the payments due under the PEC Plan).
Messrs. Edelson and Gold currently have 4 years and 28 years, respectively, of
credited service.

The following table sets forth the estimated annual pension payable under
the Employees' Retirement Plan upon retirement at age 65, to employees at
various salary levels and in representative years-of-service classifications:

AVERAGE ESTIMATED ANNUAL PENSION
PAST BASED ON YEARS OF CREDITED SERVICE AT AGE 65
ANNUAL --------------------------------------------------------
SALARY 10 YEARS 20 YEARS 30 YEARS 40 YEARS
- -------- -------- -------- -------- --------
$125,000 $ 25,000 $ 50,000 $ 75,000 $100,000
150,000 30,000 60,000 90,000 120,000
175,000 35,000 70,000 105,000 140,000
200,000 40,000 80,000 120,000 160,000
225,000 45,000 90,000 135,000 180,000
250,000 50,000 100,000 150,000 200,000
300,000 60,000 120,000 180,000 240,000
350,000 70,000 140,000 210,000 280,000
400,000 80,000 160,000 240,000 320,000
450,000 90,000 180,000 270,000 360,000
500,000 100,000 200,000 300,000 400,000

The annual pension payable to any employee under the Employees' Retirement Plan
may not exceed the limitations imposed for qualified plans under Federal law
(currently $120,000). However, under a supplemental arrangement made with Mr.
Klein, he will be entitled to receive a lump sum equivalent of additional annual
benefits equal to 1 1/2% of his average salary and bonus for the five highest
consecutive years of credited service preceding retirement (without any
limitation as to amount) multiplied by the number of years of credited service
reduced by his annual pension under the Employees' Retirement Plan (and further
reduced by retirement benefits from his former employer). For purposes of these
calculations, Mr. Klein's prior service with his former employer is included in
credited service.

BOARD AND COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

General

The salary levels for the executive officers of the Company for 1995 were
established at the end of 1994 by the entire Board of Directors (other than Mr.
Frank J. Klein). The present members of the Board of Directors who also were
members of the Board of Directors at the end of 1994 and established the 1995
salary levels for executive officers of the Company are listed at the end of
this report. In 1995, the Board of Directors appointed a compensation committee
(the "Committee") which became responsible for establishing the levels of
compensation for the executive officers of the Company. Its members are Raphael
Recanati, Chairman, and Eliahu Cohen and Harvey M. Meyerhoff, none of whom is a
current or former employee of the Company. The Committee established the bonus
amounts for the executive officers of the Company for 1995. Each year the
Committee will evaluate PEC's compensation paid to its executive officers.

Compensation Philosophy

The executive compensation philosophy of the Company is to provide
competitive levels of compensation that reward corporate and individual
performance and assist the Company in attracting,

retaining and motivating highly qualified executives. There is no specific
formula pursuant to which any executive officer's compensation is established or
adjusted. In setting executive officer salaries and bonuses, the Board of
Directors and the Committee considered the recommendations of Mr. Klein, the
Board of Directors' and the Committee's own subjective evaluations of the
performance of those officers, the respective officers' length of service to the
Company, and the many duties performed by the Company's executive officers
because of the Company's small staff. The Board of Directors and the Committee
also considered the Company's performance, emphasizing performance over a period
of several years rather than a single year because PEC's business philosophy is
to acquire interests in companies that have attractive long-term growth
potential even though such investments may not offer current cash returns. The
Board of Directors and the Committee did not give particular weight to or
quantify any one or more particular performance factors, but in establishing
salaries and bonuses for 1995 the Board of Directors and the Committee
considered management's contribution to the enhancement of shareholder value and
noted the superior performance of an investment in the Company's common stock
compared to an investment in the Peer Group Index over the past five years as
shown in the performance graph following this report.

Components of Compensation

Compensation paid to the named executive officers, as reflected in the
foregoing Summary Compensation Table, consists primarily of base salary and
bonus. The amount of the employee's salary and bonus is a function of the
employee's officer position as well as individual performance and length of
service to the Company. In evaluating the Company's executive compensation
levels, the Board of Directors and the Committee reviewed information drawn from
a variety of sources, including published survey data, information gleaned from
the media, and the Company's own experience in recruiting and retaining
executives.

Benefit Plans

At various times in the past, the Company has adopted certain broad-based
employee benefit plans in which executive officers are permitted to participate
on the same terms as non-executive employees who meet applicable eligibility
criteria. Such plans include savings and investment (Sec.401(k)), retirement and
life and health insurance plans.

Compensation of the President

Mr. Klein's 1995 compensation is based on the same factors as are described
above for all executive officers pursuant to the Company's executive
compensation philosophy. Mr. Klein's compensation in 1995 reflects his
experience as the Executive Vice President of the Company from 1977 through 1991
and as an executive officer for more than 20 years of the 16th largest
commercial bank in New York State in terms of deposits, his compensation from
his previous employer, his personal involvement in most of the companies in
which PEC has equity holdings and the Board of Directors' and the Committee's
subjective evaluation of Mr. Klein's contribution to the business and management
of the Company.

Section 162(m) of the Internal Revenue Code makes certain
non-performance-based compensation to executives of public companies in excess
of $1,000,000 non-deductible to the Company. At this time, it is not anticipated
that any executive officer of the Company will receive any such compensation in
excess of the limit in 1996. Therefore, to date, the Board of Directors has not
taken any action with

respect to this limit. The Board of Directors will continue to monitor this
situation and will take appropriate action if it is warranted in the future.

The report of the Board of Directors and the Committee shall not be deemed
to be "soliciting material" or incorporated by reference by any general
statement incorporating by reference this Proxy Statement into any filing under
the Securities Act of 1933, as amended (the "1933 Act"), or under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.

Members of the Board of Directors:

Raphael Recanati, Chairman Hermann Merkin
Robert H. Arnow Harvey M. Meyerhoff
Joseph Ciechanover Alan S. Rosenberg
Roger Cukierman Richard S. Zeisler

Compensation Committee:

Raphael Recanati, Chairman
Eliahu Cohen
Harvey M. Meyerhoff

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Raphael Recanati is Chairman of the Company and is Chairman of the
Compensation Committee. Mr. Recanati is not an employee of the Company and does
not receive any compensation from the Company. Mr. Recanati is Chairman and
Managing Director of IDB Holding and IDB Development. Mr. Ciechanover, who was
President of PEC until December 31, 1994, serves as a director of both of these
companies and participated in the deliberations of the Board of Directors of PEC
in 1994 concerning the salary levels of PEC's executive officers for 1995.

In December 1995, PEC purchased from IDB Development a 6.5% equity interest
in Property and Building Corporation Ltd., a corporation whose stock is publicly
traded on the Tel Aviv Stock Exchange, for $15.5 million, which was the market
price of such equity interest on the Tel Aviv Stock Exchange on the purchase
date.

IDB Development and a subsidiary of PEC are parties to an agreement under
which IDB Development provides advisory and other services, including accounting
services and obtaining and compiling financial information and reports, for an
annual fee of $130,000. PEC has an agreement with a subsidiary of IDB
Development under which each party provides administrative services to the other
party and offers the other party equal participation in business opportunities
for a fee of 2 1/2% of the equity invested by the paying party in business
opportunities initiated or initially presented by the other party. In 1995, PEC
paid the subsidiary of IDB Development approximately $35,000 under this
agreement. PEC has made investments in and loans to affiliates of IDB Holding.

PERFORMANCE GRAPH

The following graph compares for the five fiscal years beginning January 1,
1991 the yearly change in the year end stock price of PEC with the cumulative
total return (change in year end stock price plus reinvested dividends) of the
Standard & Poor's 500 Stock Index and an index composed of American Israeli
Paper Mills Limited (an Israeli industrial company), Ampal American Israel
Corporation (an American holding company that acquires interests in companies
located in Israel or related to Israel), Elron Electronic Industries Ltd. (an
Israeli holding company which is an affiliate of PEC that acquires interests in
high technology companies located in Israel or related to Israel), Etz Lavud
Ltd. (an Israeli industrial company) and Israel Land Development Company Ltd.
(an Israeli company that engages in the development and rental of real estate,
hotel management, insurance and publishing and other commercial media business)
(the "Peer Group Index"), all of which are publicly traded in the United States.

FIVE YEAR CUMULATIVE RETURN*
PEC, S&P 500 STOCK INDEX AND PEER GROUP INDEX
($100 INVESTED ON 12/31/1990)

$500

400
[GRAPH]
300

200

100

12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95

- ----------------------------------------------------------
WEIGHTED
TOTAL RETURN

PEC ISRAEL PEER GROUP
ECONOMIC S&P 500 INDEX
12/31/90 100.00 100.00 100.00
12/31/91 224.07 130.34 185.24
12/31/92 412.96 140.25 252.89
12/31/93 462.96 154.32 354.91
12/31/94 422.22 156.42 210.09
12/31/95 357.41 214.99 192.17
- ----------------------------------------------------------

- ------------

* Assumes that the value of the investment in the Company's common stock and
each index was $100 on December 31, 1990 and that all dividends were
reinvested. The Peer Group Index has been weighted based on market
capitalization. In accordance with rules of the Securities and Exchange
Commission ("SEC"), the Company's performance graph does not constitute
"soliciting material" and is not incorporated by reference in any filings with
the SEC made pursuant to the 1933 Act or the 1934 Act.

INFORMATION AS TO SHARE OWNERSHIP

The following table shows, as of April 15, 1996, the number of shares of PEC
common stock owned by the executive officers named in the Summary Compensation
Table (other than Frank J. Klein whose holdings of PEC common stock are listed
under "Election of Directors") and by all directors and executive officers as a
group.

NUMBER AND PERCENTAGE
OF SHARES OF PEC COMMON
STOCK BENEFICIALLY
OWNED AS OF APRIL 15,
NAME OF BENEFICIAL OWNER 1996
- -------------------------------------------- -----------------------
James I. Edelson............................ 1,000(1)
William Gold................................ 1,000(1)
Directors and Executive Officers as a Group 13,224,892--70.5%(2)

- ------------

(1) None of the executive officers beneficially owns as much as 1% of the
outstanding common stock of PEC. The amount shown for Mr. Gold includes 500
shares of PEC common stock owned by Mr. Gold's wife. Mr. Gold disclaims
beneficial ownership of these shares. Except as indicated for Mr. Gold, the
amounts shown represent shares of PEC common stock as to which the person
has sole voting and dispositive power.

(2) Persons who are directors or executive officers have sole power to vote and
direct the disposition of 29,800 shares (less than 1% of the outstanding
shares of the Company) and share with other persons the power to vote and
direct the disposition of 13,195,092 shares (70.3% of the outstanding
shares).

Set forth below are the names and addresses of those entities or persons
that are known by the Company to own beneficially more than 5% of the shares of
PEC common stock, as reported to the Company.

As of April 15, 1996, IDB Development Corporation Ltd., "The Tower", 3
Daniel Frisch Street, Tel Aviv, Israel, directly owned 13,193,592 shares of PEC
common stock, constituting 70.3% of the outstanding PEC common stock. IDB
Holding, which owns approximately 71% of the voting securities of IDB
Development and has the same address as IDB Development, may, by reason of such
holdings, be deemed the beneficial owner of the PEC common stock held by IDB
Development. Accordingly, IDB Holding may be deemed a beneficial owner of an
aggregate of 13,193,592 shares, or 70.3% of the outstanding PEC common stock. By
reason of their positions with and control of voting shares of IDB Holding,
Messrs. Raphael Recanati, of New York, New York, and Jacob Recanati, of Haifa,
Israel, who are brothers, and Leon Recanati, of Tel Aviv, Israel, and Judith
Yovel Recanati, of Herzliya, Israel, who are brother and sister, may each be
deemed to share the power to direct the voting and disposition of the
outstanding shares of PEC common stock owned by IDB Development and may each,
under existing regulations of the Securities and Exchange Commission (the
"SEC"), therefore be deemed a beneficial owner of these shares. Leon Recanati
and Judith Yovel Recanati are the nephew and niece of Raphael and Jacob
Recanati. Companies the Recanatis control hold approximately 52.4% of the
outstanding Ordinary Shares of IDB Holding.

To the best of the Company's knowledge, based on reports filed with the SEC,
the only other beneficial owner of more than 5% of the outstanding shares of PEC
common stock is Delphi Asset Management, 485 Madison Avenue, New York, New York
10022, which as of December 31, 1995 owned beneficially 1,035,218 shares of PEC
common stock, constituting 5.5% of the outstanding shares of PEC common stock.
Delphi Asset Management reported in its filing with the SEC that it has sole

dispositive power with respect to all of its shares of PEC common stock and sole
voting power with respect to 866,200 shares of PEC common stock. According to
such SEC filing, the shares mentioned above were acquired in the ordinary course
of business and were not acquired for the purpose of or having the effect of
changing or influencing the control of the Company nor in connection with or as
a participant in any transaction having such purpose or effect.

OTHER MATTERS

Representatives of Arthur Andersen LLP and Haft & Gluckman LLP, who were the
Company's auditors for 1995 and who have been recommended by the Audit Committee
to the Board of Directors to be the Company's auditors for 1996, are expected to
be present at the meeting with the opportunity to make a statement if they so
desire and to respond to appropriate questions.

The Board of Directors of PEC does not know of any other matters to be
brought before the meeting except those set forth in the notice thereof. If
other business is properly presented for consideration at the meeting, it is
intended that the proxies will be voted by the persons named therein in
accordance with their judgment. The cost of preparing this Proxy Statement and
all other costs in connection with this solicitation of proxies for the Annual
Meeting of Shareholders are being borne by PEC.

1997 SHAREHOLDERS MEETING

The Board of Directors of PEC will consider proposals intended for inclusion
in the proxy materials relating to the next annual meeting of shareholders.
These proposals must be submitted to and received at PEC's office no later than
December 31, 1996 and must otherwise comply with applicable laws and
regulations.

By Order of the Board of Directors,

JAMES I. EDELSON,

Executive Vice President and Secretary

New York, New York
April 29, 1996

PROXY PROXY
PEC ISRAEL ECONOMIC CORPORATION

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Raphael Recanati, Frank J. Klein and
James I. Edelson, and each of them, as Proxies, each with full power of
substitution, and hereby authorizes them to represent and to vote, as
designated on the reverse side, all the shares of common stock of PEC
Israel Economic Corporation held of record by the undersigned on April 19,
1996 at the annual meeting of shareholders to be held on June 4, 1996 or
any adjournment thereof.

(CONTINUED AND TO BE SIGNED AND DATED ON THE REVERSE SIDE)

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Please mark
your votes as [X]
indicated in
this example

1. ELECTION OF DIRECTORS

FOR ALL WITHHOLD
NOMINEES AUTHORITY to
LISTED(except vote for all
as marked to nominees listed
the contrary)

[ ] [ ]

R. Recanati, F. Klein, R. Arnow, J. Ciechanover, E. Cohen, R. Cukierman, A.
Jaffe, H. Merkin, H. Meyerhoff, O. Recanati, A. Rosenberg, R. Zeisler

(Instruction: To withhold authority to vote for any individual nominee write
that nominee's name on the line provided below.)

----------------------------------------------------

2. In their discretion, the Proxies are authorized to
vote upon such other business as may properly
come before the meeting.

This proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this
proxy will be voted for the election of the nominees named in Proposal 1.
If more than one of said proxies or their substitutes shall be present
and vote at said meeting, or any adjournment thereof, a majority of
them so present and voting (or if only one be present and vote, then
that one) shall have and may exercise all the powers hereby granted.

Please sign below exactly as your name appears. When shares are held
by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name by president or
other authorized officer. If a partnership, please sign in partnership
name by authorized person.

DATED
---------------------------------------, 1996

- ---------------------------------------------------
Signature

- ---------------------------------------------------
Signature if held jointly

Please mark, sign, date and return the Proxy Card promptly
using the enclosed envelope which requires no postage
when mailed in the U.S.A.

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