Biblical Hebrew Forum

["Jonathan D. Safren" <yon_saf AT bezeqint.net>]

Ha'aretz - Article

Ha'aretz Daily Newspaper
Friday, August 02, 2002 Av 24, 5762Israel Time:  10:41  (GMT+3)

Only one economic program can save us

By Nehemia Strasler




"What is needed is a conservative, responsible policy that can increase
growth and employment in 2003," senior Finance Ministry officials told
cabinet members this past week in a campaign to convince the government to
support the treasury's new cutback program. The program deserved support,
and the government did the right thing in approving it, since it is a rescue
plan designed to prevent the economy from sliding into an Argentine-style
financial crisis. At the same time, the program is not a plan capable of
shifting the Israeli economy from its current crisis to a rosy horizon of
growth and a lower unemployment rate.

It should be pointed out that there is no economic program on earth that
could prevent the deep economic crisis toward which Israel is heading. The
economic situation is steadily worsening. The hotels are miraculously
holding on, the building contractors are recycling their debts with the
banks without any clear idea as to how they will ever repay those loans, the
self-employed are facing the prospect of a deep credit freeze that might
force them either to downsize their economic activities or to shut down
their businesses altogether, and the country's major companies are reducing
operations and laying off staff. Given this situation, the unemployment rate
is steadily climbing.

If we took a close look at the press releases received by a single
journalist during a single working day, we would discover an entire series
of doomsday messages: the Israel Export Institute reports a 20-percent drop
in the export of manufactured goods to the European Union; the Israeli
Association of Plastic and Rubber Manufacturers announces that the first
half of 2002 was the worst first-half period in a decade, with 400 layoffs,
a four-percent dip in sales and an eight-percent slump in exports; the
Central Bureau of Statistics reports that hotel accommodations in the first
half of the year dropped by 13 percent compared to the first half of 2001
and by 37 percent compared to the same period in 2000.

Our international stature has never been worse. The Israel Philharmonic
Orchestra was forced to cancel a concert tour in the United States and, a
month ago, 360 members of youth orchestras and dance troupes had to unpack
their bags because the organizers of a festival in Cyprus told them that
they were not welcome. Israeli physicians and scientists are given icy
receptions at international conferences. Cyprus was unwilling to host the
Maccabi Haifa soccer club and only massive pressure led to a reversal of
that decision. The response of Moshe Teomim, owner of Hapoel Tel Aviv: "The
problem is only going to get worse. We are losing a large portion of the
moral justification that we used to have, and we are slowly becoming a
pariah that the world wants to distance itself from."

This situation generates fear and gloomy projections, which will mean that
the level of the economy's activities will continue to drop over the next
few months. Similarly, revenue from taxation will continue to shrink. Which
will, in turn, mean that the Finance Ministry will have no alternative but
to present an additional program of cutbacks in early 2003 to meet the
target of a three-percent deficit in the state budget - a precondition that
must be in place in order to prevent an immediate financial crisis - and the
next program of cutbacks will be tougher than the present one.

This inevitable process can be stopped only if we place our finger on the
real problem: The war in the territories and Palestinian terrorism. Israel's
economy can never hope to recover as long as Palestinian terrorism hits deep
in the heart of the country. This terrorism leads us to "keep our heads
down" and causes a slump in business activity, generating yet a further
slump in our standard of living and a further increase in the unemployment
rate. However, the Israeli government is feeding the flames. Its answer to
terrorism is to use more force and more bombs, to eliminate more key
Palestinian figures, to impose more closures and to deport more
Palestinians. In carrying out these actions, Israel is not reducing
Palestinian terrorism; quite the contrary, Israel is merely intensifying it.

Prime Minister Ariel Sharon is not interested in political negotiations with
the Palestinians. He is not prepared to adopt the Clinton plan, or the Saudi
plan, or even the latest plan formulated by U.S. President George W. Bush.
Instead, Sharon is saying he will accept these plans only if certain
conditions are met - conditions that will only prevent any form of peace
negotiations. When the other side has no political horizon to look forward
to, when it has no hope, and when it sees more and more poverty and
humiliation on its turf, the terrorism will only increase and intensify.

As long as the Israeli public fails to understand - and to internalize - the
direct link between peace and economics, it will continue to seek miracle
cures in the wrong places. The impressive economic growth of the mid-90s was
generated primarily thanks to the Oslo agreement of September 1993, which
restored hope in our daily lives and channeled to Israel billions of dollars
from foreign investors - dollars that enabled the economy to enjoy a rapid
pace of growth and which caused our standard of living to rise and our
unemployment rate to plunge dramatically.

Thus, the economic program that is really needed, the only economic program
capable of extricating us from the present crisis, is a political program
that will restore hope to both nations. This program is possible even today,
despite the grave security situation. The only problem is that this
country's leadership lacks the courage to take the risks needed and to
navigate a new course.