12/31/06

Times: Israel Economy Strong. No Catastrophe Looming.

I live in Teaneck, NJ, a highly educated mainly Orthodox Jewish community. My friends lean to the right politically and have a habit of bashing the government of Israel. Olmert is often called a moron, an idiot, a failure, etc. The way they make it sound, Israel is going to hell in a handbasket. This is a version of what some call "Catastrophic Zionism." These people who believe in CZ love and support an imaginary Israel that is one step from catastrophe.

I sit and listen and then say that the facts tell a different story. The government is sound, the society is solid and the economy is good. Israel has problems and is doing a very good job of managing them. There will not be "peace" with the Arabs but there are a lot of intelligent leaders managing the conflict.

Sorry friends. You can go ahead and inhabit your CZ universe. Reality reports to us that there is no looming catastrophe.

Here is page three of the NY Times today on the Israeli economy. Not a bad year-end report:

Amid Political Upheaval, Israeli Economy Stays Healthy
By GREG MYRE
JERUSALEM, Dec. 26 — For Israel, it has been a typically tumultuous year: Ariel Sharon, then the prime minister, collapsed into a coma on Jan. 4, the radical Islamic group Hamas won Palestinian elections later that month, and Israel fought a monthlong war in Lebanon this summer.

But despite the political turmoil and spasms of violence, Israel, it seems, has figured out how to keep its economy charging forward.

It was the country’s third straight year of strong growth, with the economy expanding nearly 5 percent. The stock market has been hitting record highs; unemployment is at a 10-year low. Israel’s central bank is lowering interest rates to 4.5 percent on Jan. 1, putting them well below rates in the United States, an almost unprecedented development. The Israeli shekel is trading at 4.2 to the dollar, its strongest level in five years.

Further, Warren E. Buffett, the billionaire investor, paid $4 billion for an Israeli company, and Donald Trump is developing a 70-story luxury residential tower on the outskirts of Tel Aviv.

“Israelis look at the economy, and they’ve essentially been through these disturbances in the past, and they know the economy is pretty robust and it tends to come back,” said Stanley Fischer, the governor of the Bank of Israel. “Things that happen here have a smaller impact on markets than I think they would abroad.”

While the Israeli economy has been thriving, the Palestinian economy has moved in the opposite direction, contracting by an estimated 10 to 15 percent this year, according to the Palestine Monetary Authority.

For Israel, the business that best illustrates the economy’s resilience this year is the company Mr. Buffett bought, Iscar Metalworking Company, a global leader in the manufacture of precision metal-cutting tools.

In May, Mr. Buffet bought 80 percent of the company, which has its headquarters on an isolated hilltop in northern Israel that offers a panoramic view of the nearby border with Lebanon.

Barely two months later, a cross-border raid by Hezbollah guerrillas ignited 34 days of fighting that pushed Israeli troops into Lebanon and drew heavy rocket barrages against northern Israel.

One rocket slammed into the Tefen Industrial Park, where Iscar is situated, causing minor damage to a building belonging to another company. Many more rockets crashed nearby during the weeks of war.

Many Iscar workers moved their families away from the border region, but the company maintained production, with only occasional slowdowns.

“It took us a brief time to adjust, but we didn’t miss a single shipment,” said Eitan Wertheimer, Iscar’s chairman. “For our customers around the world, there was no war.”

The northern city of Haifa came under almost daily rocket attacks, and ships stopped entering Haifa’s port, the country’s largest. Some exporters shipped their goods by air at much higher expense in order to meet deadlines.

The Tel Aviv Stock Exchange, which has been setting records throughout the year, seemingly shrugged off the war; it was slightly higher at the end of the conflict in August than before it started in July.

At the beginning of the year, Israel’s economy was forecast to grow at around 5.5 percent, and will come in at about 4.8 percent, according to Mr. Fischer, who attributed the dip to the war.
The article goes on - I recommend that you bookmark the Times country page for Israel.

2 comments:

Anonymous said...

Yes, Israel's economy is strong, and forcasts for the coming year are highly positive. It is clearly a profound example of the Jewish people's historic ability to thrive economically, even in the most difficult of environments.

Unfortunately the current security environment, and Israel's ability to survive as that environment continuously degenerates, is quite a different issue. The war this past summer demonstrated Israel's inability to prevent its major northern cities from being bombed daily. It was only Israel's virtual surrender, stalemate you might argue, that ended the carnage. Today most authoratative press reports indicate that Hezbolah has now repositioned and rearmed itself, as it was prior to the hostilities.

With Sderot and the western Negev being bombed daily, with Syria moving more troops to Israel's eastern border, and with Iran's sabre ratteling and developing nuclear threat, the security situation is as dangerous as it has been since the founding, and clearly is an existential threat.

We are all thankful for the miracle of modern-day Israel, for its econmomic accomplishments, for the ingathering of the exiles, but let's not overlook, even for a second, how very vulnerable she is.

A.Z. Fried

Bryce said...

Ditto to what A.Z. Fried said.

Also, you wrote: "My friends lean to the right politically and have a habit of bashing the government of Israel."

No would accuse you of being in the habit of bashing Bush and other right-leaning folks, now, would they? Naah.