The Israel Situation » Economy

The Best and The Worst of 2011

Anthony Reich — Sun, 01 Jan 2012 21:27:42 +0000

As we welcome 2012, it gives the opportunity to reflect on the best and worst parts of 2011. In Israel, 2011 was an eventful year, including a number of interesting and challenging events. For some, it was a year that they would prefer to forget. Despite many negative aspects to the year, I think that Israelis will regard 2011 as having been a year that was more positive than negative. Here are the main reasons why I think that this was the case.

The best story coming out of 2011 was the release of captured Israeli soldier, Gilad Shalit. It is not only the fact that Gilad was returned safely to the arms of his family that makes this story good. The fact that the Israeli government was finally able to agree and execute this deal sends some amazingly strong and positive statements to all Israelis. For me, this is a classic story where the right thing finally triumphed. Like all good stories, this has a negative side to it as well. I really cannot blame all of those who opposed the deal due to the “price” that had to be paid in terms of the number of Palestinian prisoners who were released, even those who have murdered Israelis. I also know how paranoid the Israel Defense Force (IDF) is about the possibility of soldiers being kidnapped in the future, and the measures that have been put in place to try to avoid this at any price. I feel that working to avoid future kidnappings is a better reaction than leaving Gilad in captivity under the conditions that he was held. This was, by far, the highlight of the year in my view.

Another good story of 2011 was that of the social protests. Hundreds of thousands of people took to the streets to demonstrate against lack of social justice, and of the dramatic increases in the cost of living without commensurate increases in earnings. This was a great story for a number of reasons. It was good to see the Israeli public having the time and energy to devote to social issues, and behaving in a manner that most “normal” countries behave. In the 63 years since Israel’s independence, most of the time has been spent worrying about an existential threat. Wars have been fought, terror attacks overcome and many people have been left dead and injured. This allows little time or energy to give even a fleeting thought to daily social issues. The fact that hundreds of thousands of Israelis were able to come out into the street to protest social issues gives some indication that the existential threat is not quite at the same level as it has been in the past. It also shows what Israelis really care about, and shows the real democracy that exists in Israel. On all of these levels, the protests were extremely encouraging. These good points, however, should not cause us to lose sight of the core issue of these protests – the economic inequality and hardships that many people are suffering. Unfortunately, the government has not responded sufficiently to the message of the protest marches, and this issue is likely to plague us for some time yet.

A further good story for 2011 was the extent to which the economy succeeded in holding up during the year. Even though this seems to be at odds with the message brought by the social protest movement, more Israelis were in employment during 2011 than at any other time in Israel’s history. In addition, while economies around the world were floundering and suffering all types of economic problems, Israel somehow managed to keep its economy on track. This does not mean that the year translated into a boom year for Israel. It does, however, continue the theme of displaying a real underlying strength to Israel’s economy that was shown during 2008 when the credit crunch hit many economies so hard. Once again in 2011, Israel’s economy has performed admirably. Along with the good things, come some very difficult questions. Why are so many Israelis struggling financially when the economy is at almost full employment? This is clearly something that needs to be addressed as part of the social equality agenda.

The major regional story this year was the unfolding of the Arab Spring in countries in the Middle East and North Africa. The way in which the Arab Spring has swept through the region could never have been predicted. Even though this is great news for democracy in the Middle East, it has created an instability that is proving to be negative for Israel, and many countries in the western world. While the free world has an obligation to support the move towards democracy in principle, there is a real problem about whether these countries are really ready to embrace democracy. In many respects, stability in the Arab world is more important than democracy. As things seem at the moment, the two don’t seem to be able to live side by side. The change of regime in Egypt is particularly concerning, with the increasing popularity of the Muslim Brotherhood. The protest movement in Syria also promises some dramatic changes to regional politics, and they are not necessarily all going to be positive.

The second major regional story surrounds Iran’s development of nuclear weapons. 2011 can be characterised as a year of confirmation and inaction where this is concerned. The international community were presented with irrefutable evidence of Iran’s development of nuclear missiles. Even the International Atomic Energy Agency were forced to accept that Israel’s representations about Iran’s nuclear program have been correct all along. Having had this fact confirmed, the best that the international community could muster up, were a few ineffectual sanctions. It has become clear that Iran is not only setting out to threaten Israel. The events over the past few days in the Straits of Hormuz are a clear challenge to the US. The military exercise on this occasion closed the straights for only a short period of time. The next time could be for longer, precipitating a potential military conflict with the USA.

Despite the fact that 2011 was a hugely eventful year, it seems only to have set the scene for what awaits us in 2012. Israel’s social justice movement is likely to be more vociferous, particularly if the economy suffers more than it did in 2011. The government will need to be prepared to commit to spend more money on social issues, and to see these promises through. This is an issue that is no less imporant than Israel’s security challenges.

The Arab Spring will come to a head in Syria. It seems as though the Sunni Muslims, who represent over 70% of the population, are likely to gain the ascendancy after having been ruled by the minority Alawites for many years. The Spring could yet spread to other countries in the region, and this could present a greater threat to Israel as more of her neighbours became destabilised by these events.

I expect that 2012 will also see the Iranian nuclear issue come to a head, as Iran continues to intimidate and provoke Israel, the USA and other western countries. All of this adds up to 2012 looking to be a tough year.

In between the pessimistic expectations are a few rays of light. Even though I expect a great deal of instability during 2012, it is my hope that this will then bring a period of greater stability as is often the case. I also hope that the unfolding Arab Spring can create a new, more compromising, reality with the Palestinians to allow moves towards a genuine peace based on mutual recognition and respect.

It is my hope and prayer that 2012 holds only great things for all of you. Happy new year!!

Image by www.photobucket.com

The Best and The Worst of 2011 is a post from: The Israel Situation

Israelis Invent Wireless Charger

Eric — Tue, 29 Nov 2011 14:00:51 +0000

An Israeli company has done something spectacular that has potential to change the way we charge our wireless phones and other portable devices. Thanks to my cousin Marilyn in Tel Aviv for sharing this incredible video with me.

Israelis Invent Wireless Charger is a post from: The Israel Situation

Israel’s Half Million Man March

Anthony Reich — Sun, 11 Sep 2011 08:24:21 +0000

It started with a call for a million Israelis to take to the streets in a demonstration that would serve as the culmination of the social protests that have been taking place for the past two months. For a country with a population of only 7 million, this was always going to be a tall order. Ultimately, the call for a “million man march” to protest against economic hardships, struck a chord with enough people to mobilise more than 400,000 people. This, in itself, was a record number of demonstrators that have ever attended a protest in the history of the State of Israel. The equivalent in the USA would see 22 million people coming out to protest, and the equivalent in the UK would be more than 4 million. I doubt very much that these numbers could be seen in demonstrations.

The social protests have the sympathy of most Israelis, including those who are not living below the breadline in the way that so many people are. This was in evidence last Saturday evening, when many of those who took to the streets were not necessarily struggling to pay their monthly rental. The notion of social justice impacts all aspects of Israeli society, and does not only affect those who are coping with financial difficulties. Services such as health and education are provided by the government for all sectors of society, and have been used even by those who could afford to pay separately for private services. Until now, the government-funded services have been of sufficiently high quality to satisfy all sectors of our society. For me, this has been one of the most pleasant aspects of Israeli as a country, and one which contributes to one of the flattest societies in the western world. There is nothing more pleasing than to see the rich and poor of the country receiving the same level of medical treatment and education, all provided by the government out of tax contributions. Although this has been the case in Israel to now, the quality of services provided by the government have deteriorated in recent times. This has contributed to all Israelis feeling the need to come out in protest to demonstrate their dissatisfaction at this situation.

It is true that many of those in the upper income brackets are able to buy these services privately. Private schools and health centres have begun to appear in recent years to satisfy this demand. I feel that a great deal is lost in the process. It is not only the fact that a two-tier system arises where the wealthy can buy what they need, and those who are in tougher financial circumstances are forced to take what they are offered. For me, it is also the connection that one sees at schools and medical health centres between different sectors of our society that will be lost. This will serve to enlarge the wealth gap that is already making itself evident in Israel. I feel that this lost connection will be harmful to Israeli society. In this respect, I was heartened to see the number of people who took to the streets, and to note that they were not only restricted to one sector of society or another. It is a credit to the event organisers that they succeeded in appealing to so many different Israelis, and managed to entice them out of their homes to demonstrate their displeasure to the government. All ages of the Israeli people could be seen together, including men, women and children of all ages including those in pushchairs and on the shoulders of their parents.

One of the most surprising aspects of the demonstrations, was the good atmosphere in which the gatherings were held. At the main event in Tel Aviv’s Kikar Hamedina which attracted almost 300,000 people, a stage was constructed on which some of Israel’s biggest names in music and entertainment appeared during the course of the evening of protest. Not only did this demonstrate their identification with the important cause, it also lent something of a party spirit to the event. So, while anger was in evidence against the government’s seeming lack of willingness to engage with the protestors and their cause, there was also a great spirit in evidence when the entertainers took to the stage. Once the show was over, everybody returned quietly to their homes without any major incident or violence. The traffic may have been heavy, but crowd never got out of control, and always remembered the reason that they had come out on that evening.

I could not help comparing this event to some other protest events that have taken place around the world in recent months. The protest events in countries around the Arab world comprising the Arab Spring all resulted in violence and deaths or injuries initiated either by the protestors, or the authorities against which they were protesting. The recent riots which took place in London got completely out of control, and resulted in extensive damage to personal property affecting many hundreds of people. In contrast to these events, we saw real democracy at work. The rule of law was exercised by both the protestors as well as by the authorities, while people were afforded their democratic right to have their say. There could be no greater display of mutual respect of personal and social rights, than was seen during the course of this protest. Israel is a stronger country for having experienced these demonstrations.

The protest movement has decided to take down their tents, and move to a different phase of negotiation and lobbying to bring their demands to fruition. The fact that the tents will not be visible on the streets any longer does not mean that the protest is not continuing. Whether or not their aims are ultimately achieved, it would be safe to say that Israel will not be the same country after the protests of the summer of 2011. These protestors have forever changed the face of Israeli politics, protest and demonstration. They have also unwittingly chosen an excellent time to demonstrate this. It could not be more stark how the Arab spring and the Israeli summer have contrasted each other.

Israel’s Half Million Man March is a post from: The Israel Situation

Learning Lessons From the Doctors’ Strike

Anthony Reich — Sun, 28 Aug 2011 20:56:43 +0000

After 158 long days of strikes by Israel’s doctors, a deal has finally been reached with the treasury over their pay and working conditions. An agreement was signed between representatives of the doctors’ labour union and government officials on Thursday which changes dramatically the humiliation that doctors in the public sector have been subject to in the past. The agreement is retroactive to 2010 when the last agreement ran out, and will govern pay scales for a nine-year period.

It is shameful that it took five months of strikes by the doctors to finally convince the treasury to agree to the new deal. Under its terms, hospital doctors will receive an average pay increase of 49%. Doctors working in the periphery of the country, and doctors working in specialities which suffer an acute shortage of personnel, will receive a substantially higher increase. These increases give an indication of how far behind market rates, doctors pay scales have fallen over the past few years. In return for the better salary levels, doctors have agreed to clock in and out of their shifts. A further 1,000 positions have also been added by the government to reduce the shortage of manpower that has been plaguing Israeli hospitals. Overall, this agreement is set to change the face of Israeli medicine and medical treatment in the country over the next few years.

The Israeli medical health system is one of the best that I have come across. One does not find the phenomenon here like in the USA and other countries around the world, that people who are at an economic disadvantage are unable to receive medical treatment. In Israel, all citizens have the right to have access to basic medical treatment which is of a high standard. One does also not experience the issue which the UK’s National Health System suffers from of lengthy waiting lists for treatments to be carried out. In Israel, even though it may require some patience, treatments are usually available within a reasonable period of time. Now that pay scales have been rectified, it will ensure that those delivering this service will be remunerated accordingly. It will also mean that high quality individuals will be attracted to the medical field, and will be incentivised to practice their art in Israel as opposed to seeking more lucrative opportunities abroad.

For me, the main lessons to be learned from the new deal are the ones arising from the process that it took until the time that it was agreed. One can learn many things from the behaviour of the doctors in this process, as well as the way in which government officials acted. One of the toughest lessons that new immigrants to Israel are forced to learn, frequently via the most difficult route, is that there is no such thing as automatic entitlement in this country. Even if you have a caste-iron agreement in place which says that you are entitled to a certain increase in salary or other entitlement, you will not receive this unless you are prepared to go in and demand what you are entitled to. Whereas in other countries, companies usually have a date upon which salaries are reviewed and pay increases are awarded (or not as the case may be), this type of behaviour is not typical for Israel. Companies will award pay increases to those who shout the loudest, and may completely overlook those who are not willing to make a big noise. The doctors’ strike was one of necessity. It should be clear that, without the industrial action and public relations exercise that went with it, the doctors would not have achieved a small fraction of what they deservedly achieved.

The way that the action was taken, is of equal importance. Emergency services were never interrupted. Instead, the doctors professionally separated the cases into those whose treatment was essential, and those whose treatment could be delayed. Any treatment that was essential went forward without consideration of the industrial action. Doctors administering chemotherapy and psychiatric treatment did not interrupt their regular work day in the interests of taking best care of their patients. The strike was immediately lifted ten days ago in the area of the terror attacks in the south until such time as all casualties from these attacks had been taken proper care of. Although there is now a substantial backlog of non-emergency treatments that have been delayed, the doctors have somehow managed their medical responsibilities under their Hippocratic Oath, while also succeeding in placing the required pressure on those who only understand the language of industrial action.

The behaviour of the government officials in this sorry story have less sympathy and respect from me. To begin with, the demands of the doctors were completely ignored. Even when the industrial action was initiated, the treasury refused to give sufficient consideration to the effects of below-market pay rates to the country’s medical professionals. It eventually took a hunger strike on the part of the chairman of the Israel Medical Association, and a complete walkout of all medical residents from their hospitals until the proper attention was given to this important issue. When the agreement was finally signed last week, the treasury officials did their best to keep the signing low-key and behind doors.

It is true that the government has an obligation to keep its spending under control, especially at the current time when inflation threatens to increase. With huge security obligations, Israel’s government spending is always tough to keep under control. This should not, and cannot serve as an excuse for not allocating the correct public money to build the future of this young country. Education, medical services, infrastructure and many other services cannot be ignored due to the military and security requirements. It does mean, however, that public officials have extra responsibility to ensure that each Shekel of tax money goes as far as it possibly can. In this, unfortunately, our country fails miserably. The amount of waste, corruption and unnecessary spending of money that is evident is a huge disappointment to the citizens of Israel. Why should the defense minister feel justified to request a new Audi A8 at a cost to the taxpayer of 2 million Shekels, when his current A6 is more than adequate. The state comptroller’s reports are regularly critical of unnecessary wastage of tax money. Such lack of consideration to where the money really needs to go, should not be tolerated.

I feel that citizens of the State of Israel owe a deep debt of gratitude to our medical professionals. For many years, they have provided a high quality service in line with the most recent developments in technology and treatment, while being paid far less than their real value. When the moment came to bring this situation to a head, they did so in the most respectful way possible, while still insisting upon the maintenance of their own rights and dignity. If some of our government officials and elected politicians behaved in this way, Israel would be in a much better overall state.

Learning Lessons From the Doctors’ Strike is a post from: The Israel Situation

Is This The Israeli Spring?

Anthony Reich — Sun, 14 Aug 2011 06:42:27 +0000

Some newspapers, particularly those in the Arab world, have started to write about the current social protests in Israel as the “Israeli Spring”. This brings the Israeli demonstrations into a direct comparison with the “Arab Spring”, the series of uprisings that have been sweeping the Arab world. But how relevant is this comparison? Is it accurate to depict the Israeli protests as part of a “Middle Eastern Spring”?

For me, the Arab Spring and the Israeli protests are two separate and unrelated issues that happen to have occurred at the same time. The Arab uprisings have come in the place of a due democratic process for replacing rulers and governments in these countries. The Arab Spring has been all about regime change, and protestors have not been prepared to rest until the government has fallen and the leadership replaced. This is what we have seen in Tunisia, Egypt and Yemen so far. The situations in Libya and Syria also reflect this objective, and the protestors have been prepared to continue their protests for months on end until they see Ghadafi and Assad relinquish power. The Arab Spring uprisings have also been met with a firm hand of authority by the relevant ruling powers. Thousands have been killed in the course of governments trying to quell popular uprisings against autocratic leaders.

Although the protests in Israel also reflect dissatisfaction on the part of everyday citizens, the situation could not be more different. Perhaps the most important fact concerning the Israeli protests is that they have not called for regime change. Many protestors have expressed great disappointment and dissatisfaction with the performance of Prime Minister Netanyahu and his government. None of them have, however, sought his replacement. For that, we have another mechanism – a general election. The next general election will need to take place by February 2013 at the latest, and provides the opportunity for Israelis to replace Netanyahu if they are sufficiently dissatisfied with him. This means that the current protests have no need or desire to call for the government to be replaced.

The protests in Israel have been heartfelt and have attracted the support and participation of large numbers of Israelis. All of these people have the same objective, which is to bring to the government’s attention the economic hardships that they are all suffering. These are mostly people with homes and with jobs, and who are just not managing to make their income stretch far enough to cover all their expenses in order to survive in a modest manner. They are calling for tax breaks and cheaper housing options to make their money go further to allow them to feed, clothe and educate their children without being forced into overdraft every month. The way that they are making their frustrations felt is by setting up tent cities in public areas in Israel’s major cities.

Instead of clamping down on these protestors, the municipalities have cooperated to allow them to exercise their democratic right to protest. Municipalities have put up netting above the tents to provide shade from the summer heat. They have provided water tanks at the tent cities to ensure that protestors can maintain basic hygiene. Signs have been erected alongside the tent cities proclaiming that municipal workers support their cause and the protestors’ efforts. Shopkeepers in the area have befriended the protestors and provided them with basic foodstuffs that they may require, often without charge. Lounge furniture has been delivered and set up next to the areas of the tent cities where protestors and their supporters can gather for social meetings and heated debates. Guitar music and singing can be heard in the vicinity of the protest tents, where people have come together to support each other and enjoy a little light entertainment. Police have been deployed around these areas only to protect the belongings of the protestors, and to ensure that social order is maintained in the tent cities. Many policemen and women have befriended the protestors, and have got to know them on a first name basis. The local newspapers are full of stories about romances that have blossomed in the protest tents on the streets of Israeli towns and cities. At the large demonstrations, some of which have attracted up to 250,000, some of Israel’s biggest singers have been on hand to keep the crowds entertained, many offering their services without cost. When considering all of the above, how can one honestly link this to the protests and the government reactions that have been seen in Arab countries in recent months?

I have been horrified to see the violence which has taken hold of the streets of England over the past week or two. The sights of businesses and residences of innocent people being torched by gangs of thugs, while police watch helplessly, has been a tragic and terrifying image. I feel sure that many youths and young people in Israel have the same feeling of disenfranchisement as their British counterparts. I am convinced that there are many Israelis who would also welcome the opportunity to lay their hands on a new pair of trainers or new plasma TV set. These are the people who are voicing their frustrations in the tent cities across Israel. In Tel Aviv, it is not coincidental that the tent city has sprung up on Rothschild Boulevard. Besides the fact that the street carries the name of one the wealthiest families and also has a wide middle island which has been adapted to accommodate thousands of tents, it is also the address for the headquarters of many of Israel’s largest banks. The protest alongside the wealthy bankers of Israel has been located deliberately for the upper echelons of society to see from their office windows. And despite feelings running high that many of these people are downtrodden and have been poorly treated by Israeli society, there is no sign of looting or any social unrest at all. Their point, however, has been clearly made and noted.

In the Arab countries, the rulers have abused their authority by denying citizens any rights to freedom of expression and due democratic process. They have clamped down on their citizens in the most horrific way by setting the army on innocent civilians, and killing people in their thousands. In England, youths on the streets have abused their democratic rights by looting shops, setting fire to properties and even killing innocent people. I can’t help feeling that Israelis, who also have the same strong feelings, have managed to get things just right. People are protesting about the issues which are most hurtful to them, but doing it in a way in which each side respects the other’s rights. It is not for nothing that we have been called the only democratic country in the Middle East. This is clearly visible on the streets of Israel at this time.

Long live democracy in the Holy Land !

Is This The Israeli Spring? is a post from: The Israel Situation

Being Uplifted From a Most Unlikely Place

Anthony Reich — Sun, 07 Aug 2011 19:45:07 +0000

I am sure you all know the feeling when a seemingly insignificant event or comment has a marked impact on your spirits. This is exactly what happened to me last week. I had a particularly exhausting week through a combination of increased pressure at work and the effects of the summer heat. I went along to the supermarket late one evening with my wife and son to pick up a few items of groceries. Once my wife had found all that she needed (and more), we headed to the checkout counter.

In Israeli supermarkets, the checkout counter is usually a place to increase your tension levels. Queues are long, other shoppers are rude and inconsiderate and the checkout clerks usually slow and uncaring. On this occasion, our checkout clerk was an Ethiopian lady with a big welcoming smile. We recognised her from a few weeks ago when she also checked us out, and we immediately got chatting. She remarked on how tired I looked (I guess that she figured this out from the fact that I sat down on the chair of the next checkout counter that was not in operation, and let my wife and son get on with bagging our goods). She was interested in the fact that we spoke English amongst ourselves, and asked where we came from. I told her that we originate from South Africa, and she remarked that we are cousins by virtue of our common African heritage. I asked how long she has been in Israel, and she told me that she came on aliyah from Ethiopia 27 years ago in 1984. This means that she has lived in Israel for most of her life, and probably came as part of Operation Moses that airlifted some 8,000 Jews from the Gondar region of Ethiopia.

I asked about life in Ethiopia. She said that now, life in Ethiopia is not too bad. This is in contrast to the starvation that was being experienced at the time of her immigration in the mid 80′s. Despite the improvements in the situation in Ethiopia, she said that life there is not good for the Jews. Tongue in cheek, I responded by saying that life in Israel is also not good for the Jews. My comment was a throw-away line which referred mainly to the massive demonstrations against economic hardships. I knew that she would almost certainly not have things easy. The immigrants from Ethiopia have been forced to endure a great deal of hardship during their time in Israel. Many of them were not recognised as Jews and were not extended the rights available to Jews under Israel’s Law of Return when they arrived. A great number have been forced to convert to Judaism to be recognised as Jews by Israel’s Ministry of the Interior. Their gentle character and system of respect has been taken advantage of in the aggressive rough-and-tumble that is prevalent in Israel. The fact that so many of the Ethiopian immigrants have been through the Israeli education system, completed their army service and integrated themselves fully into Israeli society is a huge achievement. I was also aware that this lady, as a checkout clerk, is probably earning the minimum wage of approximately 24 Shekels an hour. If people earning twice this amount are camped out in tent cities across Israel protesting economic hardships, how much more somebody like her. My expectation was that she would simply agree with my comment that things are not easy.

Instead, she looked at me, smiled and said, “but this is our country”. She told me how good she feels that she can identify freely as a Jew in Israel, and eat kosher food without worrying about who may be watching her. Despite having lived in Israel for so many years, she clearly still values and appreciates the freedom that she has a Jew in the Jewish homeland. I left the supermarket still feeling tired, but really uplifted from my short conversation. In the space of a few sentences, the Ethiopian lady had really made me appreciate again what it is to be a Jew in Israel despite all the hardships. The truth is that I am usually aware of this fact, and how privileged I am to be able to live as a Jew in a Jewish country. One only has to go back one generation, to the time of my parents, to know how Jews were forced to live “under the radar” in order to survive. With anti-Semitism rife in many countries, this is still the case today in some parts of the world. The checkout clerk helped to remind me of this at a time that I was thinking more about how tired I felt, and about the economic hardships that people are feeling in Israel at the current time. She somehow managed to focus on the half full part of the glass, rather than the half empty.

Life is certainly not easy these days for many of Israel’s citizens. Many people are working hard simply to stay on the bread line. Thousands of people are camped in tent cities across Israel protesting against economic hardships. The fact that fully 5% of the population were involved last nght in demonstrations against the economic situation in Israel, is evidence of the hardships being experienced by so many. Despite all of this, our Ethiopian checkout lady was able to keep smiling, and radiate her positive energy in a way that really lifted my spirits. On my next visit to the supermarket, I will definitely lookiout for my Ethiopian friend.

Being Uplifted From a Most Unlikely Place is a post from: The Israel Situation

What is the Answer to the Tent City Protests?

Anthony Reich — Sun, 31 Jul 2011 21:56:59 +0000

It is somewhat ironic that Israel’s housing crisis has run in a completely opposite direction to the crises that have taken place elsewhere around the world. House prices have dropped dramatically in the USA and Europe over the past few years. With this decrease in prices has come a wholesale collapse in the entire housing sector, as mortgage banks have found themselves unable to cope with clients not making their repayments, and the value of their collateral suddenly much lower than that of the loans. Governments have been forced to step in to save these institutions in order to prevent some of the biggest financial names going into liquidation. As opposed to this, house prices in Israel have continued to rise beyond the pockets of many ordinary citizens.

The phenomenon of oversupply and lack of demand seen in the rest of the world has not taken place in Israel, with prices somehow remaining fairly constant over the time that the bottom has dropped out of the market elsewhere. This means that Israelis, who have also suffered significant financial hardships over the period of the economic downturn, are not enjoying any relief from lower house prices. This fact extends itself into the rental market where rentals for ordinary apartments cost a great deal, and add to the financial woes of the average Israeli citizen. After experiencing price rises on a range of goods and services without commensurate increases in earnings, the Israeli consumer has eventually decided that he cannot tolerate the situation any further, and has spilled out onto the street in protest. The main target of the protest has been the inflated prices that citizens are required to pay for housing. Tent cities have sprung up in the central areas of many Israeli towns and cities, and protestors are sleeping on the street to demonstrate against the government for not paying sufficient attention to providing cheaper housing options.

In the 13 years since I moved to Israel, house prices have increased dramatically. Somehow the Israeli housing market has not seen the same ups and downs that have been evident in other markets. An apartment that cost approximately 800,000 Shekels back in 1998 will cost around 1.2 million Shekels today, an increase of 50%. Admittedly, there were years in which house prices did drop. Overall, however, the increase in the price of housing and of rentals has outstripped inflation by some distance. The reason for this comes from a number of different sources.

The most obvious issue driving house prices, is the fact that land in Israel is scarce. The entire area of the State of Israel is approximately 20,000 square kilometres, a similar size to the US state of New Jersey. Even the land that we have is not secure, with continuing demands by the Palestinians for Israel to relinquish further land claimed by them for a Palestinian state. With so little land available, it is inevitable that this will contribute to higher land prices. Attempts to build higher to use land more intensively have also not helped much to reduce the land cost element of the cost of property.

Along with the lack of supply, demand for property in Israel seems to be ever-increasing. Some of it is being fuelled by the upper classes who are not sensitive to the economic downturn, and who are constantly searching for bigger, better and more ostentatious properties. This is particularly true of the Israeli nouveau riche, some of them hi-tech and Internet millionaires. Demand is also being driven by Jews from outside of Israel who are looking for a piece of the Holy Land to use as a holiday pad. This demand has increased in recent years, and has contributed to parts of Jerusalem turning into ghost neighbourhoods with holiday apartments remaining empty between holiday visits. In addition, with approximately 20 years having passed since the gates of the former Soviet Union opened to allow Jews to leave for a new life in Israel, we are now seeing the effects of the children of these immigrants leaving the nest. A surprisingly high number of these new immigrants have succeeded in buying their own homes over the years, and now their children wish to emulate this example as they set out on their own paths. I recently attended an interesting seminar which showed that this generation will be driving demand for property and other major expense items for some time in the future.

All of this does not look optimistic for the man in the street. Israeli unemployment is currently at an all-time low of approximately 5.7%. For the economists amongst us, this means that Israel is nearing full employment, a situation where all those who wish to work are working. The problem is that this is not helping to reduce poverty. Salaries have remained so low despite increasing inflation, that Israel is increasingly becoming a nation of working poor (see my blog A Country of Working Poor). Most of those who are inhabiting the tent cities across Israel are not unemployed and homeless. The vast majority have jobs and homes, but are finding it impossible to keep making the rent or mortgage payments despite long working hours. For many people, the cost of keeping a roof over their heads is costing 50% and more from the money they bring home each month. Surely, this is an intolerable situation.

More than a hundred thousand people took to the streets last night in towns and cities from Rosh Pina to Eilat to protest the lack of action on the part of the government. The slogan being shouted at these protests is “an entire generation demands social justice”. The feeling is that the government is pandering to the Israeli tycoons at the expense of the man in the street. This has enabled the tycoons to build and live in luxury developments which are under construction across Tel Aviv. Some of these sites have become targets for the protest0rs. The government has been unable to express what they have done so far to provide more affordable housing for young couples and lower income earners. The prime minister has been unwilling to come out to meet the protestors on the streets. This is contributing, not only to the feeling that the prime minister has done nothing, but also to the feeling that the government is unwilling to do anything to fix this situation.

Unfortunately, there are no simple answers to this serious and far-reaching problem. Many respected market watchers are predicting a significant drop in Israeli home prices in the near future. The problem is that it would take some time for rental prices to follow any correction, and I have my doubts that rental prices would fall in any significant way. I remain highly doubtful that a drop in house prices is on the horizon at all. Any action that the government may take now to provide lower cost housing is likely to take years until it comes to market. So what can the government do in response to this protest?

While the protest is focused on rising house prices, it is really about the general increases in the cost of living, while incomes remain static. The first step to fix this has already been taken by the government when they decided to freeze the fuel price increase that was set for tonight. The decision to hold fuel prices steady is likely to have a significant knock-on effect by holding the prices of many other items steady. The next step is to increase earnings to level the playing field. Starting with the doctors who are fully justified in their strikes for better pay over the past three months, public sector and private sector workers need a bigger pay cheque to allow them to balance the budget at the end of each month. In tandem with this, longer-term measures should be put in place to provide sufficient lower-cost housing for those who simply cannot afford to pay the prices in the current market. Failure to act quickly and decisively risks financial ruin for many families. The future of the government could easily rest upon its ability to react to this problem.

What is the Answer to the Tent City Protests? is a post from: The Israel Situation

The Most Difficult Job in the World

Eric — Thu, 28 Jul 2011 16:08:44 +0000

In the United States, domestic politics is taking center stage at the moment. The American people seem to have forgotten that US soldiers are deployed in Iraq and Afghanistan battling terrorists with a goal of destroying our Western lifestyle.

In Israel, a major domestic issue is a big focus as well. However, while the world is watching the global economy teetering on the brink of disaster if the debt ceiling is not raised in the United States, people outside of Israel have not noticed the major news about a housing crisis gripping the country.

While Barack Obama is fighting many battles, only one has the ability to take center stage at any given point in time. Israeli politicians do not have that luxury.

Prime Minister Benjamin Netanyahu is dropping fast in the opinion polls. A nation is angry over rising home prices and a shortage of places to live. All the while, while demanding politicians fix the situation, they expect that the focus on national security is a given.

Outside of Israel, no one knows about the housing crisis. They only care about the conflict between Israel and its neighbors. Will ‘Palestine’ come to be at the United Nations? Will Israel and Hezbollah clash again on the Lebanon border?

Anyone who has had a long term stay in Israel knows that the population is demanding of its politicians. If you ask two Israelis about the Prime Minister, you will get at least three opinions. And, unlike in the two party system in the United States, Israel’s parliamentary system puts the Prime Minister’s job at risk every single day.

I would argue that Prime Minister of Israel may be one of the most difficult jobs in the world. The country expects Bibi to fix the housing problem while keeping them safe. They expect him to look world leaders in the eye and not back down on defense issues, all the while keeping the economy and education in focus.

The next time you see an opinion poll in Israel, think hard about how good of a job the Prime Minister is really doing. He did not cause the housing crisis, but he is working to fix it. He stepped in at a very difficult time for US-Israel relations, and he managed the situation delicately.

I think Bibi is doing a pretty good job. Give him a break, he is working hard.

Image by Ahron de Leeuw.

The Most Difficult Job in the World is a post from: The Israel Situation

The Boycott Act – Defensive Democracy At It’s Best

Eric — Thu, 21 Jul 2011 15:16:44 +0000

This is a guest post from regular reader Tomer.

Last Monday ( 11.7 ) the Knesset has legislated a new and controversial act, known as the ‘Boycott act’, resulting a “worry” from the international community and mostly rage from the local left wing.

The Knesset members have decisively approved this new act, initially lead by the coalition chairman, MK Zeev Alkin, by the majority of 47 members in favor, while by contrast, only 38 members voted against it, after numerous prominent protests by the left.

This act, in a nutshell, allows to those who are being boycotted due to their affiliation with Israel, to claim compensations. In other words, those who boycott products originated from the settlements in Judea & Samaria for being products that were produced in allegedly “Illegal settlements” , has to redress those who were damaged from this boycott. This act is a victory for the Israeli right wing, albeit it is also a victory for the Israeli democracy. In every tolerant and pluralistic society, there’s a variety of religions, opinions and so forth. Freedom of expression, which is embedded in the term ‘Democracy’, is the privilege for any individual, to have any opinion as one pleases.

The people which chose to reside in Judea & Samaria should not be punished for exercising their own freedom of expression by this unconventional weapon called boycott. This whole narrative of boycotting and thus economically harming the settlers, is unjust and not democratic, to say the least.

As a people living under a democratic rule, Israelis should respect the legitimacy of perspective which differ from their other side of the political debate. Boycotting settlers, is doing the exact blunt opposite.

And so, the international community plays “Worried” in the aftermath of this act approval, because the nature of this act is not democratic. Virtually, this act is an ultimate example of a defensive democracy policy. The same policy was applied back in 1984, when the Kach party was disqualified for serving in the Knesset, due to it’s threat over the democratic characteristics of the Jewish state.

Defensive democracy, means :” the philosophy that members of a democratic society believe it necessary to limit some rights and freedoms, in order to protect the institutions of the democracy.”

Therefore, when Israeli settlers are being punished only due to their political views, which are expressed by their settling in Judea & Samaria and thus also, exercising their freedom of expression, is infringing the institutions of democracy, and contradicts the fundamental plural element, which is embedded in the Israeli declaration of independence.

The left wing, who in fact supported the act in it’s inception, now oppose it for “being non democratic”. And of course, it does limits the freedom of expression of the people who are affiliated with the Israeli left, but as aforementioned, that is a measure taken for the whole aspect of defensive democracy.

On another note, I wish to closure with saying that the political dialogue must remain, literally, a dialogue. When utilizing boycotts and other excessive freedom of expression means, that dialogue ceases to exist, while it transforms into a battlefield. In conclusion, this commendable act, protects Israeli’s very own democracy by putting a substantial limit between dialogue and battlefield, between right and wrong. Let us argue freely, but never harm our counterparts, who are in possession of a different perspective then our own.

Image by SpoiltPig.

The Boycott Act – Defensive Democracy At It’s Best is a post from: The Israel Situation

Boycotts and Democracy

Anthony Reich — Sun, 17 Jul 2011 12:00:29 +0000

Last week, the Knesset passed a controversial law which has reignited the ongoing debate about the nature of Israel’s democracy. The new law, which enjoys the full support of Prime Minister Netanyahu and his ruling Likud party, makes it illegal to call for boycotts on Israel. It also makes it illegal to call for boycotts on parts of Israel, such as the settlements or the West Bank.
Over the 63 years of its existence, Israel has suffered a great deal from the effects of boycotts, which have been directed against Israel by those opposed to her continued existence. The most notable and widely reported of these boycotts has been the Arab boycott. This has not only been directed against Israel herself, but also against companies that have had links with or representation in Israel. It has been interesting to note how this boycott has been applied in a highly selective manner. Companies like Coca Cola, McDonald’s, Apple and Microsoft have continued to sell their products in the Arab world, while still being widely represented in Israel.

It is one thing for enemies to call for boycotts to try to damage a country’s economy, in an attempt to change the politics within that country or a region. It becomes quite another thing when those who are considered closer to the country, for example citizens of the country, use these tactics. It seems as if this was the moment when the Israeli government stepped in and decided that action needed to be taken against those calling for boycotts. There are those who argue that calling for a boycott is tantamount to treason, particularly for a country like Israel which already finds itself in a precarious situation. This is what prompted the government to step in, and to pass a law that makes it illegal to call for boycotts. More than this, the government has enacted that companies or individuals making such calls will be excluded from bidding on government tenders.

The controversy during the passage of the bill resulted in the final version being somewhat diluted from the original draft of the bill. Originally, it was recommended that it be a criminal offense to call for boycotts against Israel. By the time the law passed its final hearing, it was enacted that calling for boycotts would not be a criminal offense, but would rather be a civil offense. Although one cannot be arrested and charged by the state when calling for boycotts, it does mean that anybody who is the target of such boycott can sue the accused in a court of law, while not having to prove that actual damage was caused. The fine on those found guilty of this offense has been left to the court in question to rule upon.

Any controversy that was evident in and around the corridors of the Knesset during the time that the bill was in its draft form, have erupted into much greater levels of opposition since the bill was passed. The debate and controversy has focused upon whether such a bill is undemocratic. Is it a limitation on the freedom of speech of the individual to prevent him from calling for a boycott on the country in which he lives? Some highly respected legal opinions think that this is the case. Although Israeli State Attorney-General Yehuda Weinstein sees no conflict between the new law and freedom of speech, the legal adviser to the Knesset does not agree. Eyal Yanon issued an opinion which states that parts of the law “edge toward illegality and beyond”. A group of 32 Israeli law professors and senior legal academics signed a petition to demonstrate their objection to the law on a legal basis. It is their view that it should be the right of all citizens to be able to say what they feel, and to take actions to support this including the call for boycotts on Israel. There is clearly more than simply a passing concern about the impact of the new law on Israeli democracy. This, in turn, causes much consternation as Israelis are extremely protective over the democratic nature of the state.

If we take this scenario into the world of business for a moment, the rules seem clearer cut. It is acceptable to cause economic damage to competitors, so long as the actions taken are legal and within the realms of fair competitive action. It is unacceptable, however, to make calls for actions against the company for which you work, which may have a significant detrimental impact on the company. This is likely to be a firing offense. The rule is, that if you cannot live with the policies followed by your employer, you need to find employment elsewhere rather than try to militate from within to cause your company damage. Do the same rules not apply to the country in which you live? Should the state not have the right to demand some level of loyalty to be shown by those who enjoy the benefits that the state offers to its citizens? Should it not be an offense to bite the hand that feeds you, and protects you from the enemies of the world?

The effectiveness of calls for boycotts over the years is unclear. There are those who claim that the massive international boycotts applied against the apartheid government in South Africa were ultimately the catalyst that gave rise to democracy in that country. Boycotts applied against other countries, such as Iran, Iraq, Libya, Somalia, North Korea and countless other countries over the years, seem not to have produced the desired results. Boycotts have surely caused damage to these countries, but not in sufficient amounts to bring about the changes that were desired by the boycotters. Boycotts have undoubtedly caused damage to the Israeli economy over the years. They have also served to prove correct the famous idiom based on a quotation from Plato, that “necessity is the mother of invention”. As a result of boycotts applied against her, Israel has developed her own capabilities and independence in so many industries that would otherwise not have been the case. In a perverse sort of way, Israel has probably gained more from boycotts than she has lost.

I find it difficult to understand how the law passed by the Knesset impinges on the democratic rights and freedom of expression available to Israelis. This is especially true when considering the fact that there is no criminal offense committed by those who transgress the new law. For me, the true test of our democracy and rights to freedom of speech is whether we are able to hold an open debate about our democracy without fear of retribution. In that sense, the boycott law has served to strengthen my faith in our democracy rather than weaken it. The process has proved that Arab members of Knesset have the right to make their opposition clear (as long as this is done within the rules by which Knesset debates are run), and a legal adviser employed by the Knesset is also entitled to publicly voice his opposition to a law passed by the same Knesset that pays his salary and feeds his children. Most important to me is the fact that those who think that they can enjoy the benefits of citizenship of the State of Israel, and also make public calls which will damage her economic and political well-being, will be forced to take responsibility for their actions in a court of law. This is true democracy in action.

Boycotts and Democracy is a post from: The Israel Situation