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Thursday, March 01, 2012

Netanyahu: Israel's strong economy is critical for national security

From a great Bloomberg article on Netanyahu and Israel's economy:

Since the Massachusetts Institute of Technology-educated Netanyahu began selling state assets and loosening labor laws as finance minister from 2003 to 2005, Israel’s economy has boomed, growing at an average 4.2 percent each year. The expansion will help ensure Israel’s survival, as an “island of democracy that is surrounded by a sea of troubles” in the Middle East, the 62- year-old premier told U.S. Jewish leaders at a Feb. 19 conference in Jerusalem.

“If we are to address our defense needs that we are being challenged with, we have to continue this growth,” Netanyahu said at the meeting. “It is not a question of living standard. It’s a question of national security.”

As part of his plan to spur growth, Netanyahu has set up a committee to boost competition, introduced reforms to lower the cost of living after social protests, passed a law to free up public land for private development, maintained fiscal discipline, and introduced a two-year budget, a move praised by the International Monetary Fund.

Israel’s economy probably expanded 4.8 percent in 2011, according to the IMF, matching the 2010 figure and exceeding the 1.7 percent growth in the U.S. The Finance Ministry estimates gross domestic product will increase 3.2 percent in 2012.

With Stanley Fischer steering monetary policy at the Bank of Israel, Netanyahu says there’s scope for the nation to match some of the world’s most developed economies. Fischer was Federal Reserve Chairman Ben S. Bernanke’s thesis adviser at MIT.

“There’s no reason why we can’t eventually surpass Britain and France in GDP per capita,” Netanyahu said during a Feb. 20 interview in his Jerusalem office, kept warm by two free- standing electric radiators. “We have to keep growing at 5 percent.”

The IMF calculates Israeli GDP per head was $32,300 last year, compared with $39,600 in the U.K. and $44,400 in France. Unemployment was 5.4 percent in Israel in the fourth quarter, the lowest since at least 1985. The jobless rate was about 9.3 percent in France and 8.4 percent in Britain.

I fully agree that Israel's economy is critical for its political well-being. As it becomes a more integral piece in the global economic scene, it becomes harder for nations who profit from trading with Israel to marginalize it to appease the Arabs.

And as alternative and non-Arab energy sources gain ground, the economic leverage that the haters have against Israel keeps decreasing.

There's lots more in that article.

(h/t Yoel)