Is­rael

Con­flicted coun­try

Business Spotlight - - CONTENTS -

“Tel Aviv has a great en­ergy,” says Amir Fat­tal. “It’s such a young, vi­brant city,” he adds. “It’s open 24/7 and there are al­ways peo­ple out on the street. It feels so lively when you’re there. And there is the amaz­ing weather all of the time, and the beach is within walk­ing dis­tance — it’s such a great life.” Then, how­ever, comes the qual­i­fi­ca­tion: “If it weren’t for the po­lit­i­cal sit­u­a­tion, the place would be heaven.”

From ad­mir­ing ref­er­ences to Is­rael as the model of a high-tech start-up na­tion to ac­cu­sa­tions that it is well on the way to be­com­ing an apartheid state, Is­rael can di­vide peo­ple like few other coun­tries. Just about ev­ery­one has an opin­ion on this na­tion, now cel­e­brat­ing the 70th year of its ex­is­tence. The truth is that — through­out its short his­tory — find­ing bal­anced views has been no­to­ri­ously dif­fi­cult.

A Jewish home­land

In the years af­ter its cre­ation, in 1948, Is­rael was a poor coun­try with a weak econ­omy. How­ever, like Ger­many and South Korea in the 20th cen­tury, from the 1950s, Is­rael went through some­thing of its own “eco­nomic mir­a­cle”. Thanks to high growth rates and, more re­cently, to an en­thu­si­as­tic ac­cep­tance of cut­ting-edge tech­nol­ogy, Is­rael has ce­mented its po­si­tion in the Mid­dle East. The coun­try’s his­tory has been tur­bu­lent. Jews had been set­tling in in­creas­ing num­bers in Pales­tine since the early 20th cen­tury. Zion­ism — a move­ment to es­tab­lish an in­de­pen­dent state for the Jewish peo­ple — did not suc­ceed un­til af­ter the Holo­caust, the Nazis’ at­tempt to de­stroy Euro­pean Jewry. In May 1948, Is­rael’s pop­u­la­tion was just 806,000; it jumped to a mil­lion in 1949, two mil­lion in 1958 and three mil­lion in 1970. To­day, Is­rael’s pop­u­la­tion is es­ti­mated at around 8.3mil­lion and the coun­try is home to more than 40 per cent of the world’s Jews.

War with neigh­bours

The kind of mur­der­ous anti-semitism typ­i­cal in Europe for cen­turies hardly played a role in the Mid­dle East up un­til the 20th cen­tury. But on its cre­ation in 1948, Is­rael was im­me­di­ately plunged into a re­gional war against neigh­bour­ing Arab coun­tries, who saw it as an un­just “West­ern” im­po­si­tion on the ex­ist­ing Arab Pales­tinian pop­u­la­tion and their land. Af­ter cen­turies of liv­ing to­gether, Arab coun­tries be­gan ex­pelling Jews (and en­cour­ag­ing them to leave). A com­bi­na­tion of Is­raeli forced ex­pul­sions and fear led to the mass ex­ile of up to 750,000 Pales­tini­ans in what be­came known as the al-nakba, “the catas­tro­phe”.

In May 1950, the UN set up 53 refugee camps to help the dis placed Arabs. To­day, the UN says more than 1.5 mil­lion refugees live in 58 rec­og­nized Pales­tinian refugee camps in the re­gion; there are now a to­tal of five mil­lion Pales­tinian refugees.

The es­tab­lish­ment of the state of Is­rael per­suaded hun­dreds of thou­sands of Jewish mi­grants to head there. But Zion­ists were sur­prised that so few suc­cess­ful, ed­u­cated Jews from North Amer­ica and West­ern Europe moved to Is­rael.

Though US im­mi­gra­tion was only 0.5 per cent of the to­tal up to the early 1950s, Jews in the US pro­vided much-needed eco­nomic and po­lit­i­cal sup­port. Ger­man repa­ra­tions for Nazi per­se­cu­tion of Jews also pro­vided a ma­jor boost to the Is­raeli econ­omy, ex­plains econ­o­mist Paul Rivlin, a se­nior re­search fel­low at Tel Aviv Univer­sity’s Moshe Dayan Cen­ter for Mid­dle Eastern and African Stud­ies: “Is­rael was able to ac­quire, ba­si­cally with­out cost, the equip­ment to build fac­to­ries to em­ploy the new im­mi­grants and make the range of ba­sic com­modi­ties that the Is­raeli mar­ket needed.” Rivlin, who is also a vis­it­ing pro­fes­sor at the In­ter­dis­ci­pli­nary Cen­ter in Her­zliya, says that the repa­ra­tions may even have saved the econ­omy from col­lapse.

Im­pres­sive eco­nomic growth

In the early 1950s, Is­rael’s econ­omy grew by around 13 per cent each year, and then de­creased to just un­der ten per cent an­nu­ally

into the 1960s. Be­tween 1973 and 1984, how­ever, an­nual growth dropped to one per cent. Thanks to a strate­gic fo­cus on high-tech sec­tors, Is­rael ex­pe­ri­enced rapid eco­nomic growth again in the 2000s, with GDP per capita in­creas­ing by six per cent. In­deed, the only coun­try that beats South Korea’s cur­rent gross do­mes­tic spend­ing on R&D in­vest­ment is Is­rael, which is now a world leader in elec­tron­ics, phar­ma­ceu­ti­cals and soft­ware.

Os­nat Laut­man Man­soor (see in­ter­view above) has done ex­ten­sive re­search on Is­raeli busi­ness prac­tices and iden­ti­fies some so­cio­cul­tural rea­sons for the suc­cess of the econ­omy. “In my new book, I write about how Is­raelis be­came so am­bi­tious. It’s all about his­tory, about build­ing the Jewish [home­land],” Man­soor ex­plains. “We don’t have enough peo­ple in Is­rael, so we need to think global, we need to think big. In Ger­many, you can do busi­ness with France, Bel­gium — all of Europe.”

From a dif­fer­ent per­spec­tive, Dan Senor and Saul Singer’s Start-up Na­tion de­scribes how such a small coun­try has pro­duced so many start-ups. The au­thors write that a cul­ture of risk-tak­ing and co­op­er­a­tion be­tween the state and the mil­i­tary have sig­nif­i­cantly con­trib­uted to pro­duc­ing one of the most

Beau­ti­ful beach, per­fect weather: Tel Aviv is a mag­net for vis­i­tors and res­i­dents

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