Happy Birthday, Israel

polls_israel_flag_5311_565914_poll_xlargeBack in 2010, in my book The Land of Blood and Honey, I argued that Israel was the greatest political success story of the entire twentieth century. Today, on my country’s 67th birthday, I want to bring that story up to date. Most of the figures are taken from a recent posting by Dr. Adam Reuter, chairman of Reuter Meydan Investment House and CEO of Financial Immunities Ltd. The starting line is 1984; 1984 being the year in which the country, embroiled in Operation peace for Galilee (the First Lebanon War) and with a 450% inflation rate, was on the brink of bankruptcy.

As always, success had many fathers. The then minister of finance, Yitzhak Modai (1926-98), took the credit for himself. Nonsense, says then Prime Minister Shimon Peres. He, Modai, did not even know what was going on. Surely some credit must also be given to the extra $ 1.5 billion (coming on top of the annual $ 3 billion) in American aid. Be this as it may, Israel’s economic heart, which since the October 1973 War had been all but paralyzed, started beating again. Follow some of the results.

In 1984 the country had 4.1 million inhabitants. By now the figure is 8.2 million, a 100 percent increase. Following the post-2008 economic recession as well as new anti-Semitism in many countries, immigration has been picking up. Moreover, compared to other OECD countries Israel’s population is very young, a fact that has important implications for the continuation of growth. Yet the tremendous demographic increase has not prevented the number of rooms per person from growing from 0.92 to 1.26, a 37 percent increase. The number of vehicles per capita has more than doubled, with results that can be seen on every road and street every day. GDP, calculated in dollar terms, has increased ninefold. Per capita GDP has increased 414 percent, foreign currency reserves 2,866 percent. The national debt has gone down from 280 percent of GDP to just 66 percent.

Whatever one thinks of the Second Lebanon War nine years ago, since then the border with Lebanon has been almost completely quiet. Whatever one thinks of Operation Protective Edge nine months ago, since then the border with Gaza has been almost completely quiet as well. That, plus the collapse of Syria and Egypt, helps explain why Defense, which used to take up 20 percent of GDP, has gone down to no much more than 5 percent. Taxation, which took up 45 percent of GDP, went down to 32 percent. American aid went down from 10 percent of GDP in 1984 to just 1 percent today. Exports, measured in dollar terms, went up 860 percent.

Back in 1984 Israel had zero—zero—indigenous supplies of energy and water. By now, thanks to the discovery of vast gas fields on one hand and the construction of the world’s largest complex of desalination plants on the other, both are available in very large quantities and can be increased almost at will. As a result of all this, even the Economist, the smart-Alec British magazine which back in 2008 honored Israel’s 60s birthday with a cover story about “the dysfunctional Jewish state,” has been forced to admit that, since the country joined OECD five years ago, it has done better than most of its fellow-members in that august organization.

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“Israel has a disproportionate amount of brains and energy,” said Warren Buffet (who, putting his pocket where his mouth was, by spent some $ 2 billion buying some Israeli companies). In the UN’s Human Development Index it is rated nineteenth. The Wall Street Journal has rated Tel Aviv third in the world in high-tech, behind Austin and San Francisco but ahead of New York, Stockholm, London, Singapore, and others. In terms of innovation, Israel heads a list of 148 countries. In terms of entrepreneurship it comes second. 300 leading international companies, including Facebook, Microsoft, IBM, Google, Apple, HP, Cisco, Motorola, Philipps, and Siemens either already have R&D centers in Israel or are building them now. During the first decade of the twenty-first century Israel also led the world in terms of the number of Nobel-Prize winners per capita.

Nor is it just a question of economic and technological development. Israel is the only country in the world that has more trees now than it did a century ago (living in Mevasseret Zion west of Jerusalem, and having in my possession photographs of the area taken by the German Air Force during World War I, I can testify to that fact). The number of museums per capita is the highest in the world.  So is the number of published scientific articles. The same applies to the share of R&D in GDP as well as the proportion of high-tech workers in the labor force. The bad reputation of Israeli drivers notwithstanding, the number of those killed in traffic accidents per 100,000 of the population is much lower than in most other countries.

Finally, polls show that, in terms of happiness Israel ranks sixth among OECD countries and eleventh among 146 countries world-wide. All this has been achieved in spite of the country’s small size; in spite of its location in the Middle East, not exactly the most peaceful or most benevolent part of the world; in spite of continuing security problems more dangerous and more persistent than those affecting any other developed country; and without for one moment surrendering the most precious possessions of all: such as democracy, human rights (for the non-Palestinian population, at any rate) and an independent judiciary.

To be sure, there are problems. There are several hundreds of thousands illegal immigrants (although, since the completion of a security fence between the Negev and the Sinai Peninsula, the number of new ones coming in has dropped to practically zero). The gap between rich and poor has been growing, as has the number of the working poor. Some communities, particularly the ultra-orthodox and the Arabs, are lagging behind in terms of socio-economic development (although, in both cases, change has finally got under way). There is still no peace with most of the neighboring countries. However, with the exception of the last-named two, all these are problems of a developed country, not of a developing one such as Israel used to be a few decades ago.

Unfortunately, one field in which no progress whatsoever has been made is the question of the occupied West Bank, East Jerusalem included. I do not want to enter into the question as to whose fault this is, Israel or the Palestinians. As the saying goes, one needs two to tango—a point of view, incidentally, that many Israeli Arabs also share. In the eyes of many both in Israel and abroad, the occupation is the most important problem that has to be solved one way or another. Personally I agree that such is indeed the case. Let us hope that, when I write another column on my country a year from now, there will finally be some good news in that department too.