Steinitz: Black storm clouds gathering over our economy

Finance Minister expresses concerns about 2012; Finance Committee “offended” that government turned to Trajtenberg and not Knesset.

October 31, 2011 12:10
3 minute read.
Finance Minister Yuval Steinitz

Finance Minister Yuval Steinitz_311. (photo credit: Reuters)

Finance Minister Yuval Steinitz said he’s “very worried” about Israel’s economy in 2012 at a Knesset Finance Committee meeting on Monday.

“Our economic ship did not sink like most of the West’s ships did,” he explained, “but black storm clouds are gathering around us, and we have yet to steer the ship to shore safely.”

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Steinitz told the committee that Israel has high growth and low unemployment, especially in comparison to the US and Europe, which are in the midst of a recession.

“When we’re faced with a difficult economic situation in the world, the most important thing is to prevent mass unemployment, and we can look back with satisfaction at the numbers for the last year,” the Finance Minister said. “We are one of the only markets in the world to have a lower unemployment rate than we did before the crisis.”

Steinitz also said that “Israel succeeded where most of the West did not, by bringing in a high level of investments directly into our economy, a factor that is no less important than low unemployment.”

At the same time, “I try to be honest, and I need to say that I’m really worried,” Steinitz added.

The Finance Minister explained that most investments in Israel come from the US and Europe. Israeli industry is also heavily reliant on exports to the West.

“In the last six months, the optimistic forecasts for improvement in the West have stopped. There is a big crisis, a real crash, which brought a slowdown in Israeli exports, because there is less of a demand. The downturn is not dramatic yet, but it is a cause for concern, since it has continued for the past three months,” Steinitz said.

“We may think the mission of saving the Israeli market from a crisis is behind us, because of our high growth and low unemployment, but it is actually both behind and ahead of us,” he added, explaining that the Finance Ministry will have to work hard to continue the successes of the past.

Finance Ministry Budget Director Gal Herskovitz explained that the Treasury is not taking major action, because “there is so much uncertainty. Things could turn in either direction, up or down.”

Although Finance Committee Chairman Moshe Gafni (UTJ) insisted that the Trajtenberg Committee on social reform was not on the meeting’s agenda, it was mentioned more than once.

“The fact that we in the government and the Knesset are able to talk about improvements and additions to the budgets in social matters, such as education, are a result of low unemployment,” Steinitz said.

The Finance Minister addressed those saying that a new budget must be drafted so that real changes can be made by paraphrasing from an International Money Fund report: “Israel’s unique twoyear budget helped Israel overcome the international crisis and contribute to high growth and low unemployment.”

With reference to the Trajtenberg Committee, Gafni said that he is “personally offended that the government felt the need to form a 60-member committee with a large budget for refreshments,” to deal with social problems.

Throughout the meeting, Gafni made sure to refer to the Trajtenberg Committee as “that committee whose name I can’t remember.”

“We in the Finance Committee will talk about the things that committee did not mention, like water and electricity,” Gafni explained.

“It was clear that this would happen. I didn’t know that there would be tents of Rothschild Street, but we predicted months ago in this committee that there would be public outrage.”

“Trajtenberg was a shadow Finance Committee,” MK Orly Levi-Abekasis (Israel Beiteinu) lamented. “The government was showing a lack of confidence in us.”

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