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The Organization for Economic Cooperation and Development on Wednesday agreed to start accession talks with Israel, which are expected to lead to full membership in the organization within two years.
"This is a step that expresses another vote of confidence in the strength of the Israeli economy and its ability to develop," said Prime Minister Ehud Olmert, who is also acting as the country's Finance Minister. "There is no doubt that Israel will now be enjoying the fruits of additional foreign investments, which will come from everywhere around the world."
Israel currently has an associate relationship with the OECD.
At the ministerial meeting of the finance ministers of the 30 OECD countries, the group voted in favor of opening discussions for the entry of Israel, Russia, Chile, Estonia and Slovenia as members and also proposed strengthening cooperation with Brazil, China, India, Indonesia and South Africa, through enhanced engagement programs - with a view to possible membership in the future.
"The invitation for membership of the OECD reflects the strong position of the Israeli economy and will support the successful integration of the Israeli economy into the global economy, said Bank of Israel Governor Stanley Fischer, who has been actively involved in the promotion of getting Israel into the exclusive group.
The organization's 30 members produce almost 60% of the world's goods and services.
"The Bank of Israel and all the relevant bodies, including the Prime Minister's Office, the Finance Ministry and the Ministry of Industry, Trade and Labor, cooperated closely in efforts to gain membership in the OECD by making progress on economic reforms to conform with international standards," said Fischer.
Full membership is expected to help reduce Israel's cost of maintaining the national debt as the interest it would pay on loans would be lower as it would help reduce Israel's country risk-rating.
"The improvement of the economic standing of the Israeli economy will help reduce Israel's country risk rating and as such will reduce the country's credit costs, which in turn will support the continued integration of the Israeli economy into the global economy and increase the level of investments," said Uriel Lynn, president of the Federation of Israeli Chambers of Commerce, who joined the chorus of politicians and business leaders applauding the decision.
Shraga Brosh, president of the Manufacturers Association of Israel, meanwhile, said OECD membership would improve the country's credit rating in international markets in the medium-term from "A-" to "A," boost foreign direct investments by billions of dollars annually and ease the entry of foreign banks into Israel who previously were reluctant to provide credit to local companies.
"Membership of the OECD will significantly improve credit conditions for Israeli companies and make it easier to raise capital," said Brosh.
In January, the executive director of the International Monetary Fund said the Israeli economy's high degree of development, together with the authorities' commitment to maintain a market-based economy, good governance and democratic pluralism placed Israel as a natural candidate for OECD membership.
However, the membership process is expected to take at least one to one-and-a-half years, during which it will be necessary to pass legislation, enact reforms and meet the organization's standards.
"I will see to it that all relevant government ministries and bodies make every effort so that the timetable for entering the OECD is as short as possible," said Olmert.
Following the OECD announcement, the Ministry of Finance launched an Internet site, "Israel-OECD," which evaluates Israel's compliance with the OECD's high standards, describing Israel's ability to make a substantial contribution to the OECD's mission and to support its instruments.