OECD secretary-general: Israel to join in 2010

Secretary-general says organization expects Israeli economy to expand by 3% in 2010, and possibly 4% in 2011.

By SHARON WROBEL
January 20, 2010 11:00
3 minute read.
OECD sec.-gen. Gurria hands Peres a recent report,

peres oecd gurria 311. (photo credit: GPO)

OECD secretary-general Angel Gurria expressed confidence on Tuesday that Israel would be accepted as a member in the Organization of Economic Cooperation and Development this year, despite a number of unresolved issues.

"2010 marks the target year for completing Israel's accession process to the OECD," Gurria said in a joint press conference with Prime Minister Binyamin Netanyahu in Jerusalem. "We are keeping the target that this can happen. There are still issues that we must solve, but it is important to point out that all these issues are being worked on and are surmountable."

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The OECD expects the Israeli economy to expand by 3 percent in 2010, and possibly by 4% in 2011, according to Gurria.

By joining the OECD, Netanyahu said Israel is seeking to "seize the future."

"If you want to be a leading economy in the world, then act like a leading economy," he said.

Also Tuesday, Foreign Minister Avigdor Lieberman and Gurria signed an immunity and benefit agreement on Tuesday as a condition for Israeli membership in the organization.

According to the deal, OECD representatives in Israel will be granted diplomatic immunity and a preferential legal status.

As part of a two-day visit to the country, Gurria on Tuesday held a number of meetings with leading economic and government officials ahead of Israel's accession process. The unresolved issues could delay Israel's efforts to be accepted as a full member by May as planned.

The country has complied with most of the norms and standards upheld by the 31 OECD member countries in the fields of financial markets, technology and innovation, and investment.

However, as Israel approaches the final stage in being accepted as a full member, the organization is urging Israel to tackle three critical issues: anti-corruption policy measures, in particular in the defense industry; compliance with intellectual property legislation common in OECD member countries; and the exclusion of statistics relating to territories that are not considered part of the country.

Gurria also said that Israel needs to reduce its state debt. Netanyahu said the government plans to cut the ratio of the debt to gross domestic product to 60% within "a few years." It's now about 80%.

Finance Minister Yuval Steinitz said on August 5 that membership may reduce Israel's risk premium and help attract investment.

"The combination of being admitted to the OECD and the upgrade to developed status by the MSCI create a high impact," said Rafael Gozlan, chief economist at Leader Capital Markets in Tel Aviv. "Our place is with the developed countries."

MSCI Inc., whose stock indexes are tracked by investors with about $3 trillion in assets, in June raised Israel to developed-market status from emerging, a change that will take effect in May.

Gurria also met with President Shimon Peres, who expressed confidence that Israel's anticipated membership in the OECD would provide an opportunity for the Jewish state to show its other face, that of technology, innovation and care for all its citizens.

Peres listed a string of areas in which Israel could hold its own with other leading countries, and expressed his conviction that when Israel achieves peace with its neighbors, GNP per capita could rise to $35,000.

Gurria handed Peres a copy of the organization's two most recent reports on Israel's economy and the labor market, and told the president that the OECD was working with the relevant government ministries to deal with the remaining gaps for compliance with OECD standards.

In a separate meeting with Environmental Protection Minister Gilad Erdan, Gurria praised Erdan and his office for Israel's significant progress in complying with the environmental norms and standards set out by the OECD for membership acceptance. Gurria made special note of Israel's declared target to reduce anticipated carbon emissions by 20% in 2020.

Bloomberg and Jpost.com staff contributed to this report.


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