Knesset to discuss effect of US economic crisis on Israel

Economic Committee chairman warns fall of tycoon can cause "destructive, uncontrollable domino effect."

August 14, 2011 02:12
2 minute read.
Carmel Shama

Shama 311. (photo credit: Ariel Jerozolimski)


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The Knesset plans to discuss the US economic crisis and its effect on Israelis, specifically on their pension plans, in two committee meetings this week.

A Knesset Economics Committee meeting titled “The danger of a tycoon falling, and its consequences in the market,” is planned for Sunday, during the second week of the Knesset’s summer recess.

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Cabinet to discuss effect of global market crisis on Israel
‘Israel will escape short-term damage’

The meeting will deal with the effects of the economic situation abroad on major Israeli businesses. MKs plan to discuss ways to avoid a problem similar to the one banks faced after Lev Leviev’s Africa-Israel Investments Ltd. faced cashflow issues when the global recession hurt its investments in the US and Russia.

Committee chairman Carmel Shama-Hacohen (Likud) warned that “the fall of a tycoon can cause a destructive, uncontrollable domino effect.”

“It is our responsibility, in a time of stock market crashes in the world and in Israel, to closely examine the dangers of such an event and its consequences on the market and the stability of our banking system,” he explained.

This effect is rooted in the market’s centralization, Shama-Hacohen said.

“We all pay the price of centralization, when there is a lack of real competition in most branches of the market and product prices raise the cost of living in Israel,” he added. “This centralization comes from tycoons and the debts they have yet to repay to the bank or to the Israeli public.”

The Knesset Finance Committee will also discuss the US economic crisis, after MK Faina Kirschenbaum (Israel Beiteinu) sent a request to committee chairman Moshe Gafni (United Torah Judaism).

Kirschenbaum, chairwoman of the Subcommittee on Insurance and the Capital Market, wrote that a meeting is necessary because the recent falls in the market “could mark the beginning of a crisis in Israel’s economy, in which we are dragged after the rest of the world.”

The meeting’s date has not been set, but it is likely to be next week.

“We live in a global world, where we are affected by every fluctuation in the American economy,” Kirschenbaum told The Jerusalem Post.

“Israel probably has the most stable economy in the world. We survived the 2008 recession, and I hope we survive this one,” she explained, “but it has the potential to cause a major upset.”

The Israel Beiteinu MK said it was a wise decision not to cancel the current budget and go into a deficit.

“Education and housing are important, but if there is an economic crisis, the weakest members of society will be hit first,” she stated. “It is important that we maintain balance. Now is not the time for dramatic decisions.”

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