The Netanyahu era and the transformation of the Israeli economy

The spirit of Modi-Netanyahu should be reflected in India-Israel relations too.

By
June 3, 2018 04:56
4 minute read.
The Netanyahu era and the transformation of the Israeli economy

PRIME MINISTER Benjamin Netanyahu speaks at an event during his recent trip to India.. (photo credit: REUTERS)

 
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In 2004, then finance minister Benjamin Netanyahu started the revival of the Israeli economy. During that time, as in any democracy a number of voices were raised against his aggressive free-market push and economic reforms. Some said that Netanyahu would not be able to change the mindset of those who believed that the government should solve their problems, not the market. Today in 2018 the results of his tough decisions and systematic reforms are quite visible. The current status of the Israeli economy, its diplomatic leverage and growing friendly links around the world are the cumulative results of the Netanyahu era, the most transformative phase of the Israeli economy. The way the Israeli prime minister has shaped the circumstances of his country is an inspiration for others.

In a recent interview at the Economic Club of Washington, Netanyahu said that he wants to be remembered “as the defender of Israel and the liberator of its economy.”

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To understand what changes Netanyahu’s leadership has brought to Israel, one needs to compare his period with those of previous governments.

When Netanyahu took charge as prime minister, Israel had enormous conceptual and technological assets, but there was a strong socialist influence in the economy too. The status of the public/private sector, as Netanyahu used to describe it in his popular “Fat Man/Thin Man” example, was that the public sector had become a fat man resting on a thin man’s back (the private sector). Netanyahu, a true advocate of the free market economy, started a culture of continuous reforms to develop an environment in which private sector players can thrive.

In his first term as prime minister, he introduced a courageous plan to overhaul the Israeli economy. He reduced the size of the public sector, controlled government spending, cut tax rates and streamlined the taxation system, privatized major stateowned industries including banks, oil refineries, the national airline and Zim Integrated Shipping Services, reformed the pension and welfare system, and much more.

Netanyahu’s quest for economic reform has not yet stopped: in December 2013, the Knesset passed the Law for Promotion of Competition and Reduction of Concentration, to increase competitiveness in the Israeli economy. The same year, Netanyahu also began a campaign of port privatization to increase Israel’s exports. In July 2013, he issued tenders for the construction of private ports in Haifa and Ashdod. During Netanyahu’s tenure as prime minister, Israel has witnessed a major privatization push, infrastructure reforms, agricultural reforms and reforms in the financial sector, too.

From the beginning, all of his key reforms have been aimed at curbing excess bureaucracy and regulations to ease the burden on industry.

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Today Israel is one of the most technologically advanced economies in the world.

Israel, which once had a number of government- and union-controlled companies, is now the Startup Nation and Innovation Nation; a huge change, for which Netanyahu can take much of the credit.

He visualized the future market transitions accurately and much earlier than others and it is the result of his visionary approach that today, when some of the big economies of the world are struggling to foster an innovation ecosystem, Israel is leading.

A careful observation of Israel’s status reflects that over the years, Prime Minister Benjamin Netanyahu has improved Israel’s global standing and strategic position remarkably. Today, in all global platforms Netanyahu endorses Israel’s high-tech sector and next-gen capabilities in digital health, smart mobility, agri-tech, watertech and cyber. When he names individual startups in his speeches, a generation of young and innovative Israeli minds of Israel get inspired.

While addressing Indian Prime Minister Narendra Modi during his visit to India, Netanyahu said: “You are a revolutionary leader, and in the best sense of the word revolution – you are revolutionizing India, you’re catapulting this magnificent state into the future. You’ve revolutionized relations between Israel and India.”

India is indeed going through a big transformation.

Prime Minister Modi’s “Reform, Perform and Transform” agenda is yielding remarkable results. Four years of Modi’s government have transformed India’s prospects drastically and the results are visible in every sector of the economy.

The Modi-Netanyahu era is special. The current leadership approaches of India and Israel have a lot of commonalities. Both leaders are known for their courageous and revolutionary steps, proactive approach and desire to do more. The potential of the India-Israel partnership is huge. But despite a strong leadership desire and enabling environment, somewhere things are not moving as per expectations in India-Israel relations.

There is a lot which needs to be done to enhance the participation of Israel in the Indian government’s key initiatives. The vision and approach of Modi-Netanyahu must get translated into the cooperation framework of both countries and for this, the policymakers and executors of Israel need to understand the changing reality of India.

India’s approach to transformation is fast and inclusive. To align with this approach Israel needs to add new dimensions of collaboration, apart from the traditional defense and agriculture sectors. The Indian government is determined to promote MSMEs and startups in every sector; there should be some focus on establishing the links with these emerging players.

India is a vast and diversified country.

Israeli teams should focus on the quality of exchanges rather than on quantity, and I believe they should avoid biased and critical community/content/press and keep their focus on “Transforming India.”

This is the best time to maximize improvisation in India-Israel relations. The approach of Modi and Netanyahu should be reflected in India-Israel relations, too.

The author promotes advanced technologies, startup ecosystems and the Indian government’s business- and technology-related initiatives like Digital India, Make in India, Smart Cities, Startup India, etc.

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