Steinitz, Bernanke mull economic crisis

Both concluded that there are encouraging signs of an emergence out of the global financial crisis.

Steinitz with Bernanke 248.88 courtesy (photo credit: Finance Ministry)
Steinitz with Bernanke 248.88 courtesy
(photo credit: Finance Ministry)
Finance Minister Yuval Steinitz met with Federal Reserve Chairman Ben Bernanke in Washington on Monday in an effort to intensify ties and strengthen economic cooperation with the US administration. They discussed the state of the global economy and the impact of the economic crisis on the Israeli and US economies. Both concluded that there are encouraging signs of an emergence out of the global financial crisis. Steinitz invited Bernanke to visit Israel for a continuation of discussions about economic developments. As part of his first working visit as finance minister to the US, Steinitz this week is meeting officials and leading economists including Stuart Levey, the Treasury Department's undersecretary for terrorism and financial intelligence; World Bank President Robert Zoellick; and Dennis Ross, President Barack Obama's adviser on Middle East affairs. Steinitz raised the importance of maintaining the relative advantage of both countries in the hi-tech sector and proposed setting up a working group that would formulate recommendations within a few months. Steinitz told Levey it was important to intensify economic sanctions against Iran and to increase cooperation between Israel and the US to crack down on money laundering and terrorist-related financing. Meanwhile, in a review of global economies published on Tuesday, Barclays Capital named Israel as the "strongest recovery story" in the Europe, Middle East and Africa markets. Signs of a recovery among the export-oriented hitech companies in Asia, Bank of Israel leading indicators and Israel's exports outlook all pointed to optimism on Israel's economy, the investment bank said. Barclays expects the economy to grow 0.3 percent in 2009 and 2.9% in 2010, and inflation, as measured by the Consumer Price Index, to be 3.2% in 2009 and 2.9% in 2010. Interest rates will rise from the current 0.75% to 1.25% by the end of the year (including a 25 basis-point hike in September), and to 2.5% by the end of June 2010, according to Barclays. The shekel-dollar exchange rate should drop to NIS 3.65 in about three months, and to NIS 3.60 in about six months, it said. Industry, Trade and Labor Minister Binyamin Ben-Eliezer is also visiting the United States this week. On Sunday, while in New York, he urged businessmen to invest in Israel. "We must turn the crisis into an opportunity, and I tell you explicitly: this is the time to come and invest in Israel," Ben-Eliezer said. "Our country is a small country, but we have a stable economy with high potential, populated with people who have an uncompromising urge to break records of innovation through collaborations with foreign companies." "We're now a year after the outbreak of the global economic crisis, which also included Israel," he said. "Nonetheless, thanks to Israel's stable economy and banking system, and conservative regulation, the damage to Israel was kept to a minimum. I am nevertheless concerned by the employment situation and the massive layoffs, as well as the weakening of the dollar against the shekel, which is of worry to you, too." Ben-Eliezer said Israel's innovative brains gave it a competitive edge. "Today, it is possible to produce everything in China, except for brains," he said. "Israeli brains and R&D capabilities are world-leading, especially in biotechnology, nanotechnology, renewable energy and water technologies. The Industry Ministry has a number of tools to encourage R&D, including bilateral agreements with other countries, regions and companies." On Wednesday, Ben-Eliezer is scheduled to meet with New York Governor David Paterson to sign a R&D cooperation agreement between Israel and New York State. Ben-Eliezer is also scheduled to meet with leading companies in Atlanta and Boston, including GE Technology, AT&T, Coca Cola and wastemanagement firms to encourage closer cooperation.