Economic vindication

OECD membership recognizes economic achievement.

Finance Minister Yuval Steinitz hailed it as a “historic achievement.” Prime Minister Binyamin Netanyahu saw it as a “particularly welcome sign of Israel’s solid international standing,” noting that any one of the 31 member states “could have voted ‘no’ and vetoed our inclusion.”
They were talking about the unanimous vote yesterday at Château de la Muette in Paris by the 31 members of the Organization for Economic Cooperation and Development (OECD) to accept Israel – as well as Estonia and Slovenia – into its ranks.
It was undoubtedly a victory for the embattled Jewish state. Until the last moment, there was some concern that Switzerland, Turkey, Norway, Britain and/or Ireland could torpedo the move. These countries have criticized Israel for insisting on providing economic data that includes east Jerusalem, the Golan Heights and settlements in Judea and Samaria as part of the Israeli economy. Palestinian Prime Minister Salam Fayyad, evidently unperturbed by potential damage to ties with Israel as proximity talks got under way, has campaigned against Israel’s inclusion. The very fact that the well-connected Fayyad, a former International Monetary Fund economist, failed to sabotage the move is a success for Israel and for hardheaded reason.
Israel’s impressive accomplishments are best appreciated when scrutinized by a forum of highly developed countries committed to democracy, liberalism, equal opportunity and the market economy using objective socioeconomic criteria. In contrast, negative misrepresentations of the “Zionist entity” as a repressive, racist apartheid state belong to the fairy-land world of hateful propaganda and a well-developed Palestinian victimization complex.
ISRAEL WAS judged in accordance with 18 parameters set by the OECD, an organization that has its roots in the Organization for European Economic Cooperation (OEEC), founded in 1948 to help administer the Marshall Plan for the reconstruction of Europe. Thanks to years of fiscal discipline, Israel’s public debt-to-GDP ratio is expected to fall to around 70 percent in coming years, compared to 90% in Germany, 96% in France, 100% in Britain, 110% in the US, 130% in Italy and a whopping 250% in Japan. Greece, with debt estimated at €156.2 billion, as well as Spain, Portugal and Ireland, the four weakest European economies, all face massive economic overhauls. Israel’s inflation over the past decade is just half of the OECD average, and GDP growth has been rising steadily (a 5.5% annual average between 2003 and 2008). In addition, Israel made changes in its intellectual-property and anti-money-laundering legislation to meet OECD criteria.
True, there is room for improvement. This was evident in January when Mexican OECD Secretary-General Angel Gurría, a friend of Israel and a personal acquaintance of Steinitz, presented his organization’s economic survey of Israel. Gurría criticized the fact that one-fifth of Israel’s population lives under the poverty line, much higher than the OECD average of 11%. About half of all Israeli Arabs and 60% of the haredi population are poor, as are 23% of the elderly population. Due to low haredi and Arab employment, participation in the labor market is low, at just 59%, compared to the OECD average of 67%. There is also too much red tape inhibiting business growth.
But everything, both positive and negative, is on the table for all tosee. This transparency and external scrutiny that pushes for excellenceis one of the benefits of being part of the OECD. Institutionalinvestors, aware of Israel’s dynamic economy, have been queuing up tobuy Israel’s bonds for the past few years. Perhaps even more will do sonow, thanks to Israel’s new OECD membership status.
ONE CANNOT escape the irony of the timing of this “historicachievement.” Israel has been seeking OECD entry for years. Finally ithas happened, at a time when Europe, the heart of the OECD, is ineconomic disarray, with Greece, Spain, Ireland, Portugal and perhapsItaly threatening to undermine the EU’s economic stability.
Israel, meanwhile, has faced profound challenges during its shortlifetime – from the absorption of hundreds of thousands of immigrantsfrom underdeveloped Muslim countries in the 1950s and 1960s, and fromthe former Soviet Union and Ethiopia in the 1990s, to a constantsecurity threat that drains a disproportionately large percentage ofthe annual fiscal budget, to an international anti-Zionist campaign ofdelegitimization. And yet it has become one of the world’s most vibranteconomies. The big, prestigious OECD may even have a thing or two tolearn from its latest member.