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Snap Judgement:
Calev Ben-David
11/22/2007
What does it mean that the owner of New York's Plaza Hotel is a child of Netanya?
The last time I stepped foot inside New York City's Plaza Hotel was my brother's wedding day 10 years ago. Though the reception wasn't at the Plaza, he had booked a room there the night before for his bride, and chose it as the site for the official family wedding photos. And why not? The hotel is one of Manhattan's premier symbols of glamor, immortalized as such even for those who never had the pleasure of stepping through its doors in innumerable books (The Great Gatsby, Eloise) and movies (North By Northwest, Plaza Suite). The last time I set eyes on the Plaza this past summer it looked somewhat less presentable than usual, much of its exterior covered by scaffolding. That's because it was undergoing extensive renovations for a grand re-opening last month by its new owner: Israeli billionaire Yitzhak Tshuva, whose Elad company purchased it last year for $675 million. The fact that the Plaza is now in Israeli hands is one this native New Yorker still hasn't quite wrapped his mind around. (Will they soon be serving humus and falafel in the Oak Room?) Nor just that. Two weeks ago, Tshuva and fellow Israeli mogul Nochi Dankner dynamited the venerable Frontier Hotel on the Las Vegas Strip, in order to build a new $8 billion hotel/casino/residential complex that will also bear the Plaza name. Think about the symbolism of that act. Las Vegas, built by American-Jewish "businessmen" such as Bugsy Siegel, Moe Dalitz and Meyer Siegel, some of whom in 1948 sent money and reportedly arms over to the Hagana to support the establishment of the Jewish State, now finds that Israelis are coming back to demand their piece of the action. These are not exceptional instances of Israeli businessman investing abroad. Others, such as Lev Levayev and Yuli Ofer have spent billions in real estate and ventures across North America, Europe, South America and Asia. That's not in lieu of domestic investment; according to a recent Bloomberg report, Israeli companies have made $16.4-billion worth of local acquisitions in the past five years, an impressive amount that still pales compared to the nearly $25 billion of foreign investment here in just the past two years. But the local market is saturated, and Israeli capital has no choice now but to move abroad. WHAT'S MORE, investors such as Tshuva (Delek Group) and Dankner (Cellcom, Super-Sol) primarily made their initial fortunes domestically, unlike such past Israeli moguls as Shaoul Eisenberg, or more recently Shari Arison or Arkadi Gaydamak, who brought their bankrolls here from abroad. Just a few years ago it was common to still hear Jews from abroad declare the old cliché that "the quickest way to make a small fortune in Israel is to arrive here with a big fortune." Obviously Warren Buffet, the world's savviest investor, didn't think so when he bought Iscar from the Wertheimer family last year for $4 billion. BEFORE WE get carried away though, let's try to put this development in its proper perspective. Tshuva, despite the remarkable strides he's made since growing up in a working-class Netanya home, ranks as just #382 on the Forbes list of the world's wealthiest people. That pales in comparison to such Diaspora Jews as casino mogul Sheldon Adelson (#6, $26.5 b.), Oracle founder Lawrence Ellison (#11, $20.5 b.), Russian-British Roman Abramovich (#16, $18.7 b.) and Google founders Sergey Brinn and Larry Page (#26, $16.6 b.). Should such men take a real interest in investing in Israel - as Adelson has recently indicated he might - they would easily become dominant figures on the local economy. Even if that is not the case, there are certainly downsides to Israel now finally producing its own class of billionaires. For decades this country's economy was dominated by a monopolistic arrangement of either large semi-public industrial concerns, such as the Histadrut-linked Koor, or a few select family-owned business, like Strauss. On one hand, they were more interested in maintaining their wealth rather than creating new sources of it, and economic growth moved at an often sluggish pace. On the other, the over-all distribution of wealth was more egalitarian, with the gap between Israel's richest and poorest classes nowhere near as great as it is today. The government, unfortunately, still hasn't done nearly enough to discourage monopolistic practices among either private businesses or anachronistic public companies such as Israel Electric. Nor has it paid sufficient concern to an increasingly burdened middle-class that finds its tax shekels being used to subsidize welfare policies that deliberately encourage population growth among the poorest sectors (Haredim and Israel Arabs), rather then providing them with the necessary educational opportunities or to level the economic playing field. Still, there are real reasons to welcome the success of self-made local businesspeople such as Tshuva. One is that wealthy Israelis are finally starting to support local philanthropic efforts that for too long have been dependent solely on foreign Jewish largesse, thus over-emphasizing the schnorrer element of the Israeli-Diaspora relationship. Another positive aspect has to do with the development of wealth elsewhere in the region. The sharp rise in fuel prices in recent years has dramatically increased the economic power of several of Israel's Arab neighbors. Israeli investments abroad pale in comparison to those now being made by individuals and governments from the oil-rich Persian Gulf states. We have to be concerned about this trend, as that kind of buying power eventually translates into political influence. Realistically, it can't be countered in the short term simply by Israeli ingenuity and financial acumen, even when that entails headline-making investments in New York City and Las Vegas. Still, as a native New York Jew who left Manhattan for Jerusalem back at a time when it was inconceivable to think that an Israeli would one day own the Plaza, I find reassurance in the thought that we can no longer be regarded - and pitied - simply as the Diaspora's poorer cousins in the Middle East.
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