RUTHFULLY YOURS

A new year is generally a time to assess the past and consider the future. The year 5775 (in the Jewish calendar) is no different. A look back at this past year, with the grim reality of the Islamic State’s (IS) cruel terror, the general instability in the Middle East, and the recent 50-day war in Gaza between Israel and the Palestinian Islamist terror group Hamas, could easily lead one to despair. This mayhem and bloodshed has also obscured the dynamism and progress the marks Israel’s society.

A comparison between Israel, circa 1984, with Israel of 2014 reveals the country’s incredible growth and its maturity as a developed nation – a nation now commonly referred to as the “Start-Up Nation.” A few statistical facts convey the nation’s dramatic growth. Israel’s population in 1984 stood at 4.1 million, doubling in 30 years to 8.2 million. This means more security for the nation by virtue of a larger standing army and reserves, and less impact on the economy during military mobilization.

While Israel is faced with an existential threat from a nuclear Iran, terrorist organizations such as Hezbollah in Lebanon, IS and al-Qaeda affiliate al-Nusra Front in Syria, and Hamas in Gaza, the disintegration of Iraq and Syria with their substantial armies and armament, have lessened the overall strategic threat facing the Jewish state. Egypt, under President Abdel Fattah al-Sisi, the largest and most powerful Arab state, and Saudi Arabia, the primary Sunni Arab state, have found common cause with Israel. They share a concern over Iran’s quest for regional hegemony, and its drive for nuclear arms, as well as Israel’s opposition to the Muslim Brotherhood, and other radical Islamist movements.

A nation’s strength is not measured by the size of its military, and its ability to deter its enemies alone. National strength is also a function of its economic, social, and cultural achievements. Since 1984 Israel has experienced dramatic improvements in its economy. The inflation rate has declined from 447% to 1.5%, and the interest banks charge declined from 771% to 5%; national debt as a percentage of the GNP has declined from 17% to 2.5%. Likewise, the defense expenditures as a percentage of the GNP went down from 20% to 5.6% (2013), still a bit higher than the U.S. military expenditure of 3.8%.  Foreign exchange reserves in dollars grew from $3.3 billion to $90 billion. Exports in 1984 were $10 billion and by 2013 had reached $291.36 billion, while per capita income in 1984 was $7000, and in 2013 it was $34,120. Women in Israel’s labor force amounted to 30% in 1984; it now stands at 53%. And while the Gross Domestic Product (GDP) in the U.S. (2013) grew by 1.9%, in the U.K. 1.7%, France’s 0.2%, Israel’s GDP growth was 3.3%. 

Naturally, Israel has economic and social problems. To reach its full potential Israel needs to increase the number of ultra-orthodox Jews and Arabs in the labor market. The high cost of apartments (due to shortage in supply) has been especially difficult for young couples seeking their first home and is a factor in the emigration of bright young people.  There are not enough rental apartments for the post-military young. Defense expenditures are still high, but unavoidable. However, when compared with the rest of the OECD (Organization for Economic Cooperation and Development) states, Israel’s situation is improving yearly, which is not the case elsewhere in Western countries.

OECD Secretary-General Angel Gurria had this to say about Israel (March 8, 2011) “In a very short period, Israel has become an important contributor to OECD’s work. It is now a full member of more than 100 Committees and bodies, and vice-chairs of 5 of them. Its knowledge on key areas for the viability of our economies, like water management, ‘clean-techs’ and entrepreneurship, is becoming a source of best practices. Its contribution to our privacy protection standards and consumer protection policy has been outstanding.  Its support for our work with the MENA countries is also highly valuable.”

An overview of the Israeli economy by the OECD pointed out that “Israel’s output growth has been impressive, considering global economic weakness, and the output gap is close to zero in contrast to much of the OECD area. The unemployment rate is at a 30-year low, and labor force participation has been rising steadily. Furthermore, new natural gas fields have provided an additional boost to GDP in recent quarters. Substantial public spending cuts and revenue-raising measures legislated in the latest government budget are set to bring fiscal balances back on target for this year and next.”

Billionaire investor Warren Buffett described (5/2/2013) Israel as the “most promising investment hub outside the U.S.” Buffett added that, “[w]e are the world’s fifth-biggest investment firm, but for me the number-one country is Israel, which is far ahead of larger and richer countries.”

The United Nation’s Human Development Index (UN-HDI) for 2014 ranked Israel #19 among 194 member states, ahead of France (#20), Austria and Belgium (#21), Finland (#24), and Italy (#26). The HDI measures life expectancy, education, and income levels in various countries.

In the cultural sphere, Israel is #1 in the world in the number of museums per person. It has over 200 museums, and counting. Israel leads the world in the re-use of sewage water (about 80%) while in second place, Australia’s rate is only 22%. The Jewish state leads the world in the number of people employed in research and development. For every 10,000 workers, Israel has 140 employees, while second place U.S. has 85 (According to Dr. Adam Reuter, CEO of Financial Immunities Consulting, and the Chairman of Reuter-Maydan Investment House). A Wall Street/ NBC-TV survey has found Israel to be the second most educated nation in the world following Canada, above Japan.

The British Economist survey on the best places in the world to be born and live placed Israel as the 20^th, ahead the U.K., France, Italy, and Japan. A 2012 Bloomberg poll ranked Israel’s health system as the sixth best in the world, ahead of the U.S. and many European states. Life expectancy for men in Israel ranked second among 146 states polled, women’s life expectancy in Israel was ranked 13.

According to Reuter-Maydan Investment House in 2013, for every 10 Jewish children born, there were 2.4 Arab children born, a decline from the year 2000, when the ratio was 10/3 Jewish to Arab children. Since 2000, the Arab population growth in Israel stabilized at around 40,000 births a year. Jewish births at the same time increased from 95,000 to 125,000 a year. Significantly, the Jewish-Israeli growth has come mostly from secular Jews, especially among immigrants from the former Soviet Union. There has also been a significant decline of birthrates in the Arab sector as a result of better education among Arab women, and Westernization in the Arab sector. Also noted was a dramatic decline in birthrates among Bedouin women, due to the lowering of national insurance paid to families with children.

The Israeli economy is strong. The newly found gas and oil tracts offshore will make Israel a net exporter of energy within five years. A low rate of unemployment and a high rate of investments make Israel an attractive destination for West European Jews fleeing anti-Semitism. Israel’s excellent health system and vibrant cultural life keep Israelis happy and proud of their country. While the recent Gaza war entailed hardship for many Israelis, the Israel Defense Forces proved more than capable in dealing with the situation.  In summary, despite the grim reality in the region, Israel’s future appears to be bright.