THE
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Edward Epstein, an Israeli citizen who currently [May 2003] lives in California, has completed a study of the home country government's economic policies as compared to the MIEPA list of policies as outlined above. The study on Israel is shown below. The ratings herein are based on the following rating scale:
RATING SCALE
5.0 Perfect Facilitation of Wealth Creation
4.0 Midway between Perfect and Neutral
3.0 Neutral Effect on Wealth Creation
2.0 Midway between Neutral and Obstructionist
1.0 Perfectly Obstructionist to Wealth Creation
[Rating scale copyright Mike P. McKeever, 1996. Used herein with permission]
To read a disclaimer about the analysis in this file, scroll to the bottom of the file.
ISRAEL:
Comparison of Israel's economic policies to MIEPA criteria as prepared by native student of Israel, Edward Epstein, studying in the US in May of 2003.
RATING SUMMARY
POLICY NUMBER RAW SCORE ADJUSTED SCORE POSSIBLE PERCENTAGE
1 4.5 13.5 15.0 90%
2 4.5 13.5 15.0 90
3 3.0 9.0 15.0 60
4 4.5 13.5 15.0 90
5 5.0 15.0 15.0 100
6 5.0 15.0 15.0 100
7 4.0 12.0 15.0 80
8 4.5 13.5 15.0 90
9 4.5 13.5 15.0 90
10 4.0 12.0 15.0 80
11 1.5 4.5 15.0 30
12 5.0 10.0 10.0 100
13 1.0 2.0 10.0 20
14 3.0 6.0 10.0 60
15 5.0 10.0 10.0 100
16 2.5 5.0 10.0 50
17 4.0 8.0 10.0 80
18 4.5 9.0 10.0 90
19 3.5 7.0 10.0 70
20 1.5 3.0 10.0 30
21 3.5 7.0 10.0 70
22 5.0 10.0 10.0 100
23 5.0 10.0 10.0 100
24 3.0 6.0 10.0 60
25 1.0 2.0 10.0 20
26 5.0 10.0 10.0 100
27 3.5 7.0 10.0 70
28 4.5 9.0 10.0 90
29 3.0 3.0 5.0 60
30 4.3 4.3 5.0 86
31 5.0 5.0 5.0 100
32 4.5 4.5 5.0 90
33 2.0 2.0 5.0 40
34 2.0 2.0 5.0 40
TOTAL 126.3 276.8 375.0 73.8%
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INDIVIDUAL POLICIES
1. Freedom from internal control: 4.5
The Israeli constitution states that every one in the country has equal rights regardless of race, skin, color or origin. Israelis are proud of their freedom. Inhabitants of Israel can move freely around the country without any limitation except military territories. There is a freedom of speech, political opinion, and religion as well. Although Israel is a highly religious country and its inner laws comply with traditions based on Judaism, any citizen of Israel is free to attend religious services in mosques and churches as well as synagogues. Yet military service is mandatory for citizens of Israel. The period that people spend in the army is the only time when they are subjected to the law of the Israeli Defense Forces. The rest of the time any one in the state is free to leave the country, come back and fully participate in any activities in Israel.
Sources: Personal knowledge 05/03/03
2. Freedom of speech: 4.5
Israel is a free, westernized country, which recognizes the individual rights of its citizens (such as their right to liberty and freedom of speech). As citizens of the democratic country Israelis are proud of their freedom of expressing any opinion that includes freedom of publishing, freedom of broadcasting and freedom of speech. Without freedom of speech democracy cannot thrive. If an individual or a group cannot freely express himself or herself, when the right of protest is denied, if the mass media is not open to a variety of ideas and opinions, the result is not only the end of democracy, but also the beginning of intellectual stagnation.
Sources: http://www.justice.gov.il The Judiciary Authority Obtained 05/03/03
3. Fair Police Force 3.0
The Israel Police is commanded by the Commissioner of Police, who heads it under the powers vested in him by legislation and regulations and in accordance with the national policy, as laid down by the Minister of Public Security. The Commissioner serves for a minimum period of three years, whereupon his term can be extended by the Minister for another year.
Israeli policemen are relatively fair and honest. Their honesty may be challenged among high ranks, yet it would seem absurd to suggest money to the road policeman. No doubts that this institution is corrupted and there are many evidences of it, yet it is carefully hidden from the average urban inhabitant. Unfortunately, the element of racism is often present in their judgmental approach to citizens. The population of Israel consists of various clans based on different cultural traits and mentality. Policemen as well as citizens belong to some of the ethnic groups and therefore their general approach cannot be independent.
Sources: www.police.gov.il; Israeli Police Department Obtained 04/30/03; Personal knowledge
4.Currency: 4.5
The currency of Israel is the New Israeli Sheqel. In the late seventies Sheqel came to substitute Lira. The current exchange rate is 4.52 Sheqels for one US dollar. Each Sheqel is divided into 100 Agorot (singular: Agora.) Bank notes circulate in denominations of NIS 200, 100, 50 and 20 Sheqels and coins in denominations of 5 Sheqels, 10 Sheqels, 1 Sheqel and 50 and 10 Agorot. One may bring an unlimited amount of local and foreign currency into Israel in cash or travelers¹ checks. Foreign currency may be exchanged at any bank, most hotels, and ATM machines.
Sources: http://www.bankisrael.gov.il Israel's Central Bank Obtained 04/30/03
5. Commercial banks: 5.0
Israel has a highly developed and modern banking system. A full range of commercial services and support is provided by those banks, many of which maintain branches and offices in major international financial centers. Approximately 75 percent of the total assets of commercial banks are held by three major banking groups (Bank Hapoalim, Bank Leumi and Israel Discount Bank).
Sources: http://www.infoprod.co.il Info-Prod Research (Middle East) Ltd. Obtained 04/30/03
6.Communication System: 5.0
In recent years, the Israeli telecommunications sector has been developing at a rate that can only be described as revolutionary.
International and domestic telecommunication:
Bezeq remains the dominant player in Israeli telecommunications. This company is owned partially by government and provides local and long distance service inside the country. International long distance services have traditionally been a monopoly of Bezeq. In July 1997 when monopoly of Bezeq ended, two privately-owned facility-based carriers, Golden Lines and Barak, were also licensed. All three operators currently deliver services over a modern digital network, including several switching facilities incorporating an advanced intelligent network infrastructure.
Broadcasting:
The multi-channel subscriber TV market currently comprises three cable television operators (Matav, Tevel, Golden Channels), as well as a single DBS (Direct Broadcasting Satellite) operator (Yes). Cable TV home-pass extends to 97% percent of households, and about 60% of all households subscribe (1,082,000 cable-connected households). 25% subscribe to the DBS service operated by 'Yes' (as of August 2002).
Internet:
Internet penetration is also growing quickly. Four major, and about 60 smaller, Internet service providers serve more than two million users, including 40% of households and 60% of businesses. Cellular phone companies introduced wireless Internet during 2001. Israel is the world leader in developing Internet technologies and applications, and Israeli companies operating in the field have marked several international successes.
Cellular phones:
There are 5.5 million cellular telephone subscribers in Israel, translating to over 85% percent penetration, a growth of more than one million subscribers over 2000, and compared to only 125,000 subscribers in January 1995. There are four cellular operators in Israel. Three operators are privately held (the fourth, Pelephone, is held equally by Bezeq and a private company), and all provide countrywide coverage and modern network services. The second operator, Cellcom, uses IS-136 TDMA technology and is going to deploy a second, GSM network, while Orange (Partner Communications), the third operator, uses GSM technology. The last licensed cellular operator is MIRS (February 2001), which uses iDEN ESMR technology.
Radio and newspapers:
Media plays a very important role for Israeli population. Radio and newspapers are the main source of news for every family. There are 21 radio stations that legally operate on the territory of Israel. They broadcast in Hebrew, Arabic, French, Russian and English. Newspapers are also published in several foreign languages as well as in Hebrew. According to recent statistics every third family is subscribed to a daily periodical.
Sources: http://www.moc.gov.il; Ministry of Communication Obtained 04/30/03; Personal knowledge
7. Transportation: 4.0
Today, the train tracks to Jerusalem, one of the only capitals in the world that was not connected by rail. Theoretically anyone can get to any part of the country using a bus. “Egged” and “Dan” are two largest bus companies that controlled transportation business in Israel until the railroad was launched. The ticket prices are reasonable and affordable for average working person. However, because of the hot climate many people prefer the convenience of driving. Another reason to have a car for those who can afford it is the mobility on weekends. All the laws in Israel comply with its religious traditions therefore public transportation does not function from Saturday afternoon until Sunday evening. Statistically, Israel has one of the highest car densities per paved road in the world. Although the percentage of car owners is lower in Israel compared to the E.U. and the U.S., each year some 100,000 new cars are added to Israel's roads. One of the most heated and controversial environmental debates within Israel currently surrounds the building of the Trans-Israel Highway, the largest public works project in the country's history. The percentage of car ownership in Israel's cities is substantially higher than that of rich European capitals.
Sources: http://portal.mot.gov.il/default.asp Ministry of Transport Obtained 04/14/03
8. Education: 4.5
The Ministry of Education in Israel is constantly striving to improve the country's educational system. About 70 percent of the funding for education comes from the central government, the rest comes from the cities or outside sources. From pre-school through high school there are 1.8 million students enrolled in Israeli schools. Since 1968 children have been required to attend at least 10 years of school. The educational system in Israel is divided into four stages: pre-school, primary school, intermediate school, and secondary school. Israel has 300,000 public pre-schools providing education for children between the ages of three and six. Children are required to attend school by the age of five. For the next six years children attend one of Israel's 750,000 primary schools. There are 250,000 middle schools in Israel. Israeli children are required to attend a middle school for three years, grades 7-9. Secondary school, grades 10-12, is not required, but students are greatly encouraged to attend one of the 310,000 high schools across Israel.
There are various types of schools in Israel. There are state schools, state religious schools, Arab and Druze school, and private schools. The majority of Israeli children attend state schools. Within the state schools there are three different types of secondary schools: vocational, agricultural and general. Vocational schools teach the students the fundamentals of technical and engineering skills. Agricultural schools help children earn a secondary school diploma, but do not prepare them for the bagrut. The bagrut is the entrance exam to a university, and is administered by the Ministry of Education. The general type of schooling offered in Israel prepares students for the bagrut.
In Israel, most students begin their studies at the age of 20-24, later than in other countries due to compulsory military service. All the universities in Israel (except for the Open University and the Weizmann Institute) grant bachelors, masters and doctoral degrees. Thirty-two percent of all students in universities are graduate students, a very high percentage relative to other developed countries. As the level of the degree advances, the proportion of degree recipients in the experimental sciences and mathematics increases, from 28% of bachelors students to 30% of masters students and 65% of doctoral students.
Sources: Personal knowledge; www.mfa.gov.il Israeli Ministry of Foreign Affairs Obtained 04/14/03
9. Social mobility: 4.5
Generally the law of Israel protects the rights of any individual. There is an unlimited opportunity to participate in any aspect of life and in any activity equally for every one. Israel is one of the countries that never experiences racism. Even though there are mutual dislikes among certain ethnic groups based on cultural differences, it does not have an essential impact on general prosperity of a person. Every one is judged by individual qualities and professionalism when it comes to business relationship. Perhaps such attitude is explained by people having the same nationality with disregard to the roots of origin. However, as it is common among the Mediterranean communities, Israelis highly value family bonds. Family businesses are very common in Israel. Probably that is why in some of the profitable companies as well as in governmental institutions cases of family protection may still be found.
Sources: Personal knowledge
10. Freedom from outside control: 4.0
Since Israel gets a large financial support from the United States, it is highly dependent on the relationship with its supporter. Officially Israel is a politically independent country, however this is true only in the declaration of State Independency. The inhabitants pay great attention to elections in the United States because the next president of the powerful country may greatly influence the Israeli economy. However, Israeli citizens are only subject to law of Israel. For example, if an Israeli in a foreign country committed a crime, the Government would prefer to depart the accused home and to judge him according to the Israeli law.
Sources: Personal knowledge
11. Foreign currency transaction: 1.5
Foreign currency control is administered by the Bank of Israel and affects transactions carried out by the Israeli residents and non-residents. In recent years the laws governing foreign currency control have undergone several reforms to remove most of the restrictions imposed on Israeli residents investing abroad and on investments by non-residents in Israel. While the basic rule is that foreign currency transactions are prohibited unless authorization is obtained, many types of foreign currency transactions are allowed by virtue of the General Permit promulgated pursuant to the Currency Control Law of 1978. The General Permit authorizes Israeli and foreign residents to conduct certain transactions through an authorized dealer (usually an Israeli bank). Israeli residents are permitted to hold foreign currency accounts in Israeli banks using shekels to purchase the foreign currency.
Since the Israeli currency is not very stable, all the prices on the housing market are set in US dollars. The renter or buyer must still pay the price in Shekels, but in reality almost any landlord would accept US dollars. Foreign currency may not be accepted in large supermarkets, but it is definitely appreciated among small dealers.
Sources: Personal knowledge; http://www.bankisrael.gov.il - Israel's Central Bank 04/14/00
12. Border control: 5.0
Israeli relationship with neighboring countries makes Israeli borders an essential fence that protects the country from the enemies. The borders are controlled by IDF together with Border Defense Force. There are constant attempts from the side of Palestine to cross the borders of Israel illegally, yet skilful patrols prevent it from happening. Highly secure borders make smuggling practically impossible.
Long ago Israel envisioned the concept of security in terms of a system as an outcome of the Israeli situation. It was the Israeli Defense Industry’s responsibility to design a new system in accordance with the IDF needs and technical specifications. The system design for handling the threats was laid down by the IDF. The heart of this system is a central command control and operation system, which coordinate and route information and activities. The Israeli Defense Force's (IDF) border security concept incorporates the following activities:
Detection and warning
Surveillance and tracking of suspected targets
Establishment of operational intelligence and support of information received from other sources
Improvement of reaction time and capabilities of reaction forces
Prevent of infiltration
Creating a deterrent
Supporting routine operational activities
Sources: http://www.idf.il Israel Defense Forces Obtained 04/14/03; Personal knowledge
13. Cultural & Language Homogeneity: 1.0
Israeli population is very diverse and consists of representatives from all over the world. According to the immigration law every Jew, no matter where he lives, can come to the country and get Israeli citizenship. And so, Israeli population is divided into several clans, each has its own habits and traditions. The biggest groups that characterize Israel today consist of people from Europe, Africa and Middle East. They immigrated in different time periods and different ages. Youngsters who grow up in Israel learn Hebrew quite fast, the older people on the contrary, struggle and prefer to communicate in their native language. Therefore many various languages are spoken in this country, yet the official languages of Israel remain to be Hebrew and Arabic. Perhaps the biggest community in Israel is Russian. There are already 1 million Russian Jews out of 6.3 millions of Israeli population and many are still coming. Six TV channels are available in Russian, two channels in Arabic, two in French, three in English, three in Spanish, seven in Hebrew, three in German, etc. Not only are newspapers and periodicals published in foreign languages, but even official documents are often translated as well. The rich variety of foreign shops, libraries, restaurants, clubs and other businesses that are seen on the streets of Israel explain its cultural diversity.
Sources: Personal knowledge; www.mfa.gov.il Israeli Ministry of Foreign Affairs Obtained 04/14/03
14. Political Effectiveness: 3.0
National defense of the country is the he main problem that essentially slows down political effectiveness in the State of Israel. The relationship with surrounding Arabic countries often makes political decisions not as flexible as desired by the population of the State. Yet when it comes to dealing with inner problems, decisions are made fast, followed by immediate implementation. For example Israel is considered one of the fastest growing countries in such fields as road construction and building business. Despite of beurocracy in many aspects of every day life, the Israeli government struggles to meet the needs of its people and try to be as effective as possible. However, in addition to the national defense issue, Israel has to deal with the religious pressure of the Orthodox Jewish community. The Orthodox population of Israel is much more conservative than the secular and has its own unique outlook based on religious traditions. For instance, public transportation does not function on Saturdays and all the retail stores are closed. Such traditions greatly influence the entire population of Israel as well as the political effectiveness of the government.
Sources: Personal knowledge
15. Institutional Stability: 5.0
Most of institutions in Israel are quite stable.
Health as well as educational system undergoes minor
changes during the entire development cycle of State
of Israel. This young country became home for millions
of immigrants that escaped from their countries either
because of religious believes or economical
complications. Therefore mentality of Israelis
includes the concept of building new home and the
entire population of Israel works towards stability in
every field. Because of negative relationship with
many neighbors Israeli institutions must coop with
political and economical issues. It is reflected in
the laws that these institutions produce. Even though
the stability of institutions in Israel is totally
supported by population the inner laws constantly
change. Perhaps the reason for this is the political
relationship with the countries that Israel interacts
with.
Sources: Personal knowledge; www.mfa.gov.il, Israeli Ministry of Foreign Affairs, Obtained 03/25/03
16. Honest Government: 2.5
There were always some problems with Israeli
government in terms of honesty. From time to time
Israeli citizens are shocked with breaking news about
corruption in higher layers among rulers of the
country. Yet this shock is usually quickly forgotten,
and it seems that bribery among the Israeli leaders
became a common habit. It is also sharply reflected in
local humor. The honesty of many governmental
authorities was questioned during past decade. Though
it rarely resulted in jail sentences. More often
accused person resigned or left the country. Yet
corruption occurs only behind the scene and covered by
the gray web of mystery. For example, it is impossible
to suggest a bribe to policeman that stopped you for
speeding. Such action may result in imprisonment.
Sources: Personal knowledge
17. Common Laws: 4.0
Although the law should serve the same purpose for
everyone, people with higher income may afford better
lower and have superiority over poor. Yet everyone has
a right to get a free lawyer sponsored by government
if ones inability to pay is proven.
The Israeli Judiciary system consists of:
District Court (1 or 3 judges) -- Appellate
jurisdiction over magistrates' courts;
original jurisdiction in more important civil and
criminal cases.
Supreme Court (1, 3, or 5 judges) -- Ultimate
appellate jurisdiction; right to
address issues when necessary to intervene for sake of
justice; original jurisdiction
in petitions for orders against the government, its
ministers and all public
officers/ agencies; authority to release persons
detained or imprisoned illegally;
power to override decisions of other courts should
they exceed their jurisdiction.
Special Courts (1 judge) -- Traffic, labor, juvenile
and municipal courts, with
clearly defined jurisdiction; administrative
tribunals.
Religious Courts (1 or 3 judges) -- Jurisdiction in
matters of marriage and divorce;
in rabbinical courts for Jews; sharia courts for
Muslims and Druze; ecclesiastical courts for
Christians.
Sources: Personal knowledge; http://www.justice.gov.il, The Judiciary Authority 03/25/03
18. Central Bank: 4.5
The Bank of Israel Law places special emphasis on the
independence of the Bank. Thus, the Governor of the
Bank is appointed by the President of Israel for a
term of five years, at the recommendation of the
government. By law, the Governor also serves as
economic advisor to the government on currency and
other economic matters. As economic advisor to the
government, he participates in meetings of the
Ministerial Committee for Economic Affairs on a
permanent basis, and in other economic discussions of
the government. The current Governor of Bank of Israel
is Dr. David Klein.
The Bank of Israel is situated in Kiryat Ben Gurion in
Jerusalem, close to the Knesset (Israel's parliament),
the Supreme Court, and government ministries. The Bank
currently has some 800 employees, about 300 of whom
have degrees in economics, accountancy, law, etc.
Under the provisions of the Bank of Israel Law, The
Banking Law, and the Currency Control Law, the Bank of
Israel has a range of responsibilities. The main ones
are: Monetary policy, Regulating and directing
monetary policy, Economic advisor to the government,
Foreign currency activity, Foreign exchange control,
Banking supervision, Issuing coins and banknotes,
Banker of the government and of the banks, and
Representing Israel in international institutions.
Sources: Personal knowledge; http://www.bankisrael.gov.il, Bank of Israel Obtained
03/05/03
19. Domestic Budget Management: 3.5
The year 2002 was the year of contrasts in Israeli
domestic budget management. In first quarter of this
year the surplus showed 1,469 million of NIS but
second quarter brought sharp decrease of revenue and a
deficit reached 7,022 million NIS. Third quarter was
finished with lower number of budget deficit - 3,004
million NIS because of cutting down of Government
expenditures. According to the statistics published
the total government revenue in 2002 was 191,254
million NIS and total sum of expenditures reached
205,115 million NIS. Therefore, Israeli budget
finished year 2002 with an average deficit of 13,861
million NIS. In the beginning of 2003 Israeli budget
already misses 3,096 million NIS and the total amount
of deficit expected by the end of this year is 15,337.
Even though a deficit in Israeli budget constantly
present, general overview shows that during last
decade budget deficit was decreasing with every year.
Sources: www.mof.gov.il, Ministry of Finance Obtained 03/05/03; www.cbs.gov.il, Central Bureau of Statistics Obtained 02/14/03
20. Government Debt: 1.5
At the end of June 2002, the outstanding government
debt was 103 percent of GDP. As a result, the total
annual debt burden (principal plus interest) was NIS
70-80 billion, equal to approximately one third of the
total state budget. The Israeli government debt has a
unique structure that makes it more stable and
supports Israel's country rating. Since the 1980s, the
share of external debt has been decreasing, from 46
percent down to 28 percent as of the end of June 2002.
Eighty percent of the government debt is linked to the
Consumer Price Index and is unaffected by
disinflation. The impact will be felt with respect to
the remaining 20 percent of the debt (NIS 60 billion).
The lower the inflation rate is, the greater this
portion of the debt becomes because it was raised at
fixed interest in the past. The increase in real
interest rates will also be reflected in the
corresponding line in the state budget. The
disinflation process has also raised real short- and
long-term interest rates, which affect cost of current
issues.
The total government debt was NIS 488 billion at the
end of June 2002 as against NIS 448 at the end of 2001
and NIS 416.5 at the end of 2000. The domestic debt
was NIS 354 billion at the end of June 2002, as
against NIS 326 billion at the end of 2001and NIS
305.2 billion at the end of the previous year. The
external debt was NIS 135 billion at the end of June
2002 as against NIS 122 billion at the end of 2001 and
NIS 111.3 billion at the end of 2000.
Sources: www.mof.gov.il Ministry of Finance Obtained
03/05/03
21. Private Property: 3.5
Neither citizens nor foreigners can own a land of
Israel. Any individual is able to build or purchase
house in Israel however he/she cannot own even a
single acre of land. All the land belongs to the State
and if one wishes to use it for private purposes, one
must lease it from the State of Israel. Such rent
agreement must be renewed every 49 years. The price of
the rent is usually included in price of apartment or
house and hardly mentioned at the moment of purchasing
property. Yet if one wishes to use a land in purposes
different from residential the price must be
negotiated with corresponding government institution.
The price may vary depending of use.
Intellectual property in general, and copyright
protection in particular, have suffered from a
piecemeal approach in Israeli legislation. This is a
result of many separate laws, amended time and again
over the years, which with each change are losing more
of their ability to function as a comprehensive
foundation for intellectual property protection in
Israel. The existing Copyright Law in Israel
originated in the 1911 British Copyright Law. The
Copyright Law had been under attack by both Israelis
and by interest groups abroad, but both agree that
while the law is outdated and inadequate, it is only
part of the copyright problem in Israel today. The
rest of the problem originates from the lack of action
taken by the Israeli government to enforce copyright
protection.
Sources: Personal knowledge; http://www.ginot.net, Meridian Companies House, Obtained 02/26/03
22. Economic Statistics: 5.0
Many different Israeli’s institutions and websites
process and analyze data. However all of them correct
and update internal information in accordance with
Central Bureau of Statistics. Central Bureau of
Statistics is considered the most accurate source of
information about employment, wages, mortality and
many other aspects in various fields. The most current
information can be obtain from it’s website or from
periodical booklet that released ones a year. The
website is equipped with search engine where user can
type a particular question. General information about
economy is presented through various graphs and
diagrams. CBS was originated for use and convenience
of government clerks and institutions. Yet now-days
most Israeli organizations that use any kind of data
make reference to Central Bureau of Statistics. And
so, it may be seen as the most reliable source of
information about State of Israel.
Source: Personal knowledge
23. Protection of Public Health and Safety: 5.0
Israel's high standards of health services,
top-quality medical resources and research, modern
hospital facilities and an impressive ratio of
physicians and specialists to population are reflected
in the country's low infant mortality rate (7.5 per
1,000 live births) and long life expectancy (79.1
years for women, 75.3 for men). Health care for all,
from infancy to old age, is ensured by law and the
national expenditure on health (8.2 percent of the
GNP) compares favorably with that of other developed
countries.
The National Health Insurance Law provides for a
standardized basket of medical services, including
hospitalization, for all residents of Israel. Medical
services are supplied by the country's four
comprehensive health insurance schemes, which must
accept all applicants regardless of age or state of
health. The main sources of funding are a monthly
health insurance tax of up to 4.8 percent of income,
collected by the National Insurance Institute, and
employer participation in the cost of insurance for
their employees.
The country's population is served by an extensive
medical network comprising hospitals, outpatient
clinics and centers for preventive medicine and
rehabilitation. Hospital care includes highly advanced
procedures and techniques, from in vitro
fertilization, CAT scans and complicated brain surgery
to bone marrow and organ transplants. Mother-and-child
care centers, for women during pregnancy and children
from birth to early childhood, offer prenatal
examinations, early detection of mental and physical
disabilities, immunizations, regular pediatric
check-ups and health education.
Sources: www.health.gov.il, Israeli Ministry of Health Obtained 02/26/03; www.ahavat-israel.com Peace Organization Obtained
02/26/03
24. High Wage Policies: 3.0
The areas in Israel with the highest average wage are
the central region and Tel Aviv, where the more
prosperous cities and towns are located. The areas
with the lowest average wage are the north and south,
where many Arab localities and Jewish development
towns are located, and which are far away from the
main centers of employment. Residents of Arab
localities have the lowest average wage - NIS 4,477 a
month. This is approximately 30% less than the average
wage nationally, which in 1999 was NIS 6,494 a month.
The second lowest wage earners, at NIS 5,510 a month,
are residents of development towns, who earn some 15%
less than the average wage nationally, followed by
residents of regional councils, at NIS 6,248 a month.
Thus place of residence is strongly related to income
level.
The living expenses in Israel are quite high. Not
every worker that earns an everage salary can afford
renting an apartment without roommates. In particular
many young couples suffer from inconvenience in this
field. A family with at least two salaries combined
can own a car, though it is quite hard for a single
working person.
The issue of Israel's minimum wage has recently
commanded headlines due to the adjustment of its level
in April by an exceptional 8.5 percent, from NIS 2,400
to NIS 2,609 per month. Israel's Minimum Wage Law,
which went into effect in April 1987, set the minimum
wage at 45 percent of the national average wage. The
law also states that the minimum wage shall be
adjusted by the rate of the Cost of Living Allowance
whenever COLA is paid (usually twice a year, in
February and August). In 1999, 29.5% of all wage
earners were receiving the minimum wage or less. To
summarize: in Israel, expenses are high, the median
salary is low, but the majority of the population has
a considerable net worth, relative to income, though
much of this is tied up in home equity.
Sources: www.mfa.gov.il, Israeli Ministry of Foreign Affairs Obtained 02/26/03; www.cbs.gov.il Central Bureau of Statistics
Obtained 02/26/03
25. Environmental Protection: 1.0
Israel, with a population that has increased from
800,000 in 1948 to 5.6 million today, is the only
developed country in the world in which population
continues to grow against a backdrop of population
density. The master plan anticipates that by the year
2020, the country's population will exceed 8 million,
its built-up space will treble, and the number of cars
on its roads will increase three-fold, reaching 3.6
million. Without wise planning, the Israel of tomorrow
may well resemble a never-ending field of asphalt and
concrete, its air polluted, its groundwater
contaminated and its serenity disturbed by traffic
noise and pollution. Only today, Israel is taking its
first steps toward the preparation of a national
strategy on sustainable development - development that
meets the needs of the present without compromising
the ability of future generations to meet their own
needs.
National estimates of air pollutant emissions have
shown that with the exception of three pollutants
(sulphur oxides, total particulate matter and lead)
emissions of all pollutants have increased drastically
since 1980. The rapid emergence of industrial plants
in the vicinity of urban centres coupled by a dramatic
increase in the number of motor vehicles has
exacerbated air pollution problems throughout the
country.
The total quantity of municipal waste in Israel,
including yard waste and industrial waste, reaches
12,000 tons per day. Another 5,000 tons of solid waste
including construction debris, are produced daily. If
present rates of growth continue (5.5% per year),
Israel will face a serious problem in near future.
Today, about 18% of the total amount of municipal and
industrial waste is recycled, of which about 50%
constitutes post-consumer recycling.
Indubitably, under conditions of water scarcity, on
the one hand, and intensive development and population
growth, on the other hand, the degradation of water
quality may well be the most critical environmental
problem facing Israel today. Today, several of
Israel's most polluted rivers are undergoing a
transformation from sewage carriers into channels of
life. Cleanup and rehabilitation programs have already
been initiated for such polluted rivers as the Harod,
Alexander, Yarkon, Kishon and Lachish rivers.
Unfortunately these steps have been taken only
recently and represent only small improvement in the
field of Israeli environmental protection.
Sources: www.israel-embassy.org.uk, British Ministry of Foreign Affairs, Obtained 02/14/03; Personal knowledge
26. Strong Army: 5.0
The Israel Defense Forces are the state of Israel's
military force. The goal of the IDF is to protect the
existence of the State of Israel and her independence,
and to thwart all enemy efforts to disrupt the normal
way of life in Israel. The Ministry of Defense
receives about 15% of the entire budget of State
Israel. Israeli army considered is one of the most
professional and highly skillful forces in the world.
It deserved respect worldwide in such fields as
fighting with terrorism as well as in many others.
Israeli pilots are often mentioned as examples of
professionalism and courage in many European countries
and North America.
Service in the Israel Defense Forces (IDF) is a
measure of involvement in the country's life. Most men
and single women are inducted into the IDF at age 18,
women for two years and men for three, followed by
service in the reserves, men up to age 51 and single
women to age 24. In essence, the society and army are
one, as a broad spectrum of the population serves
periodically over many years, with those in and out of
uniform virtually interchangeable. Since soldiers
often hold ranks not necessarily corresponding with
their status in civilian life, the IDF has become a
highly effective equalizer in the society and
contributes greatly to integrating individuals from
all walks of life.
IDF soldiers are obligated to fight, to dedicate all
their strength and even sacrifice their lives in order
to protect the State of Israel, her citizens and
residents. IDF soldiers will operate according to the
IDF values and orders, while adhering to the laws of
the state and norms of human dignity, and honoring the
values of the State of Israel as a Jewish and
democratic state.
Sources: http://www.idf.il Israel Defense Forces Obtained 02/14/03; Personal knowledge
27. FOREIGN TRADE IMPACT: 3.5
Foreign Trade As a small economy with a relatively
limited domestic market, Israel
is highly dependent on foreign trade. Exports have
been a catalyst for Israel's
economic growth.
Foreign trade deficit excluding diamonds in January
and February was $1.6 billion. The deficit with the EU
was $700 million, 10% higher than the comparable
period in 1999. Imports from the EU was 3.7% than
exports. The trade deficit with the United States
(excluding diamonds) was $365 million. Imports from
the United States grew by $230 million, while exports
grew by $105 million compared to the same period last
year. Exports to Asian countries (excluding diamonds)
amounted to $87 million and imports amounted to $104
million.
The perennial problem of the trade deficit is the high
price Israel has had to pay for the 'miracle' of
attaining rapid growth while successfully meeting the
four national challenges. This yearly gap between a
high level of imports and a significantly smaller
scale of exports indicates economic dependence on
foreign resources. Thus, a primary policy goal of
every government has been to achieve economic
independence, the point where exports will finance all
imports. Over the first 50 years of Israel's
existence, this deficit has grown 28-fold (in current
prices): from $280 million in 1950 to $7.8 billion in
1995, then down to $ 4.7 billion in 2001. However, the
deficit continuously decreased in relative terms,
indicating that the problem is gradually being solved:
whereas in 1950 exports financed only 14 percent of
imports, in 1960 this ratio was 51 percent, and in
1990 it stood at 78 percent. This improvement and the
decline in the external debt stopped in the 1990s,
owing to accelerated imports required to facilitate
the GDP's surge and a reduction in unemployment;
nevertheless, by 2001 the export/import ratio rose to
89 percent.
In 2002 amount of total export was 2219.8 mill., total
amount of import was 2435.8 mill., GDP was 113.5 mill.
Following the formula Imp + Exp / GDP, it is seen that
foreign trade in 2002 was 4l% of total GDP.
Sources: www.mfa.gov.il; Israeli Ministry of Foreign Affairs, Obtained 02/14/03; www.mof.gov.il Ministry of Finance Obtained 02/14/03
28: Protection of Foreign Currency Earning Enterprises: 4.5
Israeli trade policy has been aimed at continuing the
expansion of its network of bilateral trade agreements
while enhancing the process of trade liberalization at
the multilateral level. After completing free trade
agreements with our two major trading partners - the
European Communities and the United States - during
the 1980’s and with the EFTA countries in 1992, Israel
has expanded its free trade agreements to Canada,
Turkey, the Czech Republic, the Slovak Republic,
Hungary, Poland and Slovenia, and most recently has
concluded free trade area agreements with Mexico,
Romania and Bulgaria.
Joining the General Agreement on Tariffs and Trade
(GATT), as well as instituting a free trade area for
industrial products with the European Community (1975)
and for all products with the United States (1985) has
enhanced the competitiveness of Israel's exports.
Hence, Israeli goods can enter both the European Union
(EU) and the United States - together comprising 630
million consumers - duty free. This enables local
producers to aim for a market over a hundred times
larger than the domestic one and attracts investors
who wish to export their products to Europe without
paying duty.
Sources: www.mfa.gov.il, Israeli Ministry of Foreign Affairs, Obtained 02/14/03
29. Management of Foreign Currency Budget: 3.0
Exports increased in the year 2002 by approximately
23%, a higher rate than the 12% annual increase in
imports. As a result, Israel’s balance of trade
deficit has decreased and reached -216 million $.
Industrial exports represent the principal
contribution to the increase in exports. A comparison
with last year’s international trade shows that while
export to European markets decreased somewhat, exports
to Asia and America increased.
In recent years, about 70 percent of all imports of
goods - amounting to $31 billion in 2001 - have been
production inputs and fuel; 42 percent of these
arrived from the European Union, with the United
States providing 23 percent and Asia 15 percent (the
remaining 20 percent came from other countries). At
the same time, 32 percent of Israel's exports of goods
were directed to the European Union, 32 percent to the
United States, 16 percent to Asia and the remaining 20
percent to other countries. During most of the 1990s
Israel's industrial exports to the U.S. exceeded its
imports from there, and since 2000 this is true even
excluding the export of diamonds.
Sources: www.mfa.gov.il, Israeli Ministry of Foreign Affairs, Obtained 02/14/03
30. Layers of collective action: 4.3
The Knesset is the house of representatives (the
parliament) of the State of Israel, in which the full
range of current opinions are represented. The Knesset
supervises the work of the Government, which is does
by means of its committees and the work of the plenum.
The Knesset has several quasi-judicial functions,
which include the power to lift the immunity of its
members, and the power to have the President of the
State and State Comptroller removed. The main function
of the Knesset as the legislative authority, is to
pass laws. Legislation can be initiated by the
Government (Government bills), by a single Member of
Knesset, or group of Knesset members (private members'
bills), or by a Knesset Committee.
The Members of Knesset function in the Knesset within
the framework of Parliametnary Groups or as individual
Knesset Members. At the opening of the first session
of every Knesset the number of Groups corresponds to
the number of lists that participated in the elections
and were elected. In the course of the Knesset's term,
Groups are liable to split or merge. Most of the work
of the Knesset is conducted on a Group basis. At any
given time there are 120 Knesset Members. The major
groups are formed from members of Avoda and Likud, two
leading parties in Israel.
There are many groups outside of Knesset, which poses
a great power. For example “B’Tselem” : The Israeli
Center for Human Rights in the Occupied Territories
was established in 1989 by a group of prominent
academics, attorneys, journalists, and Knesset
members. It endeavors to document and educate the
Israeli public and policymakers about human rights
violations in the Occupied Territories, combat the
phenomenon of denial prevalent among the Israeli
public, and help create a human rights culture in
Israel. Another example would be “Gush Shalom”. The
primary aim of Gush Shalom is to influence Israeli
public opinion and lead it towards peace and
conciliation with the Palestinian people.
Sources: www.mfa.gov.il, Israeli Ministry of Foreign Affairs,
Obtained 02/14/03; www.cbs.gov.il, Central Bureau of Statistics, Obtained
02/14/03;
www.knesset.gov.il, Knesset official website, Obtained
02/14/03
31. Pro-business climate: 5.0
Over the last few years, the Israeli business climate
has become more welcoming and supportive of small
businesses and independent workers (atzmai'm). Many
olim (new immigrants) find that going into business
for themselves is the answer to their employment and
financial needs. Enterprise coordinators, employed by
the Ministry at over 20 local branches, offer basic
guidance and support in initial decision-making
phases, distribute information and administer
applications for loans.
For those who conduct a business from home a portion
of household expenses, such as rent, utilities and
telephone, are deductible. Special regulations apply
to deducting automobile expenses. The Ministry of
Industry and Trade views small and medium-sized
businesses as an important source of economic growth
and the creation of economically stable employment.
Small and medium-sized businesses are defined as
businesses employing 1-100 employees.
Sources:
www.btl.gov.il, National Insurance, Obtained 02/10/03;
www.mfa.gov.il, Israeli Ministry of Foreign Affairs,
Obtained 02/10/03
32. Government Enterprises: 4.5
The government of Israel sponsors several types of
incentive programs to industrial enterprises located
in Israel that meet certain criteria. Government
support is provided primarily to industrial and
tourism enterprises that assist the nation in meeting
its overall economic objectives. These objectives
include competing in international markets, utilizing
innovative technologies, creating employment,
producing high added value products and generating
income in foreign currency. Government incentives,
which include grants as well as tax benefits, can
generally be grouped into three categories: investment
incentives, industrial R&D incentives, and
export-linked incentives. Companies at all stages of
the corporate life cycle have the opportunity to
benefit from the different incentive programs
providing they meet the criteria determined by the
government. Today Israeli government owns 114
companies in various fields. Among them such giants as
“Bezeq” and Israel Electric Corporation (IEC).
"Bezeq" The Israel Telecommunication Corp., Israel's
former telecom monopoly, is facing an open market. The
company, which controls the country's fixed-line phone
services, has been reducing costs to stay competitive.
It also is Israel's #1 broadband ISP and owns 50% of
leading mobile phone company Pelephone (Motorola is
selling its half). Bezeq's fiber-optic network is
fully digitalized and has 3 million access lines. A
government plan to sell a 50.01% stake in Bezeq is
back on track after being stalled after the company's
once-largest private shareholder, Gad Zeevi, was
implicated in a financial scandal. The Israeli
government owns 54.6% of Bezeq; Zeevi Communications
owns 20%.
At least there's one thing Yasser Arafat and Ariel
Sharon have in common: Israel Electric Corporation
(IEC) generates, transmits, and distributes
electricity to all of Israel and the Palestinian
Authority. Founded in 1923 as The Electric Company for
Palestine, IEC became a government-controlled monopoly
shortly after the Jewish State was founded in 1948.
Serving nearly 2.2 million customers, the company has
about 9,700 MW of primarily fossil-fueled generating
capacity.
Sources:
www.mfa.gov.il, Israeli Ministry of Foreign Affairs,
Obtained 02/09/03;
www.hoovers.com, Business Information Authority,
Obtained 02/09/03;
www.walla.co.il, News site Affairs, Obtained 02/09/03
33. International security agreements: 2.0
Fifty years ago, in May 1948, Israel gained its
independence and was immediately attacked by five Arab
armies. Fighting between Arab and Jew had started much
earlier and the War of Independence really began in
November 1947, when the United Nations General
Assembly voted to partition Palestine. Since then
Israel has fought five wars against Arabs, and the
years between them have witnessed frequent cross
border raids and terrorist attacks. Israel now faces
three distinct threats: conventional war with the Arab
world; attack by long-range missiles - possibly with
nuclear, chemical or biological warheads (WMD); and
terrorist attack mounted from both within the state or
across its borders. On the plus side, Israel has peace
treaties with Egypt and Jordan, negotiations have
taken place with the Syrians, and a start has been
made to solve the Palestinian problem. Despite the
peace treaty, Egypt still remains an existential
threat to Israel. To the east the main threat even
before the peace treaty was signed was not Jordan,
whose army is the most respected by Israel, but Iraq.
Israel redeployed one of its armored divisions from
Sinai, immediately after the Egyptian peace treaty was
signed, to the eastern West Bank. In the north,
Lebanese forces have not attacked Israel since the War
of Independence; however lodgers there have launched
terrorist attacks over the border for many years.
A permanent settlement with the Palestinians and peace
agreements with Syria and Lebanon are essential for
the stability of the peace agreements achieved with
Egypt and Jordan, as well as for paving the way
towards peace with other Arab nations.
The U.S. goal in the Middle East is to end violence
and terror and lay out a path to end the occupation of
the West Bank and Gaza, U.S. Ambassador John
Negroponte said December 3. Perhaps it is considered
to be one of the heaviest aspects in field of security
support in Israel.
The European Union - a political and economic
institution - is an important and influential actor in
our region. Meretz is strengthening ties with the
countries of the European Union and encourages the
implementation of regional cooperation projects that
are financed by the European Union.
Sources:
www.mfa.gov.il, Israeli Ministry of Foreign Affairs,
Obtained 02/09/03
34. Protection of domestic enterprises from government
mandated costs: 2.0
In its early years, the Israeli economy was
micro-managed by the government, which not only
controlled companies but also imposed strict rules on
the capital markets, trade, land development and labor
relations. Although there has been substantial
liberalization in recent years, by Western standards,
the Israeli government continues to be
interventionist. All commercial enterprises must have
business permits in order to operate. Permits are
usually issued by the municipalities after prior
approval by other government departments such as the
Ministry of Health. Permits must be renewed annually.
The progressive system of taxation makes maintaining
stable income of the small businesses quite hard. The
highest rate of income tax is 50%. Together with
payments to National Insurance it makes quite large
monthly payments that small domestic enterprises must
subtract from their income. An average extra time that
small business spends on paper work yearly is 220
hours.
However, Israel's development of an entrepreneurial
high-tech economy over a few short years and against
immense odds is a remarkable achievement. In the last
five years, Israeli high-tech companies have probably
produced more millionaires than Israel had during its
first 45 years of existence.
Sources:
www.ahavat-israel.com, Peace organization, Obtained
02/09/03;
www.mfa.gov.il, Israeli Ministry of Foreign Affairs,
Obtained 02/09/03
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