March 4, 2009

The main challenge facing the new right-wing government in Israel is not going to be the moribund peace process with the Palestinians, but rather the depressive crisis now haunting the Israeli economy.

Some economists label the current crisis as the "harshest in Israel’s history."

Manifestations of the present deepening crises includes decreasing exports, mainly due to the world-wide recession, growing insolvency and bankruptcy, rampant unemployment, shrinking investments and huge losses incurred by both the public and private sectors.

Added to this is what one Israeli economist called "widespread pessimism" throughout the Israeli economic organs due to the international financial crisis.

According to "TheMarker," which describes itself as the first and foremost source of reliable, real-time news and commentary on Israeli technology and business, thousands of companies, mainly small firms, are facing bankruptcy, resulting in thousands of employees being laid off.

In many cases, workers have barricaded themselves inside their factories, demanding government intervention.

Banks are also reporting huge losses. For example, Bank Leumi Le-Israel, Israel’s largest bank, this week reported NIS 1.2 billion (roughly $300 million) in losses in the fourth quarter of 2008.

Leumi chairman Eitan Raf was quoted as saying that "we are worried."

"We definitely expect a difficult year or more ahead. As leaders in the Israeli economy, we are worried."

Raff urged the new Israeli government to take a more active role in aiding the banks.

"Without the government, the financial powers won’t be able to handle this alone."

Another bank, Bank Discount, also reported a sharp fall in its revenue in the fourth quarter of 2008.

Rising unemployment

Since the beginning of 2008, tens of thousands of Israelis lost their jobs as a result of the deep recession.

In December, 17,500 workers were laid off. According to "Ynet" www.ynet.co.il/english/articles employment services data showed 3%- rise in the number of job seekers in December compared to the previous month. The total number of jobless workers in December reached 24,000.

The same source reported that a total of 205,000 job seekers were registered at the employment Services in the last month of 2008.

The unemployment crisis is reportedly concentrated in the "high-tech sector" where thousands of engineers and technicians have lost their jobs.

For example, in November-December, as many as 690 software engineers were laid off compared to a monthly average of 100 engineers losing their jobs in the previous ten months.

In the past nine months, there has been an overall rise of 8.7% in the number of unemployed workers in the Zionist state.

The big ones suffer

Some of Israel’s biggest firms are also feeling the crunch. Africa-Israel, one of Israel’s biggest and best known real estate developers reportedly lost NIS 2.7 billion shekels ($640 million) in the fourth quarter due to a sharp fall in property value.

The company said it would post additional losses totaling NIS 1.3 due to the decline in the value of other property around the world as well as reduced activity in the wake of the global financial crisis.

The company, controlled by diamond dealer Lev Leviev, has lost hundreds of million of dollars due to the real estate crisis in the United States.

Africa-Israel had substantial investments in Jewish settlements especially in the northern parts of the West Bank. This drew angry reactions from some pro-Palestinian quarters who called for a worldwide boycott of the company.

Africa-Israel had sought successfully to open Jewelry outlets in Dubai, prompting pro-Palestinian activists to pressure the government of the Arabian Gulf emirate to close down the two businesses.

Meanwhile, a world-wide movement aimed at encouraging boycott of Israeli products seems to have made some successes as Israeli exporters are beginning to feel the effects of boycott from several quarters.

This week, the Israeli paper, the Jerusalem Post, reported that Israeli exporters were losing foreign markets and customers because of the global economic crisis and "a growing anti-Israel boycott of locally-made products" follow the recent genocidal Israeli onslaught on the Gaza Strip which killed and maimed thousands of Palestinians, mostly innocent civilians, including as many as 400 children.

"In addition to the problems and difficulties arising from the global economic crisis, 21 per cent of local exporters report that they are facing problems in selling Israeli goods because of an anti-Israel boycott, mainly from the UK and Scandinavian countries," said Yair Rotloi, Chairman of the Israel Manufacturers Association.

The Jerusalem Post cited a survey conducted among 90 exporters from a variety of sectors which found that 53% had lost foreign markets and customers as a result of the global economic crisis. Sixty two per cent said they were having trouble collecting payments form foreign clients, while 49% said their customers had asked to pay debt in installments.

Another important factor undermining Israeli exporters and manufacturers is an inconspicuous but effective campaign to boycott Israeli consumer products among the Palestinian population of the West Bank and Gaza Strip.

The Palestinian territories occupied by Israel in 1967 are traditionally considered the third biggest market for Israeli products after Europe and North America.

However in recent years, and due to Israel’s Nazi-like treatment of Palestinians, many ordinary Palestinians have been quietly refusing to buy Israeli-made consumer products and switching instead to imported products, especially those made in Turkey.

Moreover, the perpetual crisis haunting the Palestinian economy, mainly due to the Israeli siege to the Gaza Strip and roadblock system in the West Bank, has seriously impoverished many Palestinians and therefore affecting their ability to buy costly and luxurious Israeli products.