The Jewish State

(By Thomas L. Friedman, the New York Times, February 28,
Yes, it’s true, a picture is worth a thousand words—but some are worth a whole dictionary. I
came across one the other day on The story was headlined “Israeli Minister in
Vision Gaffe.”
Next to it is a picture showing Israel’s defense minister, Amir Peretz, inspecting troops on
the Golan Heights alongside Israel’s military chief of staff, Gen. Gabi Ashkenazi. Both men are
peering into the distance through binoculars, but with one big difference: Mr.Peretz was
watching the maneuvers through binoculars with the lens caps still on….

“According to the photographer,” the BBC reported, “Mr.Peretz looked through the capped
binoculars three times, nodding as Gen. Ashkenazi explained what was in view.”

Oh my, I’d rather misspell “potato” on national TV than be remembered for that.

That picture is so evocative not only because Mr. Peretz—a former labor organizer—has
already been savagely criticized for being out of his depth as defense minister. It’s also
because much of Israel’s leadership seems to have blinded itself lately with all sorts of
bizarre and criminal behavior.

Where do I start? Israel’s police commissioner just resigned after an investigative
committee criticized his actions in a 1999 case involving an Israeli crime family. His
resignation came in the wake of a rape allegation against Israel’s president Moshe Katsav, as
well accusations of corruption against Prime Minister Ehud Olmert and suspension of his
office director, whose house arrest is part of a widening investigation into the Tax Authority—
whose chief also just resigned under a cloud. The finance minister is being questioned about
embezzlement at a nonprofit, and the former justice minister has been convicted of indecent
behavior for kissing a female soldier against her will. There’s more, but I don’t have space.

Here is the really bizarre thing: Israel’s economy—particularly its high-tech sector-has
never been better.

“The economy is blooming, growing in the last quarter of 2006 by almost 8%,” said Sever
Plocker of the Yedioth Ahronoth newspaper, who is one of Israel’s top economics writers.
“Foreign direct investment is flowing in at unprecedented rate-$13.4 billion in 2006. The high-
tech sector exports are approaching $18 billion, and the stock exchange is at an all-time
high. The shekel is stronger than ever, the inflation nonexistent. Interest rates are lower than
in U.S. or Britain, the budget deficit less than 1% of G.D.P., and the balance of payments is
positive, which means Israel achieved its economic independence and is actually a net
creditor to the rest of the world.

“In short, we never had it so good in the economy.”

Yossi Vardi, one of the founding fathers of Israel’s high-tech industry, told me that in the last
month alone, four start-ups that he was an investor in were sold: one to Cisco, one Microsoft,
and two to Israeli companies. “In the last nine months I’ve probably invested in at least nine
new companies,” added Mr.Vardi, all started by “kids 25 to 35 years old.”

So maybe Israel doesn’t need any cabinet ministers? It’s not so simple. When the cabinet is
so weak, no peace deal is likely with the Palestinians because no leader has the strength to
push it through-and that is a ticking tine bomb. Moreover, high-tech doesn’t employ a lot of
people, and if the cabinet that should be looking out for the rest of Israel is hobbled—another
bomb is ticking.

“Almost half of the population does not enjoy the boom”, Mr.Plocker said, nothing these
statistics: The unemployment rate is 8.3 percent. Israel’s poverty rate is still the highest in the
West, by far: 24.4 percent of the entire population and 35.2 percent of all children are
described as poor, living under the official “poverty line.” In the Arab and the ultra-Orthobox
Jewish sectors, child poverty is especially high: more than 50 percent. The real income of the
poorest quarter of Israelis is lower than six years ago.

“There is a growing feeling that something is deeply rotten in the Israeli political system,”
Mr. Plocker e-mailed, “as it can’t deliver a decent social policy—reducing poverty, inequality
and unemployment—even during the good times.

“Tom, I never saw in the streets of Israel such a total contempt for the government by
almost everybody-the poor and the rich, the Jews and the Arabs, the left, the right and the
collapsing center. This is the essence of our situation—a contract between the ‘you never
had it so good’ economy and the ‘you never had it so bad’ government. This is the spring of
our discontent. Excuse me for being rather lengthy, but it hurts.”

Simon Peres, president of Israel changed his name
from Persky in the 40’s.

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