Afternoon Tea in Jerusalem Blog

In addition to my work as a business coach, one of my interests is blogging about life in Israel. This is a country full of contrasts – over eight million citizens living in an area the size of Wales. You can see snow and the lowest place on the globe in the same day. Although surrounded by geopolitical extremes, Israel has achieved a decade of high economic growth. My work brings me in contact with an array of new companies, exciting technologies and dynamic characters. Sitting back with a relaxing cup of strong tea (with milk), you realise just how much there is to appreciate in the Holyland. Large or small operations, private sector or non profit, my clients provide experiences from which others can learn and benefit.

Israel has spent a week marking 50 years since the onset of the 6 Day War. A pre-emptive strike saw a tiny country change overnight. Jerusalem was reunited. The West Bank and the Golan Heights commenced on a period of unprecedented economic growth.

It is difficult to ignore the negative publicity that Israel has encountered since then. Putting that noise to one side, a series of Israeli economists posed the question if the country has benefitted commercially from the military miracle of June 1967. The financial newspaper, ”Calcalist” summarised some of the numbers and the observations.

As a starting point, Israel’s fledgling economy invested 9.9% of its GDP in defense in 1966. A decade later, that number had soared to over 35%. Over the past decade, the ratio has steadied at around 6-7%, of which nearly a quarter is devoted to pensions and similar indirect outlays.

And how were those expenses financed? Simple; badly, via printing money, an exercise that imploded in mid 1985, when prices and wages had to be frozen.

It is worth noting that the immediate period after 1967 was marked by an economic recession and high unemployment. It was only by 1972 that the economy began to see a marked improvement, which was nipped in the bud a year later with the Yom Kippur War. The real boom only followed a remodeling of the economy in 1985, which fortunately was to coincide with the high-tech era.

Israel’s current population is approaching the nine million level, of whom about 400,000 live in the West Bank and the Golan Heights. Around two-thirds classify themselves as religious or observant Jews.

  • Even though there are 14 industrial zones in these areas encompassing about 900 businesses, they contribute less than 1% of the total value of the country’s exports.
  • Per person, the government invests around 3,000 nis in these regions, compared to about 2,00 nis for other peripheral towns in the country.
  • One estimate puts the total government investment in the West Bank and Golan Heights at 826 million shekels in 2016 – about US$225 million – down from 990 million shekels in the previous year.

This is not a judgment paper on what could have been and why. This is not to say where resources could or should have been invested. As every first year economics student learns, economics is the science of making choices – the allocation of resources.

Today, Israel is a full member of the OECD. It hosts over 300 leading multinationals – Porsche is the latest member of that club. There is freedom of worship for all. It shows how much can be achieved, if you concentrate on peace rather than looking for war.

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