In June 2010, Israel will become a full member of the OECD. Prime Minister, Netanyahu, led the self-congratulations.

For the proverbial average person in the street, nothing has changed. There will be no bonus in next month’s wage packet. Unemployment will not dip a percentage point overnight. However, for the foreign investor, a thundering wake up call has gone out from the Holy Land. So what really is the news?

In the past few months, there have been several discussions on the financial newswires about Israel – its use of innovation and a centre for economic growth. Even during last week’s Greek crisis, Israeli financial markets reacted with relative calm. A catch phrase in recent years is that Israel has discovered the path to economic stability despite diplomatic and military strife – elements that normally restrict any country’s development.

It is relatively easy to sing Israel’s praises; the excellent reputation of the central bank under Stnaley Fischer, the successes in communications and cleantech, the number of patents or even nobel prize winners per capita. However, over the next 3 to 5 years, it seems that some key fundamentals of the Israeli economy and its financial markets are about to undergo a significant overhaul for the better.

Yes, joining the OECD will expose Israel to new lines of credit and on better terms. In addition, more international tenders will be available for bids from Israeli companies. Israel’s credit rating should improve. It can be assumed that together, these moves will allow the government to finance more public sector projects without increasing the budget deficit.

Nice, but not amazingly wowish on its own.

Now add in factor number two: The Tel Aviv Stock Exchange is about to be accepted as a member of the leading group of international share centres. Over time, it is expected that this will ensure a greater interest than before in Israeli shares, which converts into more jobs, better infrastructure, exports, and other economic benefits.

The icing on the cake is the energy sector. Over the coming decade, Israel will cease to import natural gas. It is conceivable that the reserves are high enough to allow for exports. (It is too early to talk about new oil reserves). The off-shore drillings will decisively alter Israel’s balance of payments, again releasing resources to other sectors such as education and health.

Even volcanic ash should not stop  wave of new investors visiting Jerusalem and Tel Aviv in the immediate future.