Tuesday, September 22, 2009

Israel and Switzerland

Trying to find out the breakdown of the Swiss economy can be rather difficult. Why would anyone living in Israel be interested in Switzerland? Simple. The Swiss population of 7.8 million people is roughly the same as that of Israel.

There the similarities nearly stop.

Switzerland has an economy of about $403 billion in 2007, making it, according to some charts, the 16th richest country in the world. It does have the highest per-capital income in the world, about $43,000 per person.

Israel’s per-capita income is $26,600 (2007 est.) with a surprising GDP of about $200 billion.

Most of Switzerland’s economy is based on according to the U.S. State Department website, Aug 2009: “Industry (est. 29% of GDP): Types--machinery, chemicals, pharmaceuticals, time pieces, precision instruments, textiles and clothing, pigment, transportation equipment.
Services (70% of GDP).
Trade: Merchandise exports (2007)--$172.6 billion (207.1 billion Swiss francs): food, beverages, and tobacco (3%; +24%); metal and chemical industries (42%; +12%); precision instruments (7%; +8%); watches (8%; +16%); machinery and electronics (21%; +11%); clothing 1.1%; +4%). Major markets--EU, United States, Canada, CIS, India, Brazil, Japan. Merchandise imports (2007)--$164.8 billion (197.7 billion Swiss francs): consumer goods (38%); equipment (19%); energy (7.1%); raw materials (28%). Major suppliers--EU, U.S., Canada, CIS, South Africa.”

Israel’s breakdown is similar to Switzerland’s. Agriculture: 2.6% industry: 32.4%
Services: 65% (2008 est.)

What big difference jumps out? War. Defense. Survival. Switzerland declared itself a neutral country. While Switzerland does maintain an army, they make sure it doesn’t really have to fight. When Switzerland joined the UN it was with the understanding the Swiss would never send troops to a conflict.

Believe it or not the Swiss air force shot down German planes that encroached Swiss airspace during WWII. They also engaged the US forces and during that war over 100 Allied troops were interned in Swiss prisons. The Allies bombed a few Swiss factories and towns. The Swiss were selling weapons to the Germans. Also the Swiss were lending the Germans money, depending though, how well the war was going.

According to the CIA World Factbook, Israel “… depends on imports of crude oil, grains, raw materials, and military equipment. Despite limited natural resources, Israel has intensively developed its agricultural and industrial sectors over the past 20 years. Israel imports substantial quantities of grain but is largely self-sufficient in other agricultural products. Cut diamonds, high-technology equipment, and agricultural products (fruits and vegetables) are the leading exports. Israel usually posts sizable trade deficits, which are covered by large transfer payments from abroad and by foreign loans. Roughly half of the government's external debt is owed to the US, its major source of economic and military aid.”

Another big difference between Switzerland and Israel is that Switzerland doesn’t depend on foreign aid to help with its deficit, since it has no deficit. The US provides Israel with about 5 percent of Israel’s GDP. Nearly $3 billion in foreign aid, another $2.5 billion in military grants and loans for the purchase of military weapons, supplies, and replacement parts. Then there’s the additional $10 billion in load guarantees the U.S. provides.

Switzerland’s budget surplus allows Switzerland to remain neutral. Israel, on the other hand, remains dependent on the USA to help Israel with the 10 percent of the GDP spent on defense (about $20 billion a year). Imagine, one pundit says, that if Israel could devote that 10 percent to hi-tech, services, tourism, the positive effect on the economy. And, the pundit adds, don’t forget when a soldier does reserve duty for 30-days, he’s away from his job that is productive to the economy, and gets paid for the month.

So when Israel’s PM Bibi Netanyahu goes to meet with President Obama for a trilateral summit including the Palestinian Authority’s Mahmoud Abbas, pundits say he goes not because he wants to, but because the largest donor to Israel’s cause has asked him to.

Israeli Jet fighters, tanks, Armored Personnel Carriers, all run on US engines; helicopters, machine guns, rifles, are pure US Army issue. One observer said, ‘Try telling the country that puts the engines in your tanks and planes you’re not interested in sitting down with the PA for a discussion that may lead to peace. Hard to do.’

The Israeli media’s take on this new summit is that PM Netanyahu is going just because he was pressured by the US to go. In this case pressure could mean shutting off the flow of arms and supplies the Israeli army needs from the US. These threats have happened in the past, under US President Nixon, the first US President Bush, and US President Carter.

So, say the observers, going to New York's Waldorf Astoria Hotel to sit with Abbas and Obama isn’t such a big deal. One cartoon shows a nervous sweating Obama sitting near Abbas and Netanyahu pleading for ‘just a little handshake, please.’

“Obama’s 11th Hour Push” was the headline in the Israeli paper Haaretz. After much back and forth by US Special Envoy George Mitchell, Netanyahu and Abbas agreed to go to Washington. Abbas, according to the paper, has little legitimacy since his term of office has officially ended and he extended it with the approval of his narrow cabinet, even though elections were scheduled.

Netanayhu has a right-wing coalition to answer to back home and isn’t willing to make any concessions prior to the meeting. This lack of concession is something that has embarrassed Abbas, according to analysts. In today’s Haaretz a report came in about new construction outside the settlement of Beitar Ilit, in contravention of the assurances Israel Minister of Defense Ehud Barak has given George Mitchell.

Most analysts say nothing substantive will come out of the meeting. Netanyahu said today that he’d stop settlement activity if the Arab states would allow Israeli commercial aircraft to fly over their airspace.

Lebanon’s strongman Sheik Nasrallah said this week that he’d never recognize Israel as a state. Hamas has echoed this statement. Syrian President Assad seems to be playing a double game, supplying Hezbollah with arms while talking about peace with Israel. The Iranian dictator has kept on threatening Israel with annihilation.

So what happened to Switzerland?

Israelis pay huge taxes on everything in order to support a military that is necessary to defend the borders. The Swiss are sailing along, no one on their borders threatening them with annihilation, no one calling for their destruction, no one saying they won’t recognize Switzerland as a state.

A veteran analyst said ‘A successful peace process in the Middle East would be wonderful. Especially one with teeth that worked. That really brought peace. But sometimes peace isn’t possible, much as it is desired. A teenager can want to have a lusty affair with Angelina Jolie, but that doesn’t mean it will ever happen.’

Another analyst says that considering the difficulties Israel has faced up to now, it is amazing that the economy is so strong, and Israel is so successful in a number of fields.
The $200 billion less than Switzerland that Israel now makes could be $200 billion more without having to constantly spend precious resources on defense.

The father of neo-conservatism, Irving Krystol, who died recently, said he thought the conflict in the Middle East was a waste.

Clearly, if Israel can make peace with the Palestinians, and then the Arab world, this would be in Israel’s best interest. One observer says that Israelis have shown a lot of things but stupidity isn’t one of them. If peace were possible, he says, then Israel would leap at it.

President Obama’s belief is that Israel is the lynchpin to peace in the Middle East, and to quelling the rise in Islamic Fundamentalism. Perhaps he’s right. If so, and the correct formula is reached, Israel will go along with it. There are few Israelis around who wouldn’t want to turn Israel into Switzerland.

In this Jewish New Year, let’s hope that a positive fate is written in the Book of Life for a real chance for peace.

Shana Tova