Naftali Bennett
Naftali Bennett, head of Habayit Hayehudi, speaks in Ashdod, Israel, Dec. 26, 2012. Photo by AP
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The creation of a Palestinian state would destroy the Israeli economy, causing infinitely more problems than an economic boycott would, said Economy Minster Naftali Bennett on Monday, responding to the threat of sanctions if Israel fails to reach an agreement with the Palestinians.

Addressing his Habayit Hayehudi Knesset faction, Bennett called on Prime Minister Benjamin Netanyahu to stand up to pressure to reach an agreement that would lead to a Palestinian state. Bennett complained that a media campaign had begun in recent days asserting that if Israel does not agree to a Palestinian state and divide Jerusalem, it would face heightened economic pressure.

“I declare here and now that the truth is just the opposite,” said Bennett. “A Palestinian state will wreck Israel’s economy.”

Concerns about boycotts and divestments increased this week after reports that three leading European pension funds were weighing selling their shares in Israeli banks out of concern they were helping to finance settlement construction in the West Bank. Two weeks earlier, the Dutch pension fund PGGM divested its shares in Israel’s five biggest banks for that reason.

But Bennett said the boycott threat paled when compared to the security problems a Palestinian state in the West Bank would create for Israel.

“You see this large mountain called Judea and Samaria?” he said, pointing to a relief map of Israel. “This large mountain controls the entire region of Tel Aviv, Azrieli [Towers] and Herzliya Pituah, the entire business center of Israel,” he said. “Every day a missile will fall on another street in Herzliya Pituah. Ask yourselves how the Israeli economy will look if just once a year a plane about to land at Ben-Gurion [International] Airport falls out of the sky. It will decimate the Israeli economy.”

Bennett pointed out that with the exception of the years in which the world economy was in a crisis, the Israeli economy has grown ever since the Israel Defense Forces reasserted control over Palestinian cities in the West Bank through Operation Defensive Shield. The 2002 military operation occurred at the height of the second intifada following a spate of Palestinian terror attacks in Israel.

“I know exactly what it’s like to lose a tender because you are Israeli,” he said. “I know exactly what it is like when your customers in Canada, the United States or London are afraid to come to Israel so they won’t buy your products .... No one will tell me that the Israeli economy will flourish in the kind of situation we will have on our hands if, heaven forbid, a Palestinian state is established in the heart of our land.”

The economy minister said Israelis should take a page from history and not fear economic boycotts. “Even before the establishment of the state the first economic boycott began in 1945, the great Arab boycott,” he said. “Afterward in ‘48 there was a round of global boycotts. Later, after ‘67 another round and after ‘73 another round, but Israel continued on and prospered.”