Former Bank of Israel Governor Stanley Fischer.
Former Bank of Israel Governor Stanley Fischer in Washington, November 19, 2013. Photo by Reuters
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Former Bank of Israel Governor Stanley Fischer says that Israel is not looking for peace "to the extent that it should” and that it is “divided between those who want to settle the West Bank and those who seek peace.”

The rare public criticism of Israeli policy from the soft-spoken former governor, widely credited with navigating the successful Israeli economy of the past decade, came during a discussion of “Israel: the View from the Inside Out,”  which convened on Tuesday evening at the Center on Law and Security of New York University’s School of Law. Participating in the panel alongside Fischer were former Supreme Court President Dorit Beinisch, Hebrew University Professor Moshe Halbertal and New Republic Literary Editor Leon Wieseltier, who moderated.

“The approach that we have to be strong because if we’re not strong we will be defeated is absolutely correct but it is not the only the part of national strategy,” Fischer said. “The other part is the need to look for peace, and that part is not happening to the extent that it should.”

“The country seems to me to be divided between those who want to settle the West Bank and those who seek peace. It is a huge challenge for the future for a country whose achievements are so extraordinary,” he added.

Fischer, who is now a Distinguished Fellow at the New Yorkbased Council on Foreign Relations, said that “the miracle of Israel it its normalcy, which is maintained thanks to the Israel Defense Forces.” He added that defense spending is currently 8 percent of GDP, down from a third of GDP following the 1973 Yom Kippur War. “But there are always more threats and there are always more reasons to spend on defense – and Israel is at a moment when it wants to spend more on defense.”

Fischer recounted the achievements of the Israeli economy, which flourished even as the world was undergoing a deep recession, but also noted the challenges facing it, first and foremost of which are demographic. Fischer cited statistics showing that the ultra-Orthodox sector doubles itself every 17 years, the Israeli Arab sector every 25 years and the rest of Israel - every 40 years. At this rate, he said, in 45 years the ultra-Orthodox and Arabs will form a majority, and if their rate of participation in the work force does not improve, “it will be very problematic from an economic viewpoint.”

Fischer also noted the declining achievements of the Israeli education system and the country’s lowly position in the international PISA tests. He said that the reason for this is simple: “The rest of the world is investing more in universities and schools, but Israel is not.” Fischer said that the existence of four separate streams of Israeli education – secular, modern Orthodox, ultra-Orthodox and Arab” – perpetuates social divisions as well as the lower rates of work participation in the Arab and ultra-Orthodox sectors.

Beinisch spoke of the role of Israel's Supreme Court in maintaining Israeli democracy and noted that “the dangers from inside are not less than the threats from outside.” Halbertal lambasted the continuing Israeli control of the territories, saying that without a resolution of the problem, “we will turn into either Lebanon or South Africa.”

Halbertal said that Israeli Jews will not survive as a minority in their own country. “You might wind up with a country with secure and defensible borders, but not necessarily a country that is worth defending,” he said.