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Israel has a stable economy that's resting on shaky foundations, warns The Economist in a special review on Israel in honor of the nation's 60th independence day. The respected British magazine calls Israel an economic miracle, but warns the country isn't taking the steps it must to preserve that miracle in the long run. The two main problems are the great inequality in Israeli society, most notably the poverty among the Arab and ultra-Orthodox populations. The second, which confers the greater threat to Israel's long-term prosperity in The Economist's opinion, is the situation of the education system.

We apparently needed somebody else's view from afar to see the glaringly obvious - between the deterioration of education quality and the deepening poverty among the ultra-Orthodox and the Arabs, and the degree to which the combination threatens Israel's very future. Yet somehow the nation's leaders have seemingly remained indifferent to the frightening figures, even when they paint a clear statistical picture.

Together the ultra-Orthodox and the Arabs comprise 29% of Israel's population, but they comprise 58% of its poor. Moreover, the trends in both communities are mainly negative. The ultra-Orthodox population increased from 5% of the general Israeli population in 1980 to 8% in 2006. According to a Bank of Israel report, if the birth rate stays the same, the ultra-Orthodox population will double itself in 16 to 18 years, and this is a population in which adults don't work much - only 37% worked in 2006 (on average, 49% of ultra-Orthodox women worked and only 28% of the men).

The education system is already groaning under the burden of the poor ultra-Orthodox families. The latest state comptroller report found that 205,000 Haredi children are studying in Israel, which is 15% of the student body.

From 1992 to 2006, just 14 years, the number of ultra-Orthodox schoolchildren increased by 141%. During those years the number of pupils at the regular state schools, including the religiously observant (but not ultra-Orthodox) ones, grew by 3.6%.

The state comptroller presented the figures in his last report, which addressed the poor condition of the education infrastructure in the ultra-Orthodox sector. The watchdog was striving mightily to show that the ultra-Orthodox problem couldn't be swept under the rug any more. The crumbs that secular modern Israel swept on the hush-hush were mounting into a pile that the rug couldn't cover any more. It is time, argued the state comptroller, for Israel to at the least set a policy regarding ultra-Orthodox education.

Don't ask, don't tell

This is precisely what the state refuses to do. The comptroller found that the state, through the Education Ministry, prefers to give ultra-Orthodox schools hundreds of millions of shekels every year without consulting any benchmark criteria or asking too many questions - it will do anything, in fact, but set a policy to clearly govern the allocation of funding that might bring the secular state into collision with the ultra-Orthodox population.

The High Court of Justice is present discussing a crucial issue regarding the future of Haredi education, namely whether their schools are obliged to teach the Education Ministry curriculum (the core program), or whether they would be free to devote all the students' time and attention to religious studies.

Studying nothing but religious matters dooms ultra-Orthodox children to a future of unemployment and poverty. Despite this obvious fact, the state - through the Education Ministry - supports, of all things, the alternative of exclusive religious studies. For reasons of coalition security, it supports a legislative proposal that would relieve the ultra-Orthodox schools of the need to teach ordinary subjects.

Economists in Israel are worried that unless a greater proportion of the Arab and ultra-Orthodox populations starts to work, Israeli economic growth will slow down and - wait for it - taxes will have to rise, as The Economist says. It also warns of dire results if the middle class continues to weaken as a function of the growing tax burden.

It took the view from London to read the Hebrew writing on the wall. The question is whether there's anybody in Jerusalem who read it too.