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It used to be, not too many years ago, that when there was a defense-related incident, the ground shook. The cabinet would gather, bombastic statements would be uttered, the stock market would drop, and the dollar would take off while the shekel would weaken. It used to be that when there was talk of the likelihood of the prime minister resigning, everyone would talk about the lack of political stability, the markets would shake, and the economy would stop.

But today, nothing seems to cause too much excitement. Qassam rockets continue falling on Sderot, and the shekel keeps getting stronger. In the communities bordering the Gaza Strip, people are dying, a Katyusha rocket hit the Hutzot Mall in Ashkelon, but the shekel is getting stronger and the stock market is indifferent.

In an interview with Haaretz, Military Intelligence chief Amos Yadlin said that in two years the missiles will reach Be'er Sheva, too - but the economy seems to be ticking normally. Even when it seems that the prime minister will be indicted and forced to resign - even then the dollar does not change direction, as if this is the most stable country in the world, in which there are no risks, which is not threatened by Iran and everything about it is strong and certain.

Is this a new form of escapism, or perhaps lack of understanding? Perhaps we are not correctly measuring the risk in our lives - the way financial experts did not correctly weigh the risk in the subprime mortgage rates before the housing market crashed. There are those who live near an active volcano who fail to understand why others look at them strangely.

And maybe, in order to continue living here, we have adopted a quality of not believing the barrage of threats sent our way?

The public has learned to filter out the military threat completely. It also learned that before any discussion on the budget, the army sends out its best people to the media front, and they paint the future black - so that during the budget deliberations no minister will dare think about any cuts in the defense budget. It used to be that the Israel Defense Forces would leak, on the eve of budget talks, that Shehab 3 missiles are aimed at Tel Aviv. Now they talk about missiles aimed at Be'er Sheva. But the truth is that the missiles are directed at the budget.

The economic and political indifference to Qassams and Katyushas hitting Sderot and the other communities bordering the Gaza Strip - and also Ashkelon - suggests that the markets have already come to terms with the inherent risk. If economic growth in 2007 was 5.3 percent, it means that without rockets the economy would have closed 2007 with less unemployment and faster growth. In other words, the rockets come at a cost, but it is already built in to the market.

Foreign investors are also not feeling too much the threats surrounding us. They are convinced that if the situation heats up and the threat level goes up a notch, they will have plenty of time to pull their investments and emerge unscathed. The fact is, they say, that the country managed not too badly during the Second Lebanon War. The economy did not collapse, it continued to function and recovered in record time. The support for Israel that George W. Bush recently displayed has also boosted investors' sense of confidence.

But the world is fickle. If there is a sudden change in the situation - if, for example, there are terrorist attacks in Tel Aviv or Jerusalem - every risk assessment will change. The investors will freeze their business, the tourists will flee, and growth with come to a standstill.

On the issue of political stability we have also gone through a maturing process. Once upon a time it was clear that changes in government would also bring about significant change in the peace process. It used to be that we were concerned about election economics. But during the past 20 years we have learned that a government goes and a new prime minister comes, and the diplomatic/political issue is handled in a similar fashion. The prime minister speaks of the importance of peace, is holding indirect talks with Syria - and the settlements continue to flourish.

The budgetary policy also remains unchanged. No one dares overspend and increase the deficit on the eve of elections. Each prime minister in turn retains fiscal and financial stability. Otherwise, the economy will punish him immediately.

But here too, like in matters of defense, if there is a sudden turn for the worse and the prime minister embarks on blatant election economics - throwing around money without any care, restoring stipends for children - the response in the economy will be swift. Interest rates will rise, investments will dwindle, inflation will raise its head, the dollar will strengthen, and the economy will reverse its gains.

Therefore, stability in Israel is conditional. It is a fragile, make-believe stability, with no guarantees.