Israel received some news this week for which it had worked for a decade and a half: inclusion in the world's elite economic club, the Organization for Economic Cooperation and Development. This development reflects confidence in the ability of Israel's economy to achieve growth and stability. Our world highly values countries' credit ratings; the agencies take into account the opinions of organizations like the OECD, World Bank and International Monetary Fund. So Israel can be satisfied by passing from the list of developing countries to the roster of the developed.
But this status is fragile, as is evident by the condition of European countries like Greece, Spain and Portugal, whose membership in the OECD did not save them from deep economic crisis. So even though it is not mentioned explicitly, Israel's economic status is conditional. And in the absence of peace, the threat of a damaging war constantly hovers over our economy, driving away investors and pushing us behind the West.
Prime Minister Benjamin Netanyahu knows this, both because he served as finance minister during the period of terrorist attacks, and also because, before his second tenure as prime minister, he deluded himself that he could offer the Palestinians "economic peace" that did not involve political concessions. The past year confronted him with a difficult and cold reality. First there was no economic peace, and if Israel finds itself in a military confrontation with Iran and its proxies, Hezbollah and Hamas, and maybe even Syria, its dependence on security and economic aid from Washington will increase and its economic health will deteriorate.
Out of political considerations that can be summed up in the loss of support both in his party and among his right-wing allies, the prime minister tried to avoid the necessity of reaching a grand compromise with the Palestinians: a compromise that would include, at the end of the process, a withdrawal from the territories. For the process to resume, after Netanyahu helped freeze it when he refused to continue the previous government's Annapolis process, he was not required to withdraw now, and not even to promise to withdraw later, but only to freeze.
He promised this to escape a confrontation with the Obama administration; the verbal games do not alter this basic fact. The link between the economic and political is clear. There can be no sustained economic growth without a substantive compromise with the Palestinians and Syria.
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