In two days time we will celebrate Israel’s 67th Independence Day, and the question is whether we are really independent? Are we standing all on our own?
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A quick survey of our economic situation reveals that it is not bad at all – it’s even rather good. From a country of 600,000 people in 1948 we have become a nation of 8.3 million people. From a standard of living of $3,000 per person we have taken off to a level of $35,000 – because of the transformation from a socialist economy under government management to a competitive market economy. Our foreign currency reserves are at an all-time high: $86 billion, and that is after the dollar warehouse almost was emptied out in 1985. The national debt stands at 67 percent of GDP, which is not the greatest, but is also not so dangerous. After all, it is mostly internal debt and not external.
Inflation is unprecedented low, something around zero, compared to 449 percent in 1984; and today you can take out a mortgage for 20 years at an interest rate of 3 percent not linked to inflation – which is a miracle in its own right.
Our labor market has reached its lowest unemployment level, 5.6 percent, half of that in Europe; and Israel is ranked 19th in the world in the welfare index, which is a weighted index of income levels, life expectancy and education levels.
Israel is also ranked quite high on the innovation index. From a country whose main exports were Jaffa oranges, we have turned in a nation of startups and high-tech; and from a situation of chronic deficits in the balance of payments account, we have become a country with larger exports than imports.
So if all this is true, we have reached independence.
Not exactly. On the security side Israel is the only country in the world that is exposed to threats of annihilation, and is constantly in danger of one war or another. In order to face all these threats we have our “big friend” that provides us with a military advantage: They give us the most advanced airplanes, the engines for the Merkava tank and the money to develop the Iron Dome anti-missile interceptor system. They provide us with weapons systems worth $3 billion every year, which they are not willing to provide to any other country. This is the qualitative advantage that allows us to survive. In more direct language, we are dependent on the United States for our lives – truly.
We are dependent on the U.S. on the economic level, too. It would be enough for U.S. President Barack Obama to declare that he is “reconsidering” relations with Israel for the stock market to collapse and the dollar-shekel exchange rate to jump. In such a situation, global banks would stop granting us credit, the UN Security Council would impose paralyzing economic sanctions (which they have so far avoided doing because of the U.S. veto), and all the pretty economic numbers would be flipped over all at once into a black picture of a crash.
After all, Israel is very dependent on exports; 30 percent of our GDP goes to exports. That is why a boycott against Israeli exports is a prescription for the death of the Israeli economy. And by the way, there are already signs of such a boycott: 16 foreign ministers from the European Union recently called for mandatory labeling of every product from the settlements. This is one step before imposing a real boycott. The residents of the Arava can tell from their own experience what happens to farmers who are unable to sell their peppers in Europe.
It is also worth remembering that when we ran into economic crises in the past, we always received support from Uncle Sam, in the form of special grants or loan guarantees. And who can be sure that such crises will never come back to threaten us?
So it may be that we are important to the U.S., since we serve as a land-based aircraft carrier in the crazy Middle East. But they can give up on these services and continue on with their lives. We cannot exist without them, and that is all the difference in the world.
That is why, when we celebrate Independence Day on Thursday, we will know in the depths of our hearts that we are very far from true independence. We are no more than an American protectorate.