Peace First, the Economy Can Wait

The best economic program for Israel is the renewal of the peace process.

AP

“For the sake of peace, I’d even wear a shtreimel,” Shulamit Aloni once said famously when she was asked how her secular, left-wing Meretz party could agree to be in a government coalition that included Shas.

With her hyperbolic remark on the fur hats worn by some ultra-Orthodox men Aloni, who died in January 2014, was setting clear priorities: The Israeli-Palestinian conflict trumps all other issues.

The same implicit question arises from a recent interview that Zionist Union coleader Isaac Herzog gave to TheMarker (a shortened version of which was published on haaretz.com), at least for readers who are not neo-socialists. That is, for readers who believe in competition, the market economy, opening the market to imports, reducing customs fees, making government services more efficient and in not increasing government spending or taxes as the recipe for growth, fuller employment and a genuine war on poverty.

In the interview, Herzog described the Israel Electric Corp. trade union as “responsible,” making a mockery of the word. He made many far-reaching promises, including to raise the income of single mothers, eliminate elderly poverty, distribute building lots, offer subsidized housing, add a third aide to preschool classes and increase education, health and welfare spending.

What fun! The state budget will grow, we will all get more and not pay an additional penny in taxes — because Herzog the alchemist says it shall be so.

But this is the same Herzog who believes in the two-state solution, who wants to advance a peace agreement with the Palestinians. It’s the same Herzog who recently said that as soon as he becomes prime minister he will go to Ramallah to renew Israel’s relationship with Palestinian President Mahmoud Abbas, and then meet with U.S. President Barack Obama in order to rescue relations with the last friend that Israel has left.

All this leads to the big question: Which is more important, the economy or the Israeli-Palestinian conflict? And which should guide our decision in the voting booth?

The answer seems pretty obvious: The Palestinian conflict is more important. It is hard to cause major damage with economic policy, however misguided. The private sector is sufficiently robust to weather a few more hardships, but when it comes to the Palestinians we are in critical condition. The occupation is corroding us on every front, political, moral, social and economic.

Our international standing is deteriorating, patience for us in evaporating. Growing numbers of companies, institutions, trade unions and consumer organizations are boycotting Israeli products. Corporate boards are severing commercial ties with Israeli firms. The farmers of the Arava Desert can no longer sell their produce in Western Europe, and investment funds are canceling deals.

The day will come when the world will impose apartheid-era South Africa-style sanctions on Israel. Maybe we will be barred from going abroad; we will simply be unwelcome.

Not until the conflict is solved will it be possible to solve our social and economic problems. It is impossible to invest in infrastructure and public transportation, to spend money on the elimination of poverty and reduction of food and housing costs when the only budget that is continually increasing is the defense budget.

Without a solution to the Israeli-Palestinian conflict, the threats that surround us will only continue to grow, and the requisite increases in defense spending will come at the expense of spending on welfare and social services.

The best economic program, therefore, is the renewal of the peace process. It’s the only plan that will stop Israel’s global isolation, restore the flow of international investment into Israel and facilitate rapid growth. That growth will, in turn, increase tax revenues and enable needed spending to right socioeconomic wrongs.

Aloni said she would be willing to wear a shtreimel. The free marketers who support the peace process will are looking for a diplomatic solution for Israel will have to sing the “The Internationale” all the way to the ballot box.