Building Industries Is Part of the Zionist Dream

Manufacturers Association President Shraga Brosh cannot fathom the reason behind the statement of well-known attorney Ram Caspi that Israeli businessmen will stop operating in Israel and go abroad if the media and the "talkbackers" keep bothering them about the big money-government nexus.

In an interview last week for Haaretz's Rosh Hashanah supplement, Caspi sat on the fence between the wealthy businessmen he represents, and the prime minister, whose goodwill is often required by these businessmen.

"So, we businessmen will use Israel as a hotel and do business only overseas," declared Caspi.

Brosh, who rubs shoulders with the leading Israeli tycoons, including CEOs Michael Strauss (Strauss-Elite), Dan Proper (Osem-Nestle), Dov Lautman (Delta Industries), Eli Hurvitz (Teva Pharmaceuticals) and Muzi Wertheim (Coca-Cola Israel), says he has not heard threats about leaving Israel. According to Brosh, any establishment of overseas operations is not a departure, but rather a necessary business expansion, with a company's roots remaining in Israel.

"There's no need to exaggerate," said Brosh, responding to Caspi's comment. "We industrialists want to be here. I think the industrialists are here because it is important for them to be here. It's part of their Zionism, in addition to the business considerations. The whole world is a global village, and everyone looks where conditions are good for him. There are also some who want to be specifically here, in the hope that if it won't be any better, at least it won't be any worse."

Brosh believes Israel would benefit socially and economically if the Zionist parties joined the government.

"At a time like this all the Zionist parties should forget their differences of opinion for the sake of our national strength, which goes hand in hand with social and economic strength," says Brosh. "We need a unified leadership. I would like to see [Benjamin] Netanyahu as a senior minister, either as finance minister or foreign minister, and [Avigdor] Lieberman should be a partner, too. These are talented people, whose entry [into the government] would undoubtedly provide us with the power we need, for the sake of Israel's inhabitants and our status in the world. This would affect economic stability, and I say this for patriotic considerations, not political ones. For now we must focus on stabilizing Israeli society, and everyone must participate in that."

There has been criticism of the government's handling of the home front during the war in Lebanon. What are your thoughts on this matter?

"All in all the government did what could have been expected of it with regard to the business sector. The issue of compensation was addressed right from the first week of the war, and this is the first time a government has offered so much compensation while the war was still going on. The government allowed businesses to delay tax payments, which is equivalent to a state loan. Anyone who filed a compensation claim for July on time has already received his money."

Over the years, the presidents of the Manufacturers Association have all nurtured relations with economic policy makers and the prime minister. How is your relationship with Prime Minister Ehud Olmert?

"Very good. I have known him for many years. We also became closer when I was director of the Israel Export Institute and he was minister of trade, industry and employment."

The Manufacturers Association has always pressured the government vociferously for more benefits for industrialists. Now, however, Brosh sounds more pragmatic and ready to be considerate of the government's current constraints, despite the large gap between industrialists' demands and the government's budget proposal. Brosh puts the industrialists' demands into perspective, although it is unlikely that all his colleagues share his opinion.

"I still believe that supporting industry and export is a very important growth engine for Israel's economy. The finance minister believes this, too, but there is still the budgetary reality. There was a war, with unexpected expenses totaling NIS 13 billion, and everyone has a different opinion of how these should be financed. I, of course, see things from the perspective of industry, and the Finance Ministry has its own point of view. But I also feel that by the time the budget is approved by the Knesset, the clauses that we think are very important will receive the appropriate attention. We are in regular contact with the government and have good reason to believe that we will be able to make a few changes in the important places."

Which sections of the budget are the most important?

"Things that lead to growth, such as R&D, and grants for encouraging capital investment. The cuts to infrastructure [budget] should be canceled, as infrastructure is important to economic growth. There should be more money for encouraging exports and approval for a slight increase of 1,500 foreign workers for industry, with skills that are not available here.

"I am not willing to pay the price of the cut to R&D, which has led to a shortage of NIS 3.6 billion in industry. This hampers exports and growth. I feel we should not be satisfied with 3.5 percent annual growth, and should strive for 5.5 percent. That is why I am lobbying for increased budgets for R&D and investment centers. A larger budget will help exports grow by 15 percent per year, not 10 percent. I know that the prime minister and the treasurer have a wide-angle view and their own priorities, but it is my job to represent those who elected me as president of the Manufacturers Association, and to develop industry as much a possible. I don't have to accept downsized goals."

Do you feel the prime minister and finance minister are managing the economy properly?

"The prime minister wanted to stick with the government's basic goals, but the war disrupted the country's economic progress. Our disagreement is over the budgetary clauses that were altered to pay for the war. Still, a leadership cannot be judged on budget clauses, but rather on economic growth. The fact that the war did not affect Israel's international credit rating and that the [stock] market is calm indicates that the Israeli and international business world accept the economic leadership."