Taking Stock / Loss to Ireland

We lost, a stinging defeat of about 8:2.

It's just as well there's soccer, and disengagement. It's also just as well Israel has a single-minded agenda - lots of defense and politics, a little soccer and a hefty dollop of Channel 2. Without that, the people might wake up from their dream and realize how ugly our economic and civilian reality is.

In our collective dream, Israel is a world wonder, a tiny country surrounded by enemies that has reached astonishing achievements, that has high-tech, sunshine, Jewish genius, beaches and what an army, what an army!

Yet the truth is that economically, Israel is one of the few countries that has been marching in place for years upon years.

Comparing us with Ireland is highly educational. Ten years ago, Israel and Ireland were in roughly the same place, with GDP per capita of about $14,000. Back then Ireland was formulating drastic reforms to transform it from one of Europe's backward nations to one of its most advanced, while Israel was enthralled by its peace process and the tremendous wave of immigration from Russia.

Next week the Bank of Israel will be publishing its annual report. For the first time, the central bankers will be analyzing the economy from a ten-year perspective, not just one year. The results will be sobering.

GDP per capita inched up by less than 20 percent, while Ireland's almost doubled. Ireland, a tiny country with just 4 million residents, is today one of the richest nations around, while Israel lags behind.

Weak excuses

Usually, the security situation is blamed, but that excuse is a feeble one. First of all, foreign investors couldn't care less about it when examining potential investments in Israel. And spending on security is a matter of national priorities, as is spending on education and healthcare, especially given how bloated and flabby the defense establishment has become.

Second of all, Israel has received aid and loan guarantees amounting to $30 billion over the last ten years. No other country in the world has received infusions of such a scale. Certainly Ireland didn't.

Thirdly, Israel was swamped by immigrants in the last decade, much of it high quality people, and there was the high-tech bubble that brought in billions of dollars.

In the last ten years, Ireland, aka the Celtic Tiger, achieved what has been called an economic miracle. It never sat back whimpering about its own security problems, quite the contrary: it took advantage of its economic boom to improve its security situation. Its economic growth played a key role in bringing the Irish and British governments to reach an agreement on northern Ireland.

Cold comfort in a draw

Haaretz has been examining the performance of managers over a ten-year perspective, on the grounds that shorter periods of time are useless for true evaluation. Looking at ten years, Israel's economy gets very low marks. Thing is, there is no single leader who could be blamed and cast out.

In the last two years, the government adopted more responsible, and clear, economic policies. But don't get your hopes up. Most of the achievements in the last couple of years were based on decisions reached during Israel's economic crisis of 2001 and 2002, and were also based on the ebb and flow of global economic processes.

Benjamin Netanyahu managed to slash government spending and to pursue structural reforms, mainly because the marketplace had been traumatized by the near-meltdown, when the exchange rate hovered at five shekels to the dollar, interest rates soared to 12 percent, and banks traded at half their shareholders' equity on the stock market.

The more time passes, the less able government is to pursue its responsible economic strategy.

With easy money flowing in from the Americans, a public agenda devoted to security and politics, a public largely apathetic to the spreading corruption and preoccupied with survival or ways to latch onto the government's udder - a draw with Ireland in soccer is one of the few comforts we have.