The Bottom Line / That Vision Thing

Israel's economic history includes two prominent dates - October 1973 and July 1985. The first was the Yom Kippur War, and the second was an economic package that managed to slam the brakes on inflation.

Israel's economic history includes two prominent dates - October 1973 and July 1985.

The first was the Yom Kippur War, which was not just a military, moral and personal jolt, but also a hard economic slap that sent the economy tearing downhill to hyperinflation and a persistent freeze on growth and investment.

July 1985, on the other hand, was a turning point. The economic package implemented then, succeeded in slamming the brakes on hyperinflation and returning the Israeli economy to normality.

From then until 2000, the economy strode forward: The government share of the economy shrank; the budget deficit was rolled back, as were the country's external and domestic debts; inflation fell to Western levels; the gap in the balance of payments contracted; the economy was opened up to competition from imports and shifted to those areas in which we had a relative edge (like high-tech); and the money, capital and foreign currency markets underwent a process of liberalization.

In brief, we were on the right road toward economic independence - a long road admittedly, but definitely going in the right direction.

In October 2000, the second intifada broke out - adding to the pummeling crisis in the high-tech industry - and the Israeli economy came to a halt. Over the past 18 months or so, the government's share of the economy has risen; the tax burden has increased and so has the national debt. The balance of payments has worsened; growth has turned negative; unemployment has reached worrying levels of 9.3 percent; and even inflation has reared its ugly head, so that in the first quarter of 2002, prices have increased by 2.4 percent.

In other words, in terms of economic independence, we have taken a giant step backward - to our enormous regret.

Now we are entering a new era - the era of the prophets of doom in which each competes with the other over who can foresee the most extreme and terrifying of futures.

The governor of the Bank of Israel, David Klein, says that growth this year will be zero, or perhaps even negative, thus resulting in massive losses in tax revenues and a doubling of the government deficit. He continues that this damage will come quickly and will impact on the interest rate. "Investors are losing interest in Israel and are cashing in their investments," he explains.

Treasury director-general Ohad Marani is not far behind. "The Israeli economy is on the brink of an economic crisis and financial collapse," he says. "We are at a critical point that is likely to lead quickly to a severe economic crisis. A cut of more than NIS 10 billion to the budget needs to made now to avoid this crisis."

So which journalist could be more critical than these two prophets?

Israel's first prime minister, David Ben-Gurion, was the first that spoke of the economic independence that the country needed to attain. He understood that economic independence was a condition of state independence. Ben-Gurion spoke on the subject back in the 1950s, when the economy was small, poor and underdeveloped. But he had a vision; he had a strategy.

Not a single leader speaks in such terms today. Who today thinks at all of economic independence, when the attention span and planning vision stretches only as far as the next television news broadcast?