BACKGROUND

Hitting Israel Where It Hurts

By the end of March 1990, the intifada is
expected to cost Israel $500 million.

HELEN DAVIS

Foreign Correspondent

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36

FRIDAY, JULY 28, 1989

ore than one million
Israelis — almost
the entire labor force
— demonstrated their anger
and frustration at Israel's
economic plight by staging a
national strike Sunday.
The industrial action was
designed to protest the
deepest recession Israel has
faced in more than 20 years
and the highest unemploy-
ment rate — 10 percent — in
the 41-year history of the
state.
The left-wing Israeli daily
Al-Hamishmar proclaimed
that "Israel cannot afford the
luxury of such unem-
ployment," and sounded a
grim note when it warned
that "the damage is very
severe and we are already on
the verge of social unrest."
The principal aim of the
striking workers was to "ex-
press solidarity with their
comrades who have lost their
jobs" and to protest "the com-
placency of the authorities,
who have done almost
nothing to halt the rise in
unemployment."
To the moderate Ha'aretz,
however, the situation was
not so clear-cut: "This strike
lacks a concrete objective," it
noted. "Unemployment was
not created inadvertently or
as a result of a malicious
scheme cooked up by in-
dividuals seeking to achieve
a goal."
The paper counseled
Israelis to devote themselves
to understanding the condi-
tions that had once again
compelled them to gaze
despairingly into the
economic abyss and to
understanding "what they
must do in order to emerge
from it as soon as possible."
True, Israel has never en-
joyed anything more than
precarious economic health,
but after the Six Day War it
entered a period of sustained
growth that allowed the foun-
dations to be laid for a
dynamic industrial economy.
Propelled by the engine of
defense-related needs, new
high-tech industries flourish-
ed and Israel was soon enjoy-
ing the spinoffs of its super-
sophisticated electronic bat-
tlefield, sprouting companies
that led the way in a range of
technological achievements.
Nevertheless, the line bet-
ween prosperity and poverty
remained desperately narrow.

A portrait of the Intifada.

Without natural resources,
save the ingenuity and skills
of its citizens, Israel always
operated on a very tight
margin.
There is no doubt that objec-
tive factors have made their
contribution to Israel's latest
economic crisis. Now,
however, an important new
element must be factored in-
to the equation: the intifada.
In addition to the manifold
human, political, social and
military ramifications of the
20-month-old Palestinian
uprising, Israelis are now be-
ing confronted with the
awesome task of counting the
rising cost of the intifada in
terms of cold hard cash.
The intifada has hit the
Israeli economy in four quite
distinct sectors:
• The frequent, protracted
Palestinian strikes and the
equally frequent Israeli-
imposed curfews have corn-
bined to significantly reduce
the large well of cheap labor,
particularly in the construc-
tion sector, on which Israeli
industrialists had come to de-
pend (last year, the number of
working hours by Palesti-
nians declined by some 20
percent across the board);
• The demand for Israeli
products and services has
declined markedly since the
Palestinians, previously
regarded as a captive market,
embarked on a campaign of
boycotting Israel
and,
wherever possible, increasing

their self-dependence (Israel's
gross domestic product for
1988 fell by 3 percent);

• An increase in military
spending as a result of the
need to double (to 60 days) the
annual reserve duty of
civilians, who comprise more
than two-thirds of the Israeli
military machine and whose
full salaries must continue to
be met even while they are
engaged in commercially un-
productive military service;

• A catastrophic fall in
tourism — the hardest hit of
all the four sectors and,
significantly, Israel's largest
foreign currency earner.
The most easily quan-
tifiable of the losses — and
the most serious — are those
that have occurred in the
military and tourism sectors.
According to Gen. Michael
Navon, who heads the
Defense Ministry's budget
department, the intifada is
currently costing the army
almost $600,000 a day. By the
end of March 1990, some 30
months after the start of the
uprising, it is anticipated that
additional costs necessary to
deal with the uprising will
have reached a total of $500
million.
In addition, the cost of de-
taining Palestinians for
intifada-related offenses is an
increasing drain on the
defense budget. In mid-July,
a total of 8,682 such detainees
were being held in various