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FRIDAY, NOVEMBER 30, 1990
471-5620
Israel Needs Change,
Help To Absorb Soviets
ARTHUR HORWITZ
Associate Publisher
A
n unprecedented level
of foreign investment,
dramatic streamlin-
ing of government bureau-
cracy, consistent policies for
economic development and
additional sacrifices by
average Israelis will be re-
quired to create more than
500,000 jobs in the next five
years needed primarily for
more than 1 million Soviet
emigres.
Arnon Gafni, former gov-
ernor of the Bank of Israel
and past chairman of Koor
Industries, estimates that
Israel will need $80 billion
invested in its economy in
the coming five years. Half,
he believes, will come from
Israeli citizens through belt-
tightening and significant
increases in their private
savings rate. But the re-
maining $40 billion must
come from grants, loans and
private investment from
abroad.
Mr. Gafni, Israel Minister
of Trade Moshe Nissim,
American business consul-
tant Arthur White, Ben-
Gurion University Professor
Herman Branover and
Genesis Foundation director
Yehiel Admoni offered ways
to stimulate job creation at a
forum on economic develop-
ment at the recent General
Assembly of the Council of
Jewish Federations in San
Francisco.
Mr. Gafni's statistics
underscored the dimensions
of the challenge facing the
absorption of the Soviets.
Israel's gross national pro-
duct would have to increase
by 50 percent, and its total
job base by 33 percent, in the
coming five years. And the
vast majority of the new
jobs, he said, would have to
be in the private sector.
Despite a free-trade
agreement with the United
States and low-barrier
access to the countries of the
European Economic Com-
munity, Israel's reputation
for bureaucratic red tape
and inconsistent economic
policies has thwarted foreign
investment and job creation.
Mr. Nissim, who also
serves as a deputy prime
minister and is part of the
ruling Likud-led coalition,
said Israel is embarking on a
new program designed to
stimulate the outside in-
vestment it requires.
"The aim of the program is
toward creating a new
climate for foreign in-
vestments in Israel, a
climate based on clear, con-
sistent and reliable govern-
ment policies offering econ-
omic certainty, profitable
business and the elimination
of bureaucratic red tape
which discouraged potential
investors," he said. "It calls
for government participa-
tion in investment risk .. .
with the entrepreneur at all
times enjoying total in-
dependence in his business
activities."
Mr. Nissim said the pro-
gram includes grants, guar-
antees, tax exemptions and
reductions and dramatically
accelerated depreciation on
new equipment. The
greatest incentives, he said,
were for development in nor-
Israel will need $80
billion in
investments in the
next five years.
them Israel, the Golan, the
West Bank and the Negev.
Significant incentives were
available for an area bet-
ween Jersualem and Beer-
sheva while the lowest in-
centives were for investment
along the coastal plain.
A newly created In-
vestment Center, he added,
will serve as a one-stop sta-
tion for investors and guar-
antee swift governmental
action on expansion or start-
up plans.
While the climate for in-
vestment — and job creation
— may be improving, Mr.
White believes the task is
too big for Israel and Jews in
the Diaspora to undertake
alone. However, many
potential investors who
aren't Jewish have percep-
tions of Israel that limit
their interest.
"The typical corporate ex-
ecutive here and in Europe
doesn't think of Israel as a
place to invest, build a plant
or do research and develop-
ment," he said. "They don't
because of security. Also,
they don't know about the
successes."
Additionally, Mr. White
noted that non-Jewish com-
panies will be deterred,
slowed, or stopped from in-
vesting in Israel if the coun-
try doesn't deal differently
with issues relating to its
situation with the Arabs.
"It's not enough to have
individual companies, in-
dividuals and philan-