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OPEN page 31
STUDIO
Israel has tremendous potential
for developing new markets, even
with old enemies.
But economic strides can only
be made if all parties "sustain a
mutual level of respect," he adds.
Mr. Leventen expects Israel to
develop strong partnerships with
Kuwait, Abu Dhabi, Tunisia and
Morocco.
"I don't think many outsiders
know the degree of good feeling
that exists between Morocco and
Israel," he said. 'That kind of psy-
chological climate leads to busi-
ness and those kinds of
relationships eventually will be
forged all over the Middle East."
Dr. Carlos Zorea, a business
consultant specializing in incu-
bating, developing and capitaliz-
ing new companies, says it may
take a full generation before Is-
raeli exporters make significant
economic progress in the Middle
East.
"The governments and the peo-
ple will have to endure a process
of building contacts and trust,"
says Dr. Zorea, who holds a Ph.D.
in engineering from Israel's Tech-
nion.
Dr. Zorea says these contacts
will lead to commercial relation-
ships and ultimately to business
transactions.
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"We need to be patient," Dr.
Zorea adds. "This is something
that will take many years and we
may not see the fruits of it in our
generation. This generation is the
same one that went to war with
each other many times, and it's
very tough to overcome the loss-
es and pain.
"But time is a healer ... I don't
have any doubt that we will see
progress. And some of the rela-
tionships will eventually be very
fruitful for both sides.
"Twenty years ago, we could
see only war. I don't care if the
volume of business isn't going up
in an explosive way because one
thing is for sure: The more it de-
velops, the less chance there is
for war."
Despite his long-term progno-
sis, Dr. Zorea views recent Mid-
dle East peace initiatives with
great optimism. He says five
years ago, few private or institu-
tional investors around the world
were interested in Israeli com-
panies; they feared the instabili-
ty of the region and the risk of
commercial upheaval that might
result in times of war.
But times are changing. As a
sense of political security slowly
emerges in the region, Dr. Zorea
says Israeli exporters will expe-
rience "a broader opening to fi-
nancial markets." As Israel
establishes diplomatic relations
with new countries, new oppor-
tunities will arise, he says.
Israel recently established
diplomatic relations with India
and China.
Because Israel has a limited
consumer market, its manufac-
turing firms must reach out to
these and other emerging mar-
kets. Countries in Israel's own
back yard also will provide new
sales opportunities. As Arab
manufacturers convert from pro-
ducing war tools to domestic con-
sumables, they will become
customers for Israeli durable
goods like machine tools and oth-
er manufacturing systems.
A country like Egypt which has
a population of over 60 million, Dr.
Zorea says, is an example of a
large potential market for Israeli
food and textile companies.
Middle East peace will lay the
groundwork for Israel's long-term
economic stability. The country's
new-found ability to buy cheap-
er oil is one significant benefit of
a regional peace accord.
Mr. Leventen says Israel like-
ly will import oil directly from
Saudi Arabia across the Gulf of
Aqaba. By scaling back on im-
ports from the North Sea region,
Norway and Mexico, the Israeli
government will save between $1
and $1.50 per barrel in trans-
portation costs.
This savings will further fuel
the Israeli economy and help
fund planned infrastructure pro-
jects like joint water pipelines and
highway systems. Such projects
will help solidify Israel's position
as a leader in Middle East com-
merce.
❑
So Long
To This Tax
The Israeli Cabinet has approved
Finance Minister Avraham
Shohat's proposal to revoke the
capital-gains tax which the Knes-
set enacted only a few weeks ago.
However, the trading on the
Tel Aviv Stock Exchange the day
of the revocation was final proof
that the tax had little to do with
the malaise on the stock market.
Prices declined by more than 3
percent.
Mr. Shohat said that despite
his proposal, he still thought that
a tax on income from capital is
just as appropriate as a tax on in-
come from work.
Bowing to political pressure,
Mr. Shohat decided to cancel the
tax and he expressed his disap-
pointment that such a tax will not
be imposed again for many years
because it is so politically
charged. ❑