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4,1

Oblivious To The Euro

Israel is hardly noticing as Europe gears up to merge
its currencies.

PINCHAS LANDAU SPECIAL TO THE JEWISH NEWS

course, it might be the fact that
Union only encompasses 15 the European banking industry
countries, with roughly 350 will have to spend, on a conserv,
million inhabitants and an ative estimate, no less than $10
economy larger than North Amer- billion over the next three years
ica's. It's also true that this geo- getting its systems ready for the
graphic, political and economic single currency.
That's just banking, and that's
bloc is by far Israel's largest trad-
ing partner, especially in terms of without that other minor software
things that matter most to ordi- problem, known as the millenni-
nary people, such as cars, vaca- um issue, i.e. what happens to
computer systems when the year
tions and cellular phones.
And it's true that the EU is well changes from '99 to 2000, a dial-
advanced in its plan to introduce lenge that ordinarily would drive
a single currency which — at least hundreds of local software com-
in Germany, France, Denmark panies to find out all about yet an-
and the Benelux trio -- is due to other prospective bonanza. And
begin circulating on Jan. 1, 1999. yet, the Israeli economy will wake
Yet while this unprecedented up to the euro eventually, much
project dominates political debate, like it did to the creation of the
business discourse and financial EU's Single Market in 1992, but
planning across the entire conti- it will probably do so far too late.
nent, none of it seems to concern Before we look into its Israeli as-
pect, let's examine briefly what
Israel.
We, after all, are not going to the fuss is all about to begin with.
"On Jan. 1, 1999, if the present
join this EMU (Economic and
Monetary Union) project, and our timetable holds," IBM's Nakamuli
powerful, stable shekel does not told the Jerusalem Post, "the Eco-
stand to be affected by it. Any- nomic and Monetary Union will
way, 1999 is a long time away, go into effect. The exchange rates
and as the time-honored Jewish of the currencies of the countries
wisdom goes, either theporitz (i.e. included in EMU will be locked—
the gentile landlord) will have permanently and irrevocably, ac-
died, or the EU will have gone cording to the plan."
This prospect alone involves
bankrupt, or something else will
turn up to save us. And, if the enormous uncertainties. -
For starters, which countries
worst comes to the very worst,
the Israeli business and financial will be included? The theoretical
sector will improvise, a skill this answer is those EU members that
country is famous for, and some- will meet the very tough criteria
as outlined in the Ma'astricht
how muddle through.
All of which explains why (a) treaty, including inflation of no
the Export Institute was
forced, for lack of registrants
(i.e. interest), to cancel a sem-
inar aimed at explaining the
impact of EMU on the Israeli
economy; while (b) the Bank
of Israel was somewhat non-
plused to receive a letter from
the EU, offering to send rep-
resentatives to discuss the like-
ly impact of the euro on
non-member countries such as
Israel. Why nonplused? Well,
because — let's be candid —
the Israeli central bank hasn't ti
actually given the euro, let
alone its impact on Israel, two more than 3 percent per annum,
minutes of thought. Nor has any- a budget deficit for 1997 of no
one else in Israel's officialdom or more than 3 percent of GDP, and
its business, banking and indus- total government debt below 60
pereent of GDP.
trial sectors.
In practice, however, no-one
However, a two-bit organiza-
tion like IBM has. It even hired knows which countries will meet
Alec Nakamuli to head a unit in these yardsticks: The 1997 data
its European headquarters in will not be available until the end
London, where he sits and pon- of this year, and the final decisio
ders over the implications of the — which will include a lot of po-
euro, and how IBM can make litical maneuvering and "creative
accounting" — will be made only
money out of it.
Not that IBM is alone in its in- in March or April 1998.
Even Germany may not make
terest — on the contrary. Of

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t's true that the European