Business
Israel Bonds prosper in economic revolution,
but has their role diminished?
Israel Bonds investments
have helped modernize
Israel's road . ports and
afrports.
.
AVI MACHLIS
Jewish Telegraphic Agency
Jerusalem
T
here are few other Jewish
organizations that can
reflect on 50 years and
boast of having raised more
than $22 billion.
But as Israel Bonds celebrates its
50th anniversary amid the dramatic
transformation of Israel's economy, it
may discover that its critical role is
gradually declining.
Israel's official position, as voiced
by Prime Minister Ehud Barak and
Finance Minister Avraham Shochat, is
that the organization still makes vital
contributions to the economy. The
Finance Ministry still factors in Israel
Bonds financing as a significant com-
ponent of international capital-raising
needs, totaling between $2 billion
and $2.5 billion a year.
However, Avi Ben-Bassat, director
general of Israel's Finance Ministry, said
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the rapidly changing economic land-
scape will likely reduce the role of Israel
Bonds in the Jewish state's future.
Private industry, which relies on money
raised from individual investors rather
than government bonds, is fueling
Israel's economy.
"We think Israel Bonds is a tool
that should still be preserved, Ben-
Bassat said. "But if we would lose this
source, I do not think the State of Israel
would have any problem raising the
sums on the open markets."
Such comments contrast with the
message Israel Bonds is disseminating
during its jubilee year.
Gideon Patt, president and chief
executive of Israel Bonds, said that
the improvements in Israel's economy
do not render the bond-raising drive
obsolete.
Even in the new, high-tech envi-
ronment, he said, Israel has enormous
spending needs in education, immi-
grant absorption and infrastructure.
"If Israel wants to maintain the stan-
dard of living and its security needs it
must double its economic capacity in
the coming 10 to 12 years," Patt said.
"The bond money is the only money
for Israel that has no strings attached.
Banks are very attuned to political
changes, but the bond is never attuned
to political changes. On the contrary,
when the situation is bad in Israel the
sale of bonds goes up."
Israeli financial officials agree that
this is the main advantage of Israel
Bonds.
"The organization has proved
itself," said Arnon Ikan, director of
foreign currency transactions at the
Finance Ministry "Especially under
adverse circumstances, it has particu-
lar importance."
Nobody denies the importance of
the massive sums of money Israel
Bonds have generated over the past
50 years, which Patt said provided 50
percent of Israel's development bud-
get. Funding, he added, was always
conditioned on earmarking the
money for civilian economic infra-
structure projects, such as roads,