while he, as leader, has yet to show a
tangible political achievement that
makes the suffering worthwhile.

CRISIS HARMS ISRAEL ECONOIVIY

Different Agendas

AVI MACHLIS

Topping the agenda of the Washington
meetings is the need to end the violence
and shore up the still-largely unimple-
mented agreements made last month at
the Sharm el-Sheikh summit. Those
agreements included ending the violence
and finding a path back to peace talks.
Beyond this, however, the two sides
appear to have very different goals for
their talks with Clinton.
Reportedly included on Barak's agen-
da is a desire to revise, in light of the
ongoing violence, some of the security
arrangements discussed at the Camp
David summit in July. Barak, who is
scheduled to meet with the president on
Sunday, is also said to have reconsidered
his previous willingness to consider
granting the Palestinians control over
Arab neighborhoods in eastern
Jerusalem.
Arafat, slated to be in Washington on
Thursday, is continuing to press for an
"internationalization" of the peace
process so that the United States will no
longer have the sole role of mediator in
the talks.
As part of this drive, Arafat is also urg-
ing that a U.N. peacekeeping force be
deployed in the West Bank and Gaza
Strip.
Israel adamantly rejects the idea, and
Barak this week denied reports that U.S.
officials had floated such a proposal with
Israel. And U.N. Secretary-General Kofi
Annan said Tuesday that the United
Nations would need Israel's agreement
before it could deploy the peacekeepers.
While the number of clashes in the
territories has dropped this week, the
death toll among Palestinians continues
to mount daily.
And at the same time, attacks on
Israeli targets took on a new dimen-
sion this week, when a Palestinian
attempted to blow up- an Israeli navy
ship ofi the coast - the G, za Strip
what the ns , y called a fumbled suicide
bombing. The man blew up his fish-
ing boat and himself late Monday
night when Israeli sailors on a patrol
boat approached to investigate.
And on Tuesday, Palestinian gun-
men fired shots at an Israeli bus bring-
ing children home from school near
the Jewish settlement of Kfar Darom
in the Gaza Strip. Bullets hit the bus,
but no one was injured.

Jewish Telegraphic Agency

Finish The Job?

Given such continued violence, can
the three leaders overcome their indi-

vidual weaknesses and pull the tor-

Jerusalem

W

ith images of violence in the
West Bank and Gaza Strip
flashing across television screens
around the world, it did not take
long for Israel's tourism industry to
start feeling the pinch.
Hotel occupancy has plummeted at
lightning speed, Ben-Gurion Airport is
deserted and taxi drivers and tour
guides have lost a big chunk of their
income as cancellations of planned trips
have flowed in.
Despite the impact on tourism and
other industries, especially those that
rely on Palestinian laborers, the crisis is
unlikely to harm economic growth in
the Jewish state this year because there
is often a lag between political instabili-
ty and economic fallout.
Because the crisis broke out at the
beginning of the fourth quarter of
2000, its impact on this year's overall
statistics will be limited. But, say
business experts, next year could be a
different story.
"The tourism industry is always the
first industry to be affected all year
round from the geopolitical situation,
and safety and security are the main
pillars for the industry," said
Abraham Rosental, chairman of the
Israel Hotel Association.
This was expected to be a record year
for the tourism industry, which makes
up about 3 percent of the Israeli econo-
my. Israel was on course for 3 million
tourist arrivals, which Israel had pro-
moted as part of the Christian millen-
nial year
Now, at least 10,000 of the hotel
industry's 35,000 employees are at risk
of losing their jobs, as are many more
workers in other tourism-related fields.
T.;-1. the short term, Rosental's only
hope
j- ews around the world
Neill choose to show solidarity with
I -;rl'el by visiting.
We hope we will see a movement of
more Jews, which is why we are send-

aired region back from the abyss? This
week, only diehard optimists were pre-
pared to subscribe to this prospect.
These optimists argue that Clinton,
freed from all considerations linked to

the elections, will be able to be more
creative, and if need be, tougher
toward both sides.
They assume that America's presi - .
dent-elect would be only too pleased

ing a big delegation to the G.A.," he
said, referring to the Jewish federation
movements annual gathering, the
General Assembly, scheduled to begin
this weekend in Chicago.
But even if large numbers of Jewish
tourists suddenly plan solidarity pack-
ages with Israel, it will not be able to
prevent the crisis affecting other areas
of the economy. Other industries
already hit hard include construction
and agriculture.
Even though these sectors have
increasingly relied on foreign labor dur-
ing the past few years, Palestinians still
made up a big part of the workforce.
Now, with the West Bank and Gaza
Strip sealed, many kibbutzim and other
agricultural settlements have no means
of harvesting, and building contractors
are often without enough manpower to
complete projects.
All of this has happened just as the
Israeli economy was finally pulling out
of a four-year economic slowdown.
Gross domestic product, which
measures all goods and services pro-
duced in an economy and is the main
indicator of overall economic health —
has grown about 2 percent in each of
the last three years. This year, just
before the crisis broke out, Israel's
Central Bureau of Statistics estimated
the economy would grow at a robust
rate of 5.8 percent.
But late last month, when the gov-
ernment presented its budget and eco-
nomic forecasts for 2001, it lowered its
projections for economic growth next
year from 5 percent to between 4 and
4.5 percent.
At the same time in anticipation of
massive layoffs in tourism and other
industries, it raised unemployment fore-
casts from 8.1 percent to 8.4 percent.
Oded Tira, president of the Israel
Manufacturers Association, said reduc-
ing imemployment will become more
,i is f
if the crisis begins to eat away
at economic growth.
Some economic officials add - `hat
Israel should count its': '.e.F.F ...rigs. The
economy is in better shape than ever

to give Clinton his full moral support
to finish the job of Israeli-Palestinian
peacemaking — rather than face the
prospect of inheriting a potentially
explosive situation in one of the
world's most dangerous flashpoints.
Where Barak is concerned, the opti-
mists believe that his sole chance of
political survival is to go to the elec-
torate with a peace treaty, and that this

before, with strong growth and low
inflation of about 1 percent.
"This does not mean we will not be
affected if the unrest continues," said
Avi Ben-Bassat, director general of
Israel's Finance Ministry. "But we are
entering this period with a stronger
economy than ever before, and that
will enable us to endure more easily:"
On Monday, the Tel Aviv Stock
Exchange inched higher for a fourth
straight session, a period in which the
index of the top 100 stocks climbed a
total of 8 percent to 498.8.
But the index was still 10 percent
lower than the day the clashes started
on Sept. 28, and traders say that for
the first time in years, regional insta-
bility has become a key factor in the
stock market.
According to conventional wisdom
in the business sector, Israel's high-tech
industry, which has been the engine for
economic growth in recent years, will
have a greater ability to withstand polit-
ical volatility.
The biggest sign of this came on the
October day that President Bill Clinton
announced a truce in the Egyptian
resort of Sharm el-Sheikh. The same
day, Marvell Technolog, a communi-
cations equipment company from
California, announced that it would
acquire Galileo Technology of Israel for
$2.7 billion in a stock deal.
However, there are already signs of
wealmess in the industry, which has
been considered more affected by senti-
ments on the U.S. NASDAQ stock
exchange than by the political ups and
downs of the region.
Jonathan Katz, chief economist at
Nessuah Zannex Securities, a Tel Aviv
brokerage firm, said an open-ended
conflict will put a damper on overall
consumer spending, which accounts for
about 65 percent of the GDP
"This is much more significant than
high-tech," he said If there is gloom
and pessimism, people will certainly
shop less and go less to, malls and
restaurants. They will also be more
wary of taking on increased debt or
noergages when their core perma-
nent income is uncertain and its hard
to set the light at the end of the tun-

will drive him to cut a deal with Arafat.
But is Arafat still interested in a
peaceful resolution of the conflict?
The optimists say that this may be the
only way for him to remain as the
leader of his people.
The intifada, now in its sixth week, has
unleashed new and potent forces within
the Palestinian community; including

TALK on page 16

•

11/1

2006

