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imposed long curfews on Palestinian
cities to curb terrorist movements.
On the Israeli side, investments dried
up, gross domestic product per capita
fell by 6 percent over a two-year peri-
od, fewer than 400,000 tourists visited
in the first half of 2002 and unemploy-
ment was rapidly reaching.record levels
of more than 10 percent. The govern-
ment introduced a number of austerity
programs, but failed to reinvigorate the
economy or restore public confidence
in its economic policies.
On the domestic political front, the
Labor Party remained in disarray as it
struggled to find a leader and many
members called on the party to leave
Sharon's national unity government.
Defense Minister Benjamin Ben-Eliezer
bested Knesset Speaker Avraham Burg
in a disputed election for party chair-
man, but was expected to face addi-
tional opposition when Labor holds yet
another leadership vote in November.
For a time, it seemed that longtime
Labor politico Haim Ramon would
challenge Ben-Eliezer in November. In
August, however, Haifa Mayor Amram
Mitzna, a former general whose initial
interviews suggested strongly left-wing
views, emerged as a potential challenger.
More ferment was evident on the
two fringes of the political spectrum.
In March, the far-right National
Unity-Israel, Our Home bloc deserted
the unity government because it felt
Sharon was not being tough enough
on Palestinian terror.
On the left, more dovish elements
of the Labor Party and some leaders of
the Meretz Party debated breaking
away to form a new left-wing move-
ment that would focus on social jus-
tice and seek to revive the peace
process with the Palestinians.
On the religious front, the fervently
Orthodox Shas Party threatened to
withdraw from the government in
May unless Sharon met their funding
demands at a time when the govern-
ment was facing severe budget cuts.
Unlike previous prime ministers, who
largely gave in to Shas' demands,
Sharon stared them down, firing the
Shas ministers and allowing them back
into the government only when they
agreed to vote for his budget.
Yet for many Israelis, political
intrigue and realignment seemed an
abstract concern in 5762; the main
priority merely was to stay alive.
Some pinned their hopes on the
construction of a security fence that
Sharon approved in June along Israel's
convoluted border with the West Bank.
But others warned that in the Israeli-
Palestinian conflict, not even good
fences would make good neighbors.

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