The Israeli government recently decided to exempt seven housing companies from the obligation to publish tenders. I think that this decision is liable to cause unnecessary tension with the American government and with entities in the US economy that already believe that the Israeli government discriminates against them.
The recent marking of America’s Independence Day on July 4, is a good opportunity to review what is known as the “special relationship” with the US and examine its importance from an economic perspective. It is not for nothing that Israel is the largest recipient of US aid among all the countries of the world.
There is more than one reason underpinning the “special relationship”. One of its main foundations is, without question, was has been called “common values”: democracy, the rule of law, the status of women, and unequivocally - the Bible. The second factor is Israel’s standing as a strategic asset. With the rising threat of Islamic fundamentalism and global terrorism, the strategic alliance between America and Israel has grown in importance, even if its foundations are less sturdy than the common values. Another factor, which should not be ignored, and whose influence touches on all the other elements, is the Jewish community, especially AIPAC.
Until 1967, there was almost no official substantial US aid for Israel. In 1970, the Jackson Amendment allocated $300 million as a loan for military aid. This development was, to a great extent, the result of the great victory in the Six-Day War. Aid increased further after the Yom Kippur War. Then US Secretary of State Henry Kissenger and President Richard Nixon understood that the war opened a chance for peace between Israel and Egypt, but only on the condition that Israel was strong.
After Camp David in 1978 and the signing of the peace treaty with Egypt, an agreement was reached with the US for a further increase in aid. From 1984 onwards, Israel has been able to convert all aid from loans into grants, which has had a crucial effect on Israel’s balance of payments.
In 1985, the two countries signed a free-trade agreement, the first of its kind, which became the model for subsequent agreements. The level of bilateral trade grew substantially, but until a few years ago, Israel’s balance of trade with the US, as with most of the countries of the world, was negative, with imports exceeding exports. This situation has reversed.
In 2006, Israeli imports from the US totaled $6 billion, while Israeli exports to the US totaled $18 billion - triple imports. This has created for the Israel America Chamber of Commerce and Industry (AmCham) and myself, as its president, a problem, especially when the trade situation between Israel and Europe is the opposite, i.e. imports are several times the amount of exports.
The Americans believe, and in my opinion, justifiably, that at least as far as government projects in Israel, or government procurements and public tenders, are concerned, they deserve a special relationship.
We too, at AmCham, attach great importance to promoting US trade in Israel and giving preference to US products over other imported goods. It could be expected that ministers and MKs ought to be driven in Made in USA cars, if only because of the symbolism.
Globalization and the technology revolution have brought ever closer ties between the economies and companies of the two countries. For our part, we should strive for complete independence, alongside the support of American values, strategy, and if necessary, economics as well. But the aid should not be denigrated, and not for the political and values reasons that underpin it. US aid is one of the key aspects of the “special relationship” between the two countries, which are a fundamental strategic asset for Israel.
Zalman Shoval is president of the Israel America Chamber of Commerce and Industry.
Published by Globes [online], Israel business news - www.globes.co.il - on July 8, 2007
© Copyright of Globes Publisher Itonut (1983) Ltd. 2007