Geography
The modern State of Israel was established in 1948. It is located on the southeastern shores of the Mediterranean Sea at the crossroads of three continents Europe, Asia and Africa.
In the north, Israel is bounded by Lebanon and in the south by Egypt’s Sinai peninsula. On the west it runs along the Mediterranean shore and the Kingdom of Jordan borders on the east. At the southern tip of the Negev desert it opens to the Red Sea at the Gulf of Eilat.
The land area of Israel (excluding Gaza and the administered territories of Judea and Samaria) is approximately 22,000 square kilometers. The country has often been likened in size and shape to New Jersey.
Despite limited water resources and varying climactic and soil conditions, agriculture has played a major part in the economy of the State, particularly in its early years, and large areas have been devoted to farming. However, with increasing urbanization and industrialization, agricultural lands have increasingly been converted to housing and industrial uses, particularly along the coastal plain.
The Negev Desert constitutes over half of the pre-1967 land area. Like the rest of the country, it is limited in oil and mineral resources but has rich chemical deposits in and around the Dead Sea, where flourishing bromide and potash industries exist.
Key cities
Jerusalem - Israel’s capital and the location of the Knesset and numerous historic and religious sites (population: 720,000)
Tel Aviv -major population, financial, commercial and industrial center (population: 378,800; Tel Aviv metropolitan area: 1.2 million)
Haifa -principal port city in the north of the country (population: 268,000)
Rishon Le’Zion - located on the central coastal strip, just south of Tel Aviv (population: 219,000)
Beersheva - the largest city in southern Israel (population: 185,500)
Population
The population of Israel is approximately seven million. Jews comprise approximately 5.23 million, the Arab population (principally Moslems) approximates 1.35 million, and other religions approximate 200,000. The population has grown rapidly since the beginning of the 1990s, aided by the arrival of a million immigrants, primarily from Russia and other former USSR countries.
Industry
High technology industries have taken a pre-eminent role in the economy, particularly in the last decade. This is partly due to the influx of technological talent from the former Soviet Union and elsewhere. Israel’s limited natural resources and strong emphasis on education have also played key roles in directing industry towards high technology fields. As a result of the country’s success in developing cutting edge technologies in software, communications and the life sciences, Israel is frequently referred to as a second Silicon Valley.
Another leading industry is tourism, which benefits from the plethora of important historical sites for Judaism and Christianity and from Israel’s warm climate and access to water resources. The diamond industry is also of importance, though it has been impacted by changing industry conditions and by the expatriation of certain industry activities to South and East Asia.
Political system
Israel is a parliamentary democracy with a 120-member Knesset as the directly elected legislative body. Knesset seats are assigned in proportion to each party’s percentage of the total national vote at elections. The head of the political party receiving the most votes is typically called upon by the President to form a government. This is usually accomplished with the help of other parties.
A law which provided for direct election of the prime minister was in effect for elections from 1996 to 2001. Currently, the head of the party that forms a government becomes the prime minister.
In late 2005, former Prime Minister Ariel Sharon resigned his position as leader of the Likud party (the ruling party from 2003 to 2005) to establish Kadima. This brought about early elections in which Kadima was voted as the new ruling party. Prior to elections, Ehud Olmert, replaced Sharon as head of the Kadima party following a severe deterioration in Sharon’s health. A Kadima-led coalition government has been in power since March, 2006.
Key government officials as of August 2006:
President Moshe Katzav
Prime Minister Ehud Olmert
Finance Minister Avraham Hirchson
Bank of Israel Governor Stanley Fisher
Currency
The New Israeli Shekel (NIS) is the official currency of Israel. On August 15, 2006, the representative exchange rates for the NIS were as follows: US Dollar = NIS 4.371 EURO= NIS 5.558 100 Yen = NIS 3.749 Currency Basket= NIS 4.945
International trade
European countries have been traditional trading partners due to their proximity. A free trade agreement with the European Union (since 1975) has further bolstered ties to western Europe. Eastern European economic relationships have expanded rapidly following political changes in those countries in recent years. Various free trade agreements are under negotiation.
Israel has a close trade relationship with the United States, its leading trading partner. A free trade agreement has been in effect since 1985.
Trade with Japan, China and other Asian countries has resumed at a brisk pace following the 1997-8 Asian financial crisis which had a temporary negative impact on the growth rate. Trade with Arab countries in the Mideast is at very low levels. Political changes and the demise of the Arab boycott have helped open limited trading contacts with certain neighboring nations with which no direct trade links previously existed.
Investment incentives
Israel has traditionally offered large incentives to attract both foreign and local capital. Investment projects granted Approved Enterprise status entitle companies to substantial financial support from the government in the form of reduced taxation, investment grants or guaranteed loans. These incentives have been instrumental in motivating numerous international companies, such as Intel, Motorola, Berkshire Hathaway, Computer Associates and Cisco, to make direct investments in production and/or R&D facilities in Israel.