Treasury estimates damage of European boycott

Europe

Cancellation of Israel's associate EU status would affect investments and exports, and could cost 4% of GDP.

In 2013, the Ministry of Finance chief economist prepared a secret report that attempted to estimate the effects on the economy of a European boycott with various degrees of severity.

The report states, "If the European Union (EU) employs more severe measures in its policy against Israel, the damage to the economy is liable to be extremely significant." Under the most moderate scenario - marking goods from the territories and a voluntary boycott - the damage to Israeli exports will amount to NIS 1 billion a year, and GDP will shrink by NIS 500 million."

500 Israelis are liable to lose their livelihoods under the most moderate scenario. Under the next scenario a full boycott by the EU of goods from the territories and a minimal boycott of goods from within the 1967 lines the damage to exports jumps to NIS 4.37 billion and the damage to GDP rises to over NIS 2 billion, while unemployment will increase by 1,800.

Under the most extreme scenario, including cancellation of the associative agreement between Israel and the EU, a complete halt in direct investments in the Israeli economy, and the absolute elimination of Israeli exports to Europe, the cumulative damage to exports rises to over NIS 80 billion, and the damage to GDP will be over NIS 40 billion (4% of GDP), while the number of jobs lost will be 36,500.

Published by Globes [online], Israel business news - www.globes-online.com - on July 22, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

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