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War wont bring economic salvation { May 6 2003 }

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Tuesday, May 06, 2003 Iyyar 4, 5763
War won't bring economic salvation

By Nehemia Strasler

The despair caused by the economic situation and the desire to see the light at the end of the tunnel has led many good people to believe that the war in Iraq will bring us out of the gloom to a great illumination. They say that Europe flourished after World War II and Israel flourished after the Six-Day War, so wars are therefore a good growth engine. But if they are right, why wait for the wars that seem to visit us every decade? We could initiate a war every three or four years, sow destruction and ruin on both sides and thus grow and flourish on a regular basis.

Unfortunately, war does not bring economic growth. It is an economic and human disaster. It kills people, destroys infrastructure and harms society and prosperity. The growth in Europe after WWII came after Europe had been destroyed, when poverty was everyone's lot, when whole cities had been wiped of the face of the earth, when tens of millions had lost their lives. Then, from that low point, Europe began to become rehabilitated in a long difficult process - and no one should yearn for that type of growth.

The Six-Day War was an extraordinary war, of a small country that suddenly became a power in its own eyes, conquered new territory, obtained oil fields and a cheap work force - and began to grow. But this memory should be refreshed with that of the Yom Kippur War, which caused tremendous economic damage and a sharp drop in the standard of living, until it deteriorated into hyperinflation.

So who said the war in Iraq resembles the Six-Day War? Perhaps it's more like the Yom Kippur War? Who said this war will be a lightning war? Who can guarantee that the United States will not become entrenched in the Iraqi desert? Who can be sure that the world will not suffer from a wave of terror? Who knows what will happen to the price of oil? And who knows how many missiles will fall on Israel and how the few remaining investors and tourists will react then?

Even if we take the most optimistic scenario, according to which U.S. President George W. Bush destroys Saddam Hussein in three days - why would this have a positive effect on the Israeli economy?

After all, our war of attrition is with the Palestinians, the killing in the territories and the terror in the cities are currently the only reason for the deepening of the economic crisis in which we are mired. The war in Iraq, even if it is successful, is not expected to halt this war of attrition.

It turns out that despite the military effort, the pinpoint assassinations, the tremendous destruction and the sharp decline in the standard of living in the territories, the IDF has not succeeded in breaking the Palestinians' spirit and they have no intentions of waving a white flag.

On the one hand, the government of Prime Minister Ariel Sharon is not even dreaming about entering peace negotiations with the other side, before or after Iraq, because any such negotiations mean the beginning of compromises regarding settlements and territory - to which Sharon does not agree.

Therefore, even if the war ends with the greatest success from America's perspective, and even if the uncertainty in the U.S. ends and it pulls out of its recession - even then the effect on Israel's economy will be minor. Because we have not touched the main problem - the war of attrition against the Palestinians.

The only positive thing about the war in Iraq is the grant ($1 billion) and the loan guarantees ($9 billion) that we will receive from the Americans. They will solve two tough problems for us - the deficit in the defense budget and the inability to attract capital on world markets. But despite the good that will do, Israel has the high expenses of its preparations for the war in Iraq and the economy is also suffering from a further drop in activity.

Thus the moment we understand that the war in Iraq will not get us out of the mud, there will be no choice but to quickly approve and implement the new economic plan, including the reforms. Even though that plan will hurt us all, and mainly those who depend on the government for their sustenance, it will prevent a harsh and cruel financial crisis that will be much harder on the weaker sectors.

A country that lives by the sword cannot simultaneously wave the social-economic flag. Israel does not have enough strength to wave both flags. Israel cannot solve the problems of poverty, the shortfall of the basket of health services, the delayed infrastructure projects and the problems in the education system when the war of attrition continues and the army's budget keeps growing.

It is impossible to sanctify the settlers in Hebron and Netzarim and all the illegal outposts and also to maintain quiet, stability, high employment and economic growth. The two simply do not go together. It is therefore the height of hypocrisy for Danny Naveh to cry out against harming the basket of health services and for Limor Livnat to oppose the dismissal of supervisors in the education system. The money they want is going to the territories, to the settlements, to the IDF's budget, security guards, the Shin Bet security service and the police - so there is not enough money to save society and the economy.

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