The October war in the Middle East shattered Israel's economic boom and the continuing full alert is preventing any recovery.
The October war in the Middle East shattered Israel's economic boom and the continuing full alert is preventing any recovery. Taxes have been raised and industry disrupted.
Production and services have been cutback because the continuing tension has forced Israel to keep its citizen-army in a state of full preparedness. The vast majority of the armed forces are reservists. When fighting starts, the men immediately leave their jobs throughout the country to join their detachments. Until the threat of war is reduced, few of the men can return to civilian jobs.
All forms of civilian road transport, from cars to buses and trucks are ferrying supplies to the front. As a result, there are few vehicles available to transport the ripened crops and the goods still being manufactured. The construction industry is almost at a standstill because of the lack of manpower.
With volunteers and double shifts, essential services and businesses have been maintained but manufacturers are operating far below their pre-war quotas.
The cost of the war will surpass five and a half billion dollars. To cover the debt, taxes have been increased, the public compelled to loan money to the government, customs duties have been increased, sales tax increased on luxury goods and subsidies on such staples as rice and meat have been reduced. The result is that at a time when goods have become more expensive, Israelis have less money to spend.
The best hope for economic recovery is for a return of the work force from the battlefront. That is why the current negotiations in Geneva on disengaging the Egyptian and Israeli armies are crucial to the future of Israel. Even if agreement is reached before the end of the year, it would be at least April before the economy is fully functioning again and it will be years before Israel fully recovers its economic strength.
SYNOPSIS: Transport is perhaps the most visible sign of the drastic affect the Middle East conflict is having on the Israeli economy. Thousands of vehicles have bee pressed into service transporting goods and materials to the war zones. As a result, there are fewer buses than usual and people have turned to hitch hiking. Few trucks are available for transporting civilian goods. There are fears that there will not be enough trucks to transport ripened crops to the docks and markets.
Despite the problems of transportation, there is plenty of food, with one excepting Eggs are in short supply. Queues for eggs form long before shops open and the open only twice a week. But prices have increased. There are new taxes, a reduction in subsidies for such staples as rice and meat, increased taxes on luxury goods, and higher customs duties, all in an effort to pay the estimated five and a half billion dollar war debt.
The biggest bloc to the economy is the loss of manpower. Construction sites throughout the country are practically deserted. Israel's citizen army has been in the field for two months now and even if there is quick agreement in Geneva to disengage forces, demobilisation could not be completed until April. Israel's biggest sources to foreign currency is tourism but the war has halted construction of new hotels. And fewer tourists are coming. It is estimated the drop in visitors since October has cost Israel thirty million dollars. Many hotel workers have had to be laid off.
But those laid off in the tourist industry are having no trouble finding other jobs Volunteers and double shifts have filled the gap left in essential industries by the mobilisation. But many manufacturing concerns are operating far below capacity Old men, youngsters and women have moved in to fill the void. But there simply aren't enough people to fill the available jobs. This factory near Tel Aviv builds fork lifts. Now, even though half its personnel are missing, it must also repair army vehicles. It has still managed to maintain eighty per cent of its pre-war production rate.
But some plants are almost deserted. The post-1967 economic boom abruptly ended with the October War. Whichever government is elected on December thirty first faces a massive task in rebuilding the economy. Demobilization of Israel's citizen-army will be the first step.