MR
11.04.10
Israel's Shock Doctrine
Shir Hever and Shlomo Swirski Interviewed by Lia Tarachansky

Shlomo Swirski, Economist, Adva Center: The government cut its yearly budget for four consecutive years.  The cuts were very severe.  They hit the school system, universities, the health system, and, more than anything else, the social security system.  So, within two years the level of the poverty rate for families jumped from 17 to 20%.

Shir Hever, Economist, Alternative Information Center: Poverty and inequality in Israel are the highest in the developed world.  The only country that has a higher GINI coefficient than Israel -- the GINI coefficient measures the inequality of income -- is the United States.  The OECD is worried about the high level of inequality and poverty in Israel although the policies that increase that inequality and poverty are the very same policies that the OECD seems to favor.  Israel started to implement neoliberal policies in 1985, following a very deep economic crisis in Israel.  The rate of adoption of these policies was gradual, and the rate of liquidating the Israeli welfare state has taken many stages since 1985, but, since the second Intifada, the rate has increased very dramatically.

Shlomo Swirski: In this country, it was introduced by bipartisan agreement between the two major parties, Likud and Labor.  That is important to know because ever since both the Likud-led government and the Labor-led government have used the same kind of macroeconomic policy.  You can use the Naomi Klein thesis in the Israeli case to explain at least one instance, and that is the second Intifada.

Shir Hever: In light of this combination of fighting, bloodshed, and economic crisis -- and the state of shock for many Israelis who believed that the Palestinians would be forced to accept any deal offered to them -- the government had a very convenient ground to impose neoliberal policies on the population.  In fact, that was exactly the rhetoric that they used: they said, "We're now in a state of crisis, so everyone has to tighten their belt."  The idea that Naomi Klein talks about in her book The Shock Doctrine was already visible in 1985, the beginning of these policies, because the economists who wrote the stabilization plan for 1985 to reform, taking Israel to a new road to neoliberalism, away from the welfare state, have written in their own diaries, their own journals, that they had the plan to implement these policies long before 1985 and used the economic crisis as an excuse to push forward these reforms.  So the reforms were not really tailored to the crisis.

Lia Tarachansky: According to the OECD review, the two populations with the largest poverty rates are the Arab citizens of Israel and the Jewish Ultra-orthodox.  In the case of the Arab indigenous population in Israel, major contributors are discrimination and the lack of government investment in development and education. . . .  However, this conclusion is misleading as the statistics the review used carefully excluded the Palestinians in the occupied territories while including the Jewish settlers there.  An internal opinion published by the OECD noted that the statistics Israel provided are misleading but went ahead and published the misleading statistics anyway. . . .

Shir Hever: Israel has become the fourth biggest exporter of arms in the world.  However, two of the three biggest exporters of arms in the world are already members of the OECD, so perhaps that is a sensitive topic for them to mention in their report, but, if you talk about military exports as proportion to the size of the economy, then Israel is the biggest exporter of weapons in the world.  That means that the Israeli business model -- the business model of the Israeli economy you could say -- is constant conflict.  Peace would not be good for the Israeli economy, at least for many large sections of the economy, and would have an immediate negative impact on Israeli exports.

Lia Tarachansky: When he delivered the first economic review of Israel, OECD Secretary General Angel Gurría congratulated Israeli Prime Minister Benjamin Netanyahu for the neoliberal reforms he had already implemented in his previous role as minister of finance and noted that Israel would be a welcome addition to the OECD.  Since the process began, Israel has now passed 18 review stages that examined various aspects of its economy.  Next week, the final decision on its acceptance will be taken by a committee of ministers of all the member states.  They will decide whether the issue of the occupation is significant enough to prevent Israel from joining and becoming the 31st member of the OECD.


This video was released by The Real News on 10 April 2010.  The text above is an edited partial transcript of the video.
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