ISRAEL: Diplomatic dispute with Turkey lands at Istanbul airport

 
Israel's airport security is widely admired but its stringent passenger screening has been criticized by other countries -- and by the Israeli supreme court. On Monday, some Israelis got a glimpse of what it's like on the receiving end of a harsh security inspection when they were forced to undress by personnel at an airport in Turkey.

The incident came days after relations between Israel and Turkey reached an all-time low when Turkey announced a further downgrade of diplomatic ties, including expelling the outgoing Israeli ambassador to Turkey and suspending military and economic dealings. The Turkish moves followed Israel's rejection of a Turkish ultimatum for Israel to apologize for last year's deadly flotilla raid.

After the airport incident, Israeli officials accused Turkey of trying to lead Israel into an open confrontation.

Some saw the episode as retaliation for similar treatment of Turkish citizens by Israeli authorities the evening before. But an Israeli foreign ministry official admitted that Turkish citizens were routinely humiliated at Israel's Ben-Gurion airport.

Intelligence Minister Dan Meridor told Israel Radio on Monday that he hoped Turkey and Israel could find a way to fix the damage to their relationship but said that would not be easy. Once a strong strategic ally of Israel, Turkey now seeks closer ties with Egypt, another regional asset threatening to slip away from Israel.

Speaking at the International Conference on Economic Regional Cooperation in Tel Aviv, Bank of Israel Governor Stanley Fischer warned that a disruption of trade with Turkey could prove "expensive" for Israel.  Israeli exporters are already expressing concern; Turkey is Israel's sixth-largest export destination.

Some defense analysts speculated that the rift could hinder Turkey's fight against Kurdish militants. Turkey has recently acquired substantial military gear from Israel, including armored vehicles, upgraded tanks and unmanned aerial vehicles. That equipment already has been delivered but the usual post-sale agreements for maintenance and parts are now iffy.

-- Batsheva Sobelman in Jerusalem

Photo: A Turkish Airlines jet. Credit: Wikimedia Commons

SYRIA: The economic consequences of social unrest [Video]

Editor’s note: This post is from analyst Lahcen Achy, below left, with the Carnegie Middle East Center. Neither the Los Angeles Times nor Babylon & Beyond endorses the positions of Carnegie analysts, nor does Carnegie endorse the positions of The Times or its blog.

Popular protests in Syria over the last five months have caused a notable decline in the country’s economic indicators. Gross domestic product is expected to contract by 5% for the current year, after International Monetary Fund estimates had originally predicted 3% growth before the protests erupted.

The budget deficit has increased due to expanded social expenditure and shrinking tax revenues. The economic and security situation is expected to deteriorate further as the unrest continues to grow. The international community may resort to additional sanctions affecting the private companies and government institutions that form the backbone of the Syrian economy. This could throw the country into an unprecedented economic and fiscal crisis.

Tourism, which accounts for about 12% of Syria’s GDP and directly contributes more than 10% of total employment, is one of the economic sectors most damaged since the protests began. Over the last three years, Syria has spent huge sums to increase its ability to receive Arab and foreign tourists and improve the quality of services provided to them. Tourist numbers rose from 6 million visitors in 2008 to 8.5 million in 2010, an increase of more than 40%. This activity supplied Syria with about $8 billion of hard currency over the same period.

ISRAEL: Protest tents launch Israel's summer of discontent

Two weeks into Israel's housing protest, demonstrations are sweeping the country. More than 150,000 people took part in protests nationwide calling for socioeconomic change and demanding "social justice." And what started with the odd tent has become the summer of Israeli discontent.

Young Israelis feel they are victims of the country's strong economy and decades of security-heavy priorities. The Israeli economy boomed, but its young middle class has bombed, caving under price hikes, taxation and increasingly privatized public services such as health, education and child care. The leadership admits there are problems but say protesters' complaints are exaggerated.

The economic trend was no accident, protesters say, but a calculated economic ideology coupled with conservative politics. Decentralizing Israel's economy was necessary but privatization has run amok, critics say, with the government outsourcing its commitments to the majority of its citizens, who now demand government reaffirm its vows to the greater public.

"Re-vo-lu-tion!" cries bounced off walls in Tel-Aviv, Beersheva, Haifa and other towns Saturday night. 

So here's a Revolution 101, an incomplete dictionary to the cousin of the Arab Spring: the Israeli Summer. Naturally, there are millions of possible definitions.

A is for Arabs. It took some time, but Arab citizens of Israel joined the protests. Chronic under-budgeting has left many in the lower rungs of the country's socioeconomic ladder with more than half below the poverty line and a shortage of 60,000 housing units in the sector comprising 20% of Israeli society. A rare opportunity to join a social cause striving to be inclusive, not exclusive.

B is for Babies. Baby products and child care are too expensive, keeping women from professional development and young families in constant debt. Thousands marched with strollers and baby carriages last week, demanding, among other things, work schedules that are better synchronized with child-care calendars so parents can actually work.

C is for Competition. There is none, protesters say, that's why prices are high. 80% of the nation's economy is controlled by a few dozen powerful family empires who prevent real competition.

ISRAEL: Natural gas deposits stir waters with Lebanon

Five years after what Israel calls the Second Lebanon War, the border seems quieter than ever -- although this could always change.

The war prompted the Israeli military to dust off routine drilling of forces and other things neglected due to budget cuts and the assumption that "those kinds of wars" were gone. It also showed that the civilian population was the new front line, after a third of the country was pinned down in bomb shelters for a month. 

Hezbollah has turned a corner too, Israelis observe, improving its capabilities and replenishing its arsenal above and beyond what it had in 2006, which calls into question the effectiveness of U.N. Security Council resolution 1701, which ended the war and was supposed to curb such armament.

Fifty tons of explosives could be dropped on Israel in the next war, Defense Minister Ehud Barak told a parliamentary committee recently, quickly adding that Israel could retaliate with 1,500 tons of its own extremely precise ammunition.

But at present, Israel and Lebanon are fighting a different kind of war -- over maritime borders and economic issues. If past maritime disputes were mostly about fishing rights, today's squabble concerns a far bigger matter -- billions of dollars worth of natural gas.

ISRAEL: Is the Arab Spring spreading to the Jewish state?

When the protest for affordable housing began, some dismissed the campaign as a "Woodstock" of college kids on vacation. By the time Saturday night rolled around, tens of thousands demonstrated in Tel-Aviv and what started as a students' summer protest became a nationwide push for change and a political headache for Prime Minister Benjamin Netanyahu.

A few months back, citizens' protests targeted the pricing of specific commodities like gasoline, water and cottage cheese. Now, protest is everywhere. Students are camping out in the streets in tents. Dairy farmers are blocking roads with cows. Doctors are striking, the head of Israel's medical association is on a hunger strike. The latest is a Facebook call not to show up for work on Aug. 1.

Israel's economy is strong, the public is constantly told; the country has money, the economy is growing.

Then why is everyone angry? First of all, because they can be. A quick look around the neighborhood has reminded people they have power and can use it to rework priorities and redistribute resources.

Beyond that, some numbers (from a story by Sever Plocker, a financial journalist): Over the last five years, the average income in Israel has increased by 17% and food prices by 25%. Water rates have gone up 40% and gasoline by 23%. The average apartment price has gone up 55% and rent by 27%.

That last item, housing, sparked the protest sweeping the country. But it's not only the last five years, Plocker writes. Real wages haven't increased since 2000, while companies traded on the stock exchange have grown by 300%. The rich are getting richer, the middle class is treading water and "this unusual prosperity has passed it by," Plocker noted.

ISRAEL: Arabic radio station campaigns against killing of women

A young woman turns up dead. Her husband is held for a few days, then released. Police have no other suspects. Murmurs of "family honor" are heard -- and the news races on, reluctant to deal with a painful issue: the killing of women in Arab society.

Until now.

A few years ago, Duah Fares was within reach of a dream as a finalist in a local beauty pageant. Not everyone was proud of the groundbreaking model who changed her name to the less ethnically conspicuous "Angelina." As the swimsuit stage of the competition neared, displeasure over the break from tradition became heavy pressure and Fares withdrew from the competition when it became clear that her life was in danger.

Her younger sister, Jamila, was also an aspiring beauty pageant contestant; she too changed her name to the more cosmopolitan "Maya" before taking a safer path of marriage and a job in a shop. It wasn't safer. Maya, 21, is the last statistic in a grim tally.

Most of the 35 women murdered in Israel since the beginning of 2010 were killed by close relatives. Sixteen of them were Arab women, sadly over-represented given that their community makes up 20% of Israeli society.

PALESTINIAN TERRITORIES: Financial crisis causing public concern

The Palestinian Authority has until July 26 to come up with a plan on how it intends to pay salaries, without interruption, to more than 150,000 of its civil and military personnel. Otherwise, the employees may go on an open-ended general strike.

This was the warning the Union of Public Employees conveyed to the Palestinian Authority on Monday following a meeting of its board members to discuss the authority's financial crisis and its claim that it may not be able to pay salaries anymore.

And the members of public employees union, who have lately been receiving late or half salaries and who took bank loans during a preceding period of relative financial stability, are also up in arms, worried about whether next month's salary will be paid and if they will be able to make the loan payments.

After four years in office during which he was able to pay salaries on time, Salam Fayyad, the Palestinian Authority prime minister and finance minister, has publicly declared that he may not be able to pay salaries. Last week, President Mahmoud Abbas made a similar announcement.

ISRAEL: Students protest soaring rent prices

As the peoples of the region wage protests over rights and distribution of resources and power, young adults in Israel have also been taking to the streets in recent days. And they're staying there, they say, until somebody does something about the cost of rental housing.

In Tel Aviv, the only thing more scarce than legal parking is affordable housing. Coveted by students and many other young Israelis, the seaside culture and business hub is overflowing with people looking for a place to live. Buying is out of the question, and the cost of renting is as high as the flats are small and scarce. 

Last week, students took to the streets to protest the housing shortage and high prices, turning Tel Aviv into a huge campground as dozens of tents were set up, complete with makeshift facilities, kitchens and, of course, a lot of media attention.

Maybe it's that protest is in the regional air. Or maybe members of the usually blase public were emboldened by a recent campaign to boycott cottage cheese that succeeded in bringing powerful dairy companies to their knees and lowering prices. Either way, tent towns are sprouting up all over, along with demands for a housing solution.

ALGERIA: Postponing economic therapy is playing with fire

Editor’s note: This post is from analyst Lahcen Achy, below left, with the Carnegie Middle East Center. Neither the Los Angeles Times nor Babylon & Beyond endorses the positions of the analysts, nor does Carnegie endorse the positions of The Times or its blog.

In recent weeks, Algeria’s government has taken a series of steps to improve the economy and reduce public anger over its poor political and economic performance. The government amended the 2011 budget law, approving a 25% increase in public spending.

The country also launched a new round of negotiations with the European Union aimed at postponing Algeria’s obligation to lift customs barriers on European imports. Policymakers also took various measures to improve the country’s business environment and stimulate private investment.

Although these moves may suppress the potential risk of short-term popular unrest, they fail to address the structural flaws in Algeria’s economy. Its excessive dependence on global oil and gas prices, along with the absence of any credible strategy for economic diversification, present clear mid- to long-term challenges.

This failure to use available resources today to develop competitive economic activities outside the fuel sector is exposing Algeria to serious dangers in the future. If the price of oil suddenly drops below $100 — which is plausible — it will be impossible to maintain the current pace of government spending without tapping the country’s sovereign wealth fund, known as the Revenue Regulation Fund, and then resorting to foreign loans.

On the other hand, sharply reducing government spending to limit the budget deficit could fuel popular anger and throw the country into a cycle of social unrest. Even if fuel prices stay high, however, Algeria’s oil and gas reserves could be depleted within 20 years. Algeria’s leaders must therefore start now to seriously plan for a post-fuel economy. 

ARAB WORLD: Why social expenditure in the Arab states isn’t working

The major challenge facing Arab states transitioning from totalitarian regimes to democracy is how to manage social expenditure: that is, state spending on health, education, direct subsidies to poor citizens, cash support for poor families, pensions and social security for those working in the private sector. Even though these states face different situations, such spending shares a number of traits.

The amounts spent on social expenditures -- about 40% to 50% of GDP -- are high in the Arab states, including Morocco, Tunisia, Egypt, Jordan, Lebanon, and Syria. This means that the chances of allocating additional resources for social expenses are slim.

In addition, social spending is distinguished by low levels of competency, especially in healthcare and education -- the two sectors that capture the greatest share of social expenditure. These sectors are usually not subject to oversight and lack indicators to measure their operational efficiency. Most of the expenditures go to wages and salaries, rather than to areas such as research and development, which could help improve competency and reduce waste.

EGYPT: Foreign debt constrains economic choices

The first six months of this year have not been easy for the Egyptian economy. The political unrest that ousted the president and uncertainty over the country’s direction triggered a drop in tourism revenues, low levels of domestic and foreign investments and scarce employment opportunities in the formal private sector.

Economic growth is expected to drop from an early forecast of 5.5% to a maximum of 2% for the 2010-11 fiscal year, the country’s lowest growth rate during the past decade.

Meanwhile, government expenditures are steadily rising, following a 15% hike in civil servants’ wages and a budget increase in food subsidies to soften the burden of high prices in global markets. The government’s budget deficit for the 2010-11 fiscal year could exceed 10% of GDP, up from 7.6% projected before the unrest began.

Timeline: Revolution in Egypt

As a result, the Egyptian government is struggling to fund a gap of around $20 billion and to budget confidently for the coming fiscal year, which begins next month. There are ongoing negotiations with international institutions — primarily the International Monetary Fund (IMF) and the World Bank — as well as talks with Egypt’s traditional partners: the United States, the European Union and the Persian Gulf states.

In his recent speech on the Middle East, President Obama announced several measures to support the Egyptian economy, including the conversion of $1 billion of Egyptian debt into investments, and loan guarantees up to $1 billion to assist Egypt in entering global financial markets. Egyptian debt to the United States now amounts to $3 billion of a total of $32 billion in foreign debt. Saudi Arabia has also announced a program of loans, grants and support for investment programs in Egypt with a total value of $4 billion.

Other negotiations are underway with the IMF to obtain loans that could be worth an additional $4 billion. The G-8 has also announced a forthcoming support package of loans and investment partnership projects, which could pump nearly $10 billion directly into Egypt’s economy within one year.

MOROCCO: What a GCC membership would mean for the economy

The Gulf Cooperation Council’s unprecedented decision to invite Morocco and approve Jordan’s request to join its ranks came as a surprise to political observers in the region and outside. Since its inception, the council has been reluctant to grant membership to other states in the region.

Even though Yemen represents a natural geographic extension and strategic depth for the Gulf states, the council has always refused its membership request. It has also dealt cautiously for a decade with Jordan’s application for a free-trade zone agreement.

Political uprisings and new security concerns that surfaced in the Middle East and North Africa over the past few months explain the unexpected move by the GCC. Gulf countries are in the process of building new strategic alliances to face the Arab Spring’s ramifications on both domestic and regional politics. Yet, Morocco’s membership in the GCC does not seem to be the right option. The cost of its membership may be incommensurate with the expected benefits for both parties.