Israeli economic policy tugged by external, internal forces

JERUSALEM -- With one eye on troubled economies elsewhere and another on protests inside Israel, the government is walking a tightrope these days to balance economic and political needs.

Israeli Prime Minister Benjamin Netanyahu raised the deficit target to 3%, nearly double the government's original target. Netanyahu explained to his cabinet Sunday that this would adjust Israel to the European standard and minimize tax hikes.

Stanley Fischer, governor of the Bank of Israel and one of the world's renowned economists, disapproved and warned that Israel is at a dangerous turning point, partly due to the deepening financial crisis in Europe. Israel's economy weathered the last global recession well, but now, he says, it might not fare so well if the European economy deteriorates.

Nor should Israel count on falling back on the U.S. for guarantees, Fischer said recently at an economic policy planning forum. "There is a problem with our rich uncle today: He is not so rich and not as friendly" as last time," Fischer said, urging the government to set a lower deficit target, cut expenditures and pass a responsible budget.  

In recent years, Israel has adopted a two-year budget. This policy, spurred by finance minister Yuval Steinitz, was designed to streamline expenses and increase governmental stability by sparing the annual ritual of political haggling that takes place as it is prepared each summer. Opponents have complained the two-year budget stifles parliamentary discussion of related policies.

The 2013 budget will be for one year only because of uncertainty that clouds the future of the Eurozone, Stenitz said.

Analysts say it is also because it is an election year, and some have criticized Netanyahu's deficit move as "election economics."

A year ago, socioeconomic protests rocked Israel for months. The protests began with a specific call for affordable housing but rapidly morphed into a movement demanding overall "social justice,"   a more egalitarian distribution of wealth and resources, and reductions in the cost of living.

The government responded with steps that included the expansion of public childcare, government dental care for children, stepped up construction of affordable apartments and increased competition in telecommunications. 

Now, social protesters are  emerging from hibernation, claiming nothing has changed. The early attempts to recapture last year's energy faltered until a series of missteps on part of the authorities, including violent arrests and police summons for activists, brought protesters back to the streets.

The protests are gaining in numbers but still lacking in cohesion. Key activists profess they are split between "reformists," who seek to improve the system, and all-out "revolutionists," who want the entire system and government out.

Activists have set up a discussion tent in Tel-Aviv, where debates will be held with hopes of clarifying the agenda. The municipality that supported the tent-town last year is less cooperative, strictly forbidding activists to camp out in the streets.

While activists seek to define their demands, a recent study shows people's feelings that they work mainly to pay taxes and bills are not unfounded.  According to the Jerusalem Institute for Market Studies, an economic policy think-tank, Israelis will work more for paying taxes than for themselves this year.

Israeli citizens will celebrate "Tax Freedom Day" on July 9, after working 192 days just to pay taxes. According to the report, Israelis have worked more days for the government than for themselves every year since 1990, with the exception of 2010-11. This year, U.S. citizens reached the turning point on April 17. 


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Photo: Israeli Prime Minister Benjamin Netanyahu attends the weekly cabinet meeting in his Jerusalem office on Sunday. Credit: Abir Sultan / Associated Press

Jewish families begin quiet evacuation of West Bank homes


JERUSALEM -- Israeli authorities began evacuating an outpost in the West Bank on Tuesday after the country's Supreme Court recently held the government to its promise to remove five houses from the Ulpana hill outpost, built on privately owned Palestinian lands in violation of Israeli law.

After holding morning prayers together, residents took their children to school and began packing quietly, helped by staff provided by the Defense Ministry. The settlers were to be moved to a temporary site on a military base two miles away, where mobile homes provided by the government have been set up. Around half of the 33 families to be relocated were moving Tuesday, and the eviction of the disputed buildings is expected to be completed by the end of the week.

The empty homes will be sealed off and the government may ask the Supreme Court for a three-month extension to allow for their physical relocation. 

Anxious to avoid scenes of violence and clashes between settlers and security personnel that might harm both settlers and government, the two sides reached an agreement: The government promised no police or army and the settlers promised a peaceful move with no children on the scene. Young right-wing activists who set up camp on the site in recent weeks with intentions of clashing with authorities were sent away. 

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Russian President Putin to visit Israel, West Bank and Jordan

Putin to visit Israel
JERUSALEM -- Russian President Vladimir Putin will land in Israel on an official visit Monday, making Israel one of the first countries he will visit since his recent election. The last visit of a Russian leader to Israel was canceled at the last minute early last year, when Dmitry Medvedev halted his plans because of a strike of Israel's foreign ministry staff. Putin himself last visited in 2005.

Israel and Russia have a wide range of bilateral issues to discuss, including tourism and cultural and business cooperation, partly because of the country's 1-million-strong Russian-speaking community, many of whom emigrated to Israel over the last two decades. A delegation of 300 political leaders, businessmen and journalists will accompany the president.

The two nations also cooperate on matters of more strategic nature such as military technology. At the same time, Russia is an ally of Israeli enemies Iran and Syria. With Russian and Israeli interests at odds on these two nations, a delicate balance act will be required during Putin's visit.

On bilateral issues, the two countries enjoy an "ongoing honeymoon," according to an analysis by Haaretz's Barak Ravid (in Hebrew) but Russia's goings-on in the Middle East harm Israel's interests at times and unnamed foreign ministry sources told Ravid this reality is unlikely to change anytime soon.

Russia may buy $50 million worth of Israeli drones and accompanying command and control centers, according to recent Russian reports. The two countries may also soon begin joint development of a new unmanned aerial vehicle. Israel may try to use this interest in an attempt to sway the super-power's resistance on regional issues, as well as Russia's interest in helping Israel develop its natural gas fields in the Mediterranean. Russia may also be interested in tapping into an emerging alliance between Israel, Greece and Cyprus to offset tensions with Turkey.

"Russia's standing in the Middle East was undermined by the Arab Spring," writes Zvi Magen, former Israeli ambassador to Russia and currently a research fellow at the Institute for National Security Studies, a Tel-Aviv-based think tank. Russia seeks new levers of influence to replace the ones it has lost, Magen writes, stressing that these would not, however, undo Russia's good relations with Iran and Syria.

Another commentator, Adar Primor, wrote that despite the "unexpected alliance" between Russia and Israel, the first won't change its basic policies in the Middle East and the latter won't exchange its alliance with the United States, "certainly not if Netanyahu's friend Mitt Romney, who has called Russia 'America's top geopolitical adversary' wins the November presidential elections."

Meretz, a left-wing movement and member of the parliamentary opposition, has called for a demonstration outside Prime Minister Netanyahu's residence Monday, about the time of his working luncheon with Putin, to protest what they called on their Facebook page "Putin's help of the massacre in Syria." Lawmakers attended a recent rally with a similar message in Tel Aviv and the U.S. Jewish daily, Forward, recently published an editorial urging Israel to "disinvite Putin" on these grounds and others.

Russian Israelis casting absentee ballots in Russia's recent presidential election were divided on their support for Putin.

During the visit, Putin will attend the unveiling of a monument, a tribute to the Red Army and the Soviet Union's role in defeating Nazi Germany and liberating the death camps in World War II. Throughout Monday, he will hold working meetings with Netanyahu and President Shimon Peres, who will also host a special evening for Putin.

The presidents will discuss strengthening relations between the two countries, the peace process, the Iranian nuclear issue, the Syria crisis and the wider Middle East, according to Peres' office.

The Russian president will also visit the West Bank, where he will inaugurate the Russian Cultural Center in Bethlehem and meet Palestinian President Mahmoud Abbas on Tuesday. The two are expected to discuss issues relating to the peace process, especially given Russia's membership on the United Nations' Security Council, according to press reports.

The Russian delegation will then continue to Jordan.


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Photo: Russia's President Vladimir Putin. Credit: Alexey Druzhinin / AFP/Getty Images


Jewish settlers agree to voluntary evacuation of outpost

Ulpana outpost
JERUSALEM-- Thirty Jewish families have agreed to evacuate their homes in the West Bank outpost of Ulpana and avoid confrontation with Israeli authorities acting on a court order to evict them, Israeli media reported.

The agreement comes 10 days before the deadline for compliance with a ruling by the Supreme Court that holds the government to its promise to remove five buildings from the  outpost in the West Bank, built on privately owned Palestinian land in violation of Israeli law.

As the deadline approached, many young pro-settlement activists had set up camp around the houses slated for removal, preparing for a fight with the authorities. Past outpost dismantlings have often turned violent. A recent rash of vandalism, including the torching of a mosque in a Palestinian village, worsened the tense situation, heightening concern of violence among authorities and settler leaders alike.

Prime Minister Benjamin Netanyahu  sought a legal solution that would spare the houses and himself the need to evacuate Jewish settlers, who are a base of support for his ruling right-wing coalition. None was found and Netanyahu announced the government would comply with the ruling, but he pledged to build 300 new apartments in the Beit El settlement. 

Ulpana is adjacent to Beit El, which Israel vows it will keep in any future peace deal with the Palestinians.

Residents of Ulpana  have agreed to avoid confrontation that would tarnish the image of settlers, reports said. They will vacate their houses by the end of the month and move into mobile homes until the houses are physically relocated, in keeping with the government's promise.

Last week, the Cabinet approved the establishment of a ministerial steering committee on settlement affairs, seen as a move to appease Netanyahu's right-wing flank after shooting down a bill to approve illegal settlement outposts, possibly cutting into the defense minister's jurisdiction over settlement affairs, though some question this.

During the committee's first meeting, held Wednesday, Netanyahu briefed ministers on how the government plans to comply with the court ruling by removing the houses, relocating them and building 300 new apartments on land that will be vacated by an army base. Netanyahu told the members that the solution meets his two goals, "upholding the law and strengthening the settlement movement."

The state plans to ask the court for a three-month stay during which the houses will be relocated.


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Photo: The Ulpana outpost in the West Bank. Four of the five buildings scheduled for removal are visible: those in the top row, and the building on the left in the second row from the top.  Credit:  Sebastian Scheiner / Associated Press


Rocket attacks, airstrikes continue between Gaza and Israel

Palestinian guerrillas based in the Gaza Strip fired rockets into Israel, drawing airstrikes in return as the latest round of violence between the two sides continued
JERUSALEM -- Palestinian guerrillas based in the Gaza Strip fired rockets into Israel on Wednesday, drawing airstrikes in return as the latest round of violence between the two sides continued.

As of midday, at least 65 rockets had be launched at Israel in the last three days, with the Israelis carrying out 14 aerial strikes on targets in Gaza, according to Israeli army figures.

One airstrike Wednesday targeted two militants, Aleb Armilat and Mohammed Rashdan, whom Israeli military statements identified as members of a radical organization affiliated with Global Jihad. The military said the two had been involved in an attack along Israel's border with Egypt earlier this week and were planning another.  

Rashdan was injured in the airstrike and Armilat killed, bringing to at least six the number of Palestinians killed in Gaza in recent days. Four members of Israeli security forces have been injured, and an Israeli contractor was killed in Monday's attack along the Egyptian border.

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West Bank mosque set on fire; extremists suspected

JERUSALEM -- A mosque in the West Bank village of Jabaa was set on fire late Monday or early Tuesday in an apparent act of political vandalism. The assailants spray-painted the walls with graffiti saying "the war has begun -- pay the price" and "Ulpana -- war," the latter a reference to an outpost of Jewish settlers soon to be dismantled.

Prime Minister Benjamin Netanyahu condemned the act and pledged swift apprehension of the perpetrators, whom he called "lawless, intolerant and irresponsible." In an update to his Facebook page, Deputy Foreign Minister Danny Ayalon said, "We must not allow such terrorist acts to continue." 

Pro-settlement extremists are suspected of carrying out what has become known as a price-tag operation: vandalism meant to impose a price for actions that are perceived as attacks on the settlers' movement.

The arson at Jabaa comes as the Israeli government is preparing to evict residents from five buildings at an outpost known as Ulpana hill by the end of the month and negotiating with settlement leaders in hopes of avoiding violence.

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Israeli civilian, 2 gunmen killed in cross-border attack from Egypt

JERUSALEM -- An Israeli civilian and two unidentified gunmen were killed in an attack along Israel's border with Egypt on Monday, Israeli officials said.

Lt. Col. Avital Leibowitz, a spokeswoman for the Israeli military, told reporters the attack occurred when militants crossed from Egypt about 18 miles from the Gaza Strip. They reportedly set off explosives and fired a rocket-propelled grenade at two vehicles carrying civilian contractors working on the fence Israel is erecting to seal its border with Egypt.

Israeli ground forces arriving a few minutes later engaged the gunmen, two of whom were killed when the gunfire set off a large amount of explosives one of them was carrying, said Leibowitz. Two bodies were found on the Israeli side and a third gunman is thought to have remained on the Egyptian side, she said.

The affiliation and identities of the shooters are not yet known; the army said it is checking possible links to Gaza.

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Israel watches Egyptian elections as rockets hit its south

Egypt voting
REPORTING FROM JERUSALEM — As voters in Egypt cast presidential ballots on Sunday, Israelis next door remained watchful and wary, with few comments from official speakers.

The silence, however, was punctuated by the sounds of rockets launched at southern Israel over the weekend, which Israeli security officials said appear to have been fired from the northern Sinai.

Though denied by Egyptian sources, Israeli security sources were quoted in Israeli media claiming the rockets were fired by a Hamas-affiliated group of Bedouins at the request of Egypt's Muslim Brotherhood. Sami Abu Zuhri, a spokesman for Hamas in Gaza, denied the organization was involved.

Regardless of who launched the rockets, their firing is evidence of the chaos in Sinai as several antagonists of Israel try to foster bad relations between the neighbors, said Yom-Tov Samia, formerly in charge of Israel's southern command.

But peace between the neighbors remains is a first-rate strategic interest for both, Samia added in a radio interview, noting that Egypt does not have the resources for armed conflict and Israel already faces uncertain scenarios with Lebanon, Syria and Iran.

Benjamin Ben-Eliezer, former defense minister and among the Israeli politicians to have the warmest ties with Mubarak's Egypt, told media that regardless of what side wins the Egyptian elections, channels of dialogue between the two countries must be maintained. "I trust the government to find the right way to Egypt's new leadership, even the Muslim Brotherhood," he said, "whoever is elected will soon realize his first problem is feeding millions. Conflict with Israel will not feed them."

Ben-Eliezer too hopes the new leadership understands that "peace, good neighborly relations and trade ties with Israel are an express Egyptian interest."

Like others, he warns that lawlessness in Sinai is a regional threat. "Sinai has become a place where terrorists from all far-flung corners of the globe feel at home. There's no way this can continue and no Egyptian government will accept it either," he said.

Relations with Israel are something of an election issue but "not the highest priority on Egypt's national agenda," according to former ambassador to Cairo Eli Shaked, who also believes new Egyptian leaders will have to tend to pressing socio-economic matters.

With a paralyzed economy and declines in tourism, Egypt will need billions of dollars in aid, Shaked says, far more than U.S. aid and trade agreements related to the peace treaty with Israel. But if that doesn't happen, Shaked fears Israel and the entire Middle East "could suffer when it turns out that the new government of Egypt has no solutions to the country's socio-economic problems either."

Israeli experts view an ongoing power vacuum in the Sinai as having potentially serious security and economic implications. The repeated sabotage of the natural gas pipeline in Sinai has disrupted Israel's energy plans and raised the cost of electricity to both consumers and environment.

But ultimately, Samia says, Israel's main concern is "not what happens in Sinai but what happens at Tahrir Square," the bottom line of Israel's concerns being that the peace is preserved.


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Photo: An Egyptian woman shows her ID to the polling station chief during the second day of the presidential runoff election in Alexandria, Egypt, on Sunday. Credit: Manu Brabo / Associated Press




Israeli report criticizes Netanyahu's handling of flotilla raid

JERUSALEM -- More than two years after an Israeli raid on an aid flotilla headed for the Gaza Strip turned deadly, a report released Wednesday criticizes Prime Minister Benjamin Netanyahu as making poor decisions and misunderstanding the magnitude of the unfolding confrontation.

In a special 153-page report, State Comptroller Micha Lindenstrauss used harsh words to describe a long list of flaws in the government's preparation for the approaching flotilla, which carried activists determined to run Israel's blockade of Gaza.

Lindenstrauss accused the Netanyahu administration of failing to coordinate the actions of relevant agencies, ignoring military warnings about potential violence, keeping the National Security Council out of the loop and dropping the ball on media response and public diplomacy.

The interception of the Mavi Marmara, the largest ship in the mainly Turkish aid flotilla, turned violent when the shipboard activists fought back against Israeli commandos. The clash resulted in the deaths of nine passengers and fierce international condemnation of Israel, forcing it to ease its blockade of the Hamas-controlled coastal strip. The attack also worsened relations with Turkey, already soured following an Israeli military assault on Gaza, sending them into a tailspin from which they have not recovered.

Although Lindenstrauss found fault with others, including Defense Minister Ehud Barak and the army, his report holds Netanyahu responsible for the overall outcome.

"The prime minister's decision-making was made without proper coordination, documentation or preparation," despite the fact that all were aware that the Turkish flotilla was larger and more politically sensitive than those that preceded it, he wrote.

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Israeli lawmakers discuss commemorating Armenian genocide

JERUSALEM -- Israeli lawmakers dedicated a session of parliament Tuesday to discussing whether to commemorate the Armenian genocide, a controversial and sensitive issue that could further aggravate the country's strained relations with Turkey.

When ties were stronger, Israel refrained from official recognition of the killings of minority Armenians early in the 1900s as genocide, citing diplomatic reasons. But diplomatic relations have been strained since Israeli soldiers killed nine Turkish activists in 2010 during an attempt to block a flotilla of aid bound for the Gaza Strip.

Some Israeli lawmakers say the time has come for their nation to finally divorce the issue from diplomatic concerns and take a clear, moral stance.

"The Armenian genocide has been swept under the rug" for fear of upsetting foreign relations, said Zehava Galon, who initiated the debate. "We must not politicize this matter," said Reuven Rivlin, the Knesset speaker, a longtime supporter of Israel making a clear statement of recognition.

The Knesset came to no decision on the motion Tuesday but plans to hold another session on the issue.

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