Thu, Jun 26, 2014 - Page 15 News List

Israel joins club of rich creditors

PARIS MATCH:Israel became one of the 20 countries in the Paris Club whose members assist nations that struggle with debt, despite high poverty levels at home


Israel on Tuesday joined an influential group of rich nations that help poor indebted economies, giving the country an international boost for the recognition of its economic accomplishments.

The news that Israel had been accepted into the Paris Club of creditor nations was welcomed by Israeli policy makers, who are facing calls to reduce high levels of poverty and inequality even as the country’s economy hums along.

The Paris Club announced Israel’s induction, bringing its membership to 20 countries. The club is an informal group of governments, including the US, that collectively negotiate deals with poor countries struggling with huge debts. It was created in 1956 and has worked out loan deals for 90 countries.

It can cancel or restructure debts when countries are at risk of default. Argentina agreed last month with the Paris Club on a plan to resolve US$9.7 billion in debts that have gone unpaid since its economic collapse in 2001-2002.

Israeli Minister of Finance Yair Lapid lauded the Paris Club announcement, saying it “shows Israel’s economic might and presents additional proof that Israel’s place is alongside the strongest countries.”

Once a tiny farming nation, Israel has evolved into a high-tech economy with numerous startups and companies in communications, software and military technology. Its economy continues to grow, and unemployment is roughly 6 percent, well below the double-digit levels seen in many parts of Europe.

After a 16-year effort, Israel was accepted into the Organisation for Economic Co-operation and Development (OECD) a policy forum for the world’s most developed economies, in 2010. Still, more than 20 percent of Israelis live in poverty, nearly double the OECD average. This week, a government committee urged Israel to pump nearly US$2 billion into social services and welfare programs.

“We are like two Israels in one,” said Dan Ben-David, executive director of the Taub Center for Social Policy Studies, an independent Jerusalem think tank.

“It is cutting edge by every stretch of the imagination, and fortunately for us, it’s leading the country... The problem is that we have another Israel here, and that other Israel isn’t receiving either the tools or the conditions to work in a modern economy. That other Israel is huge and growing,” he said.

Israel’s continued occupation of lands captured in the 1967 Middle East war has also emerged as an economic issue. Lapid, the finance minister, has said spending on isolated West Bank settlements is a waste of money.

Israel is also facing a burgeoning movement calling for divestment and sanctions in response to its policies toward the Palestinians. Last weekend, the Presbyterian Church (USA) voted to sell its stock in three US companies whose products Israel uses in the West Bank.

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