Israeli News: A Daily Analysis

Yesterday's press conference by President Obama created waves in Israel today. Foreign Minister Lieberman was quick to explain his opposition to the Saudi plan, by clarifying he was specifically opposed to was the plan's solution of the refugee problem. The Saudi plan points to the right of return for Palestinian refugees, although the details on this point are a little vague. Israeli commentators were quick to point out that the “road map” which Lieberman says he accepts, states explicitly that at the end of the path there will be two states, and also refers to the Saudi Plan as a basis for negotiations.

Meanwhile, in testimony to the House Foreign Affairs Committee, Secretary of State Clinton reinterated the US position to refuse any interactions with Hamas or a government in which Hamas was a part, unless it accepted the Quartet terms (which include recognition of Israel and acceptance of all previous agreements.) Clinton also made it clear the US outreach to Iran had to reciprocated. She further stated the current overture was a clear prelude to what she characterized as ”crushing sanctions”, if either the Iranians did not respond or talks went nowhere.

The IDF released the results of investigations into actions in the recent war in Gaza. The results stated there were no deliberate attacks on Palestinian civilians during the war. There were a number of mistakes made, including one where the airforce was supposed to target a house 100 meters away, thought to house ammunition. Instead a private house was hit, in which the bomb killed 21 members of the family. Furthermore, in the case of the much reported attack on a UN school, the report stated the school itself was not attacked, but the road near it was and 12 civilians were killed. The report also stated that shells containing phosphates were fired during the war, but in accordance with international law, all were in open areas to create smoke screens.

There has been much talk over the course of the last few days regarding a possible economic stimulus package in Israel. The stimulus package would include a decrease in income tax and the instution of an earned income credit for those on the bottom of the economic scale. One of the major questions in Israel at the moment, economically speaking, is what to do with what are called "the tycoons." The tycoons are a small group of individuals, who, over the last 15 years have amassed huge fortunes and control a significant part of the Israeli economy. How they accomplished what they did will no doubt one day make a very interesting book. However, it has become clear they accomplished much of it on borrowed money. It would seem the 5 largest tycoons owe approximately 140 billion Shekels to Israel banks and investors in the debt bonds. Of that 30 billion shekels is due this year. The fear is, if they are allowed to fail, they can bring down some of the banks with them. The solution is really very clear. If necessary, bail out their companies, but not the tycoons. The state should, once again, gain control of some of their enterprises if they have to be bailed out. The state should, of course, not keep control. Instead, they should consider issuing new shares of stock and dividing the stock up among the population. In one step that would do more to correct the drastic change that has taken place in Israel in the last twenty years, from a country with one of greatest income equality- to one of the countries in the world with the largest economic inequality.