HEAD OF U.S.-BASED ECONOMIC GROUP FORESEES REPEAT OF ISRAEL'S '95 ECONOMIC BOOM IN 1996
MILWAUKEE -- Fueled by a stunning 6.8 percent growth in gross Domestic Produce (GDP) in 1995, Israel can be expected to repeat--and perhaps exceed-- that record in 1996, the head of a joint committee of American and Israeli business executives predicted this week.
Industrialist Elmer L. Winter, co-founder and long- time president of Manpower, Inc., the world's largest temporary help agency, said his annual year-end analysis of Israel's economic indicators also suggested a 1996 inflation rate of 7 percent or less; an unemployment rate of 6.2 percent; an 8 percent growth in exports; and a 10 to 11 percent rise in capital investment.
Mr. Winter, chairman of the Committee for Economic Growth of Israel (CEGI) -- a 20-year-old non-profit organization of top executives in the United States and Israel involved in furthering business and trade ties between the two countries -- said that the importance of Israel's booming expansion "goes well beyond its purely economic significance and is at the very heart of the Mideast peace process."
The CEGI head, whose offices are here in Milwaukee, asserted that the peace process has reached a point where "economics, rather than nationalist politics or ideology, is becoming a key factor in the peace equation." For Israel's close neighbors, including Jordan, Syria and the Palestinians -- all three of which are beset by critical budgetary woes -- Israel's economic success is emblematic of what peace can bring, particularly as development proceeds on a regional basis, according to Mr. Winter.
This is already beginning to occur on a broad scale, he said, adding that private meetings regarding joint ventures between Israeli and Palestinian entrepreneurs and business executives have been taking place since the very start of the peace process. He also emphasized the significant role of so-called "multilateral" discussions and planning sessions among Israel and the Arab states on a wide range of regional issues, including water resources, linked electrical grids, cross-border transportation, telecommunications, agriculture and trade.
Mr. Winter noted that even Syria, which had been at a standstill in negotiations with Israel, has now resumed face-to- face discussions. "President Hafez al-Assad has been overwhelmed by money problems since the demise of his patron, the former Soviet Union," the CEGI chairman said. "He knows he can't afford to be permanently left out and desperately needs to share in any Middle East economic development, which can only happen if he reaches a peaceful agreement with Israel."
Mr. Winter said his positive forecast for 1996 was based on a number of significant happenings last year that point the way to a continuing increase in the growth of the GDP, exports and investment and a low level of unemployment and inflation in the year ahead. He said the following were among the most important developments:
The announcement by the Intel Corporation that it is investing $1.6 billion in an additional microprocessor plant in Kiryat Gat, the largest single foreign investment in Israel's history, which is expected to generate thousands of jobs and "send a message to other companies that are prospective investors in Israel."
Additional multimillion dollar investments in new plants and joint ventures by such American firms as Boston Scientific, Pfizer and Motorola. Although Motorola has had a plant in Israel for many years, it is now considering building an additional $1 billion facility that will employ 900 more workers and export $600 million in products annually.
Foreign investors, including the Shamrock Group, Nestle and Israeli subsidiaries of American companies like General Motors and Electronic Data Systems, are rushing to buy into such existing Israeli companies as Koor -- Israel's largest conglomerate -- Ossem Industries and Tadiran Information Systems.
A boom in trade with the United States, which reached a record $10 billion in 1995.
The de facto erosion of the Arab boycott, which has opened the way to trade with nations like Japan, China and South Korea that formerly refused to do business with Israel for fear of jeopardizing their Arab markets.
The start of business normalization with Arab states like Qatar and Oman and the first large-scale joint venture with Jordan -- the building of a $50 million bromine plant in Jordan.
Ultimately, regional projects now being discussed by Israel and other Middle East states could carry a total pricetag of $250 billion, Mr. Winter said. Some of these projects could get underway as early as 1996, he added.
While acknowledging that the peace process must still contend with a number of "hot button" political issues, "the Israeli boom of 1995 is projecting a future in which economic development will be a principal factor in furthering peace in what formerly was a volatile and extremely dangerous region of the world," he said.
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