Why is it that Israel's per capita GNP still lags substantially behind that of the leading countries of the world? Why is it likely to take decades for the Israeli economy to catch up? This is while the Israeli papers are full of news about very promising high-tech start-ups, and we even hear occasionally about payments of billions of dollars by major foreign firms to acquire Israeli businesses which were founded a few years ago and have at most several hundred employees.
A number of factors are impeding the implementation of privatization in the Israeli economy. Here I will review those factors based on my own experience, both as someone who has represented investors who purchased government companies through privatization processes, and (from the other side of the fence) in my positions in the Ministry of Finance, when I had an opportunity to observe the governmental process from the inside.
During the past twenty years, beginning with the Israeli-Egyptian disengagement talks following the 1973 war, the tension between secular and religious perspectives on the Middle East peace process and the "land for peace" formula has grown steadily.
Over the last two decades, the reliance on separate negotiating tracks in the Arab-Israeli peace process has resulted in a cumulative loss of territories vital for the defense of Israel's very existence, without any corresponding buildup of peace and security for Israel that could last for generations. The military capabilities of Israel's potential adversaries have not diminished, but, in fact, have expanded considerably. The normalization of relations between Israel and the Arab world, as stipulated in the peace treaties between Israel, Jordan and Egypt, has not advanced, but, rather, has been held hostage to further Israeli concessions in each of the separate negotiating tracks. Finally, the employment of terrorism and violence by Israel's neighbors became part of the negotiating process with Syria and the PLO.
In the 1950s, the French Catholic academician, playwright, and former Ambassador to the U.S., Paul Claudel, asked the cultural attachè of the Israeli Embassy in Paris to convey the following message to Martin Buber: Now that the Jews had recovered their sovereignty, would they consider granting citizenship to Jesus, thereby putting an end to his "statelessness" status both for Judaism and Christianity? This could contribute to the fight against anti-Semitism.
During the ceremony of the presentation of my credentials as the Ambassador of Israel to the Holy See on April 10, 1997, I told His Holiness that, actually, this was not my first connection with the Vatican. In fact, when I served as Ambassador of Israel to the Republic of Cyprus, in one of the ceremonies there, I was approached by the non-resident Ambassador of Outer Mongolia, who asked me whether I represented the Holy See in Cyprus. Of course I answered that I represented the State of Israel. Then, looking at my head, he remarked: "Oh, you are right, sir; now I can see the difference in the color!" Of course, he was referring to my skullcap.