No housing shortage over the Green Line

Who says that the Israeli government does not recognize the 1967 border, known as the Green Line? Who says that the Israeli government opposes increased spending on social services? Who says that too few apartments are under construction in Israel of 2011?

A new OECD report, released this week, written with the full cooperation of the Israeli government, reveals that the government fully recognizes the 1967 border, spends heavily on settlements and that there is no housing shortage in them.

Before Prime Minister Benjamin Netanyahu stands before a Knesset investigative committee, or is charged under a clause of the Boycott Law, it should be pointed out that the government was compelled to cooperate with the OECD in conducting the research, which examines Israel's statistical procedures regarding the West Bank, the Golan Heights, and eastern Jerusalem. The final result is a quite accurate picture of both Israel within the Green Line and economic and social activity beyond it.

It should also be pointed out that the all the data on economic activity, construction, and government spending are for 2007; in other words, covering activity by the previous government of Prime Minister Ehud Olmert.

It is worthwhile to highlight the economic data beyond the Green Line because, for the first time, they quantify the differences between the two sides of the border that existed before June 1967. First, government spending cuts do not apply to the settlements, or the Golan, or eastern Jerusalem. Government spending accounts for 20% of Israeli economic activity in the territories, and it adds 11% to total public sector spending. For the sake of comparison, Israeli activity beyond the Green Line accounts for just 3.9% of Israel's GDP. Part of the difference is due to security operations in the territories, but civilian spending adds 7% to GDP.

Anyone who asserts that there is no construction in Israel should peruse OECD data on building beyond the Green Line. 9% of GDP beyond the Green Line comes from construction, compared with 4.7% of GDP within the Green Line. The difference is even greater for residential construction: within the Green Line, residential construction accounts for just over a fifth of investment; beyond the Green Line, it accounts for almost 45%.

It is necessary to add that the increased construction and higher government spending on civilian public services, including education, has persuaded many Israelis to move to the territories. According to the OECD, the number of Israelis living in the territories nearly doubled between 1997 and 2009.

Published by Globes [online], Israel business news - www.globes-online.com - on July 28, 2011