2 May 1998

To: Letters to the Editor, Haaretz

Re: The investors keep coming

Avraham Tal (Haaretz, 27.4.98) reexamines the theory that states that foreign investors and businessmen should beware of investment in the Israeli economy, when the latter is characterized by "a stuck peace process and the threat of a collapse of security." He rightly notes what many others tend to hide: "The facts do not indicate an unwillingness to invest in the Israeli economy." He supports his statement with a sketch of the impressive growth of investments.

When the facts do not fit the theory, it is appropriate to examine not just the facts, but also, and principally, the theory -- in our case, to ask whether we are indeed dealing with a peace process. The phrase "Peace Process" as it refers to the dangerous political process begun in Oslo has apparently lost its influence on potential investors. The investors base their ventures on real economic analysis, and not euphoric propaganda. Tal lists factors that attract investors, and reports a flow of new investment. It appears that the investors read correctly the structural changes that have been taking place in the Israeli economy in the last two years, and decide accordingly. Presumably if Mr. Netanyahu can halt the collapse of security that began with the Oslo process, the flow of investment will be strengthened. Tal states that "even speculators are not fond of political and security risks." The growth of investment thus indicates that investors appreciate that the present Government's policies are lessening the dangers that were created in the days of the previous Government.

Moreover, Tal is probably right in his warning that "blaming the recession and unemployment on the frozen diplomatic process is a mistake that may distract attention from the economic efforts that are needed to end the recession." For this we need appreciable investment in infrastructure, and the growing flow of foreign investment will help here as well.

Dr. Ron Breiman, Spokesman
Professors for a Strong Israel
Tel: 03-642 5540