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Visionaries bullish on Israel's future
Washington Jewish Week / December 3, 2008

By Larry Luxner

Within two decades, Israel hopes to rank among the world's 10 to 15 richest countries as measured by per-capita income a lofty yet completely plausible goal, according to the visionaries behind "Israel 2028: Vision and Strategy for Economy and Society in a Global World."

The 309-page document was unveiled Tuesday in Washington by Eli Hurvitz, chairman of the board of Teva Pharmaceuticals Ltd., one of Israel's largest companies, and by Sallai Meridor, Israel's ambassador to the United States.

"In 20 years, we will have a population of 10 million and per-capita GDP of $50,000 a year," up from the current $23,000, said Meridor, addressing some 200 U.S. and Israeli business executives at Washington's Capital Hilton. "This will be largely dependent on what we do in Israel. But at the same time, it will also depend on our unique relationship with the United States. We will never, ever take this relationship for granted."

The study the culmination of four years of research and investigation on both sides of the Atlantic cost around $2 million and was initiated and supported by the US-Israel Science and Technology Commission and Foundation.

"Israel 2028 is the first-ever domestic competitiveness strategy for the State of Israel," Ann Liebschutz, the foundation's executive director, told WJW. "It's a comprehensive plan that covers globalization, higher education, domestic infrastructure, science and technical cooperation. Even though Israel's economy is strong today, it's important there's a strategy in place to ensure it will remain strong into the future."

David Brodet, a Jerusalem-based economist who edited the Israel 2028 study, said his goal is to try to design a strategy that would allow Israel to enjoy sustained economic growth so that within 20 years, it'll wipe out poverty, with its people enjoying the same prosperity and quality of life as citizens of Canada, Finland, Switzerland, New Zealand and Luxembourg.

The "Israel 2028" blueprint calls for average GDP growth of 6% a year through the adoption of policy guidelines on seven major issues:

* promoting and strengthening Israel's educational system, from kindergarten through post-secondary education.

* strengthening scientific and applied research.

* increasing labor force participation rates of economically vulnerable sectors, including Arabs and ultra-Orthodox Jews.

* strengthening and enhancing government mechanisms and improving Israel's governability.

* dispersing interdisciplinary innovation and leveraging technology throughout Israel's traditional economic sectors.

* creating conditions for continued rapid growth of knowledge-based industries.

* improving Israel's national physical infrastructure.

"Of course it's possible," said Brodet, former director-general of Israel's Finance Ministry, when asked if Israel could one day rank among the world's most prosperous countries. "Due to our solid relations with the United States, we want to share this vision with the U.S. business community because your country is a big market for Israeli products and a good source for investments."

Brodet conceded that "there is some uncertainty [about President-elect Barack Obama], but the basic relationship between the United States and Israel is so profound and solid that it's not a question. We are very optimistic and eager to cooperate with the new administration."

In his speech, Meridor said at least $1 billion will need to be invested in R&D joint ventures, up from the current $330 million, and that one area with particularly strong export potential is that of Israeli expertise in national security and counter-terrorism technologies.

"I hate to mention it, but what we've seen just a few days ago in India is only a reminder of what may be awaiting us in Western societies, in terms of protecting the world from this wave of extremist terror," said Meridor, former chairman of the Jewish Agency.

"We can also help in finding alternative energy sources. This is so important for national security and the environment, even when oil prices are at $50 a barrel and not $150. I hope that in the coming decade or two, Israel could help as a small partner in trying to meet this unbelievable challenge."

Brodet declined to quantify the market for Israeli counter-terrorism technology, though he said it is potentially enormous.

"Israel has been tackling this issue for many years due to the situation we are living with," he told WJW. "And due to that need, all the time you're creating innovative measures, procedures, hardware and software that are all part of our struggle against terror. We also have lots of army and police graduates who deal with terrorism, and their services are requested all over the world."

Marc Stanley, director of the Advanced Technology Program at the National Institute of Standards and Technology (NIST) in Gaithersburg, said he attended the day-long event becuase his work involves "investment in early-stage, high-risk research that will help the United States become more competitive."

"Israel is incredibly innovative in fields such as medical devices and forms of encryption that protect the transfer of financial data, as well as in technologies that maintain privacy," said Stanley, who's also a representative of the Israel-U.S. Bilateral Industrial Research and Development Fund. "At NIST, we have had a 30-year association with Israel that has enabled me to observe and be enamored of the success and wonderful science coming out of Israel's leading universities."

The event's keynote speaker was David Rubenstein, co-founder and managing director of the Washington-based Carlyle Group, which manages more than $89 billion in investments. He noted that while the U.S.-Israeli geopolitical relationship is well-known, far fewer people understand that the U.S.-Israeli business relationship is among the most important this country has with the rest of the world.

"No place outside the United States is as fertile and vibrant a place for U.S. venture capital as Israel. And today, with a very weak economy, we're not in much of a position to give lessons to other countries," he suggested. "I hope the U.S. will take some lessons from Israel on how to create a vibrant economy."

Rubenstein said that over the next year or two, Israel will consistently outperform the United States, which he predicted will suffer unemployment exceeding 10% and a GDP drop of 2-4% before pulling out of the current recession in late 2009.

Nechemia J. Peres, chairman of the Israel-America Chamber of Commerce, said he remains upbeat about the U.S. and its future influence around the world, even in the face of mounting pessimism in stock markets from New York to Tel Aviv.

"Many people are worried about the state of the U.S. economy, and that maybe this great empire is weakening. We do not believe this," he said. "We believe in the powers of the United States, both the hard and soft powers. We need to make sure the relationship between Israel and the United States will continue to be strong."

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