JERUSALEM — U.S. Deputy Treasury Secretary Stuart Eizenstat called on Israel over the weekend to reduce its numbers of foreign workers in order to make room for more Palestinian workers.
Speaking at the Van Leer Institute in Jerusalem on Sunday, Eizenstat said that foreign workers constitute about 10 percent of Israel’s workforce and that half of them are illegal residents.
Shrinking that percentage would reduce future social problems created once those workers start families here. It would also create a hole that Palestinian labor could fill, thus forging a stronger economic link between Israel and the Palestinian Authority.
He urged Israel to introduce more structural reforms, including greater efforts to privatize all sectors, develop deeper capital markets, encourage competition and increase public investment.
“Tough fiscal reform does pay off, as you have proven,” Eizenstat said. To bring Israel “from the cusp of the first world into the first world” he suggested “adopting the remaining reforms.” He cited the need to deregulate the domestic telecommunications market.
Eizenstat lauded Israel’s high-tech industry. He pointed out that the reason for its success, in great part, is that it is “a totally free market, and the least-regulated industry in the country.”
Regional trade and cooperation is also a key to Israel’s economic health, he stressed. Israel should “end its [economic] divorce” with the region and thus reduce its political isolation, he said.
Despite the Israeli-Jordanian peace, only 1 percent of Jordan’s exports go to Israel and only 4 percent of its imports originate in Israel. But the success of the Qualified Industrial Zone in Irbid, Jordan — which has led to hundreds of millions of dollars in new investment, more than 3,000 new jobs, and $500 million in exports — exemplifies the region’s potential and readiness for commerce. Three more such zones are scheduled to open in Jordan.
Eizenstat also called on the Palestinian Authority to push forward with major reforms. While he called the opening of the safe-passage route between Gaza and the West Bank a “significant step” toward jump-starting the Palestinian economy, he said that Monday that “it’s cheaper [doing business from] Gaza to Germany than from Gaza to Ramallah.”
The Palestinian Authority must create transparent government and banking institutions, develop a legal infrastructure and consolidate budget accounts, he added.
Israel’s other Arab neighbors are also to blame for lagging regional trade, Eizenstat said. “The Middle East is dysfunctional,” he said bluntly.
He noted that 60 percent of European countries trade among other European countries, compared to 30 percent of Asian countries and 20 percent of countries in the Americas that do the same. But only 7 percent of countries in the Middle East trade within the Middle East.
Eizenstat blamed that phenomenon on closed Arab societies, however, and not on Israel. And though the Middle East is not a natural trading bloc because it doesn’t have a diverse range of products and resources, he said, the opening of economic borders would at least produce product differentiation and competition.
The peace process and regional economic cooperation must develop simultaneously, Eizenstat stressed. And, he added, reforms are urgently needed. “It’s an absolute security imperative” that the Palestinians and Jordanians make economic peace with Israel, he said.