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An Ariga Note: US Ambassador to Israel Martin Indyk is an England-born, Australian-raised, naturalized US citizen long involved in the Middle East Peace Process; as an academic researcher, and as an advisor to US President Bill Clinton. He is the first Jew to serve as an American ambassador to Israel, and is a leading proponent of the Israel-Palestinian peace process. The following article originally appeared in Ha'aretz, a few days before the signing of the Israeli-Palestinian Interim Agreement on the West Bank and Gaza Strip.

The Fruits of Peace:
A Personal reflection

By Martin S. Indyk
U.S. Ambassador to Israel

I have just returned to Israel from a short visit to New York and Chicago. My purpose? To sell Israel to the American business community. Some might think that is the task of an Israeli diplomat but my concern is to lobby American firms to come and make money in Israel. I told them there were great opportunities: billions of dollars worth of infrastructure projects; Israeli consumers with money to spend and a penchant for American products; and high-tech companies on the cutting edge looking for American investment partners. They were surprised to hear of Israel's $80 billion GNP, of an economy growing at 8% per annum, of per capita income outstripping that of Spain and Ireland.
What really interested them, however, was the potential of Israel as a gateway to the Middle Eastern market and as a trade and transportation hub between the markets of Europe and the Middle East. To be sure, they are attracted by the unique opportunities now available in a booming economy. But Israel, on its own, represents a market of a mere 5 million people. Alone, it cannot hope to sustain its attractiveness in competition with the newly emerging markets in India, China, and the Far East that are one hundred times as large.
So, when American business looks at Israel, they want to know not only whether they can make money in the short term, but also whether by establishing a base here they can open the door to a much larger Middle Eastern market of 300 million people down the road. For the first time, some of the larger American firms are concluding that the proposition is worth testing.
It is ironic that just as America is exploring the potential of a western-oriented Israeli gateway to the Middle Eastern market, Israeli business has become disillusioned with the prospect. Put off by Arab concern and continuing Arab worry that Israel might dominate the Middle East economically, some Israelis have chosen the path of least resistance, leap-frogging the Middle East to take advantage of new opportunities in the Far East, Central Asia and Eastern Europe. This has obvious benefits, but it risks forfeiting Israel's long term prospects in the Middle East. A more prudent and productive approach is to try to do both: while exploiting the immediate prospects outside the Middle East, Israel should begin to develop a long-term, patient but purposeful business plan to build economic and commercial relations with its Arab partners in the peace process.
Such a plan would have to start by recognizing constraints. Israel does not produce much of what the Arabs want to buy. Eventually, the Gulf Arabs may provide a market for Israeli high- tech products, but Israel will face tough competition because the Gulf states can afford to pay for the best from the West. Second, for a long time to come, Israel's Arab partners will continue to fear Israel's dominance. This is partly because Israel's economy is already larger than all of its Arab neighbors' economies combined. But it is also because of centuries of dominance by outside powers and a legacy of bitterness towards Israel engendered by decades of hostility and conflict. These concerns will fade with time but, in the meantime, they require an approach based on realistic expectations and heightened sensitivity to the fears of Israel's potential partners.
That said, much business can be done, if Israel's comparative advantages are skillfully linked to Arab needs to create opportunities. First, Israel can translate its larger economy into an asset by mobilizing capital for joint ventures, investments, and regional projects. Israeli investors need to be on the front line. Israel's experience in dealing with large multinationals can reduce the business risk many will still associate with an investment in the Middle East.
Second, Israel can use its leadership in advanced technologies to propel the region into world class industries. In agriculture, Israel leads the world in integrating agricultural research with water- and land-efficient equipment such as drip irrigation and fertilization systems, leading to new and better varieties of food products. In microelectronics and computer software, Israel can link its current shortage of engineers and designers to a growing number of capable professionals in the Arab world. Israel can also play an essential role in developing high quality and high tech medical services and medical products for the region and the world.
Third, Israel can take positive actions to close infrastructure gaps that will enable the Middle East to take off as a regional business unit. Transportation, air, sea and land links must be planned and executed to facilitate the movement of people, goods, and services within the region and to extra-regional markets. Telecommunications capabilities and services, essential to global business, are badly in need of upgrades and integration. Reliable and cheap electric power, good water and sewage systems, modern office complexes and industrial parks -- all these are areas where regional projects make sense.
Israel and her neighbors have unique and world class natural, cultural, historical, and religious sites that cry out for regional development. Long divided by the politics of the last century, a regional vision may restore to tourists something of the field of view of Nabatea, Petra, of Roman Bet She'an, Alexandrian Jerash, Samson's Gaza, and the Crusader's Caesaria and Akko. The coral reefs in the Gulf of Aqaba and the unique features of the Dead Sea need development of new touristic facilities from hotels and restaurants to museums and nature centers. Because of its modern airport facilities, and new facilities like the Arava International Airport already in the planning stages, Israel could become a hub for regional visitors interested in archeological, cultural, and eco-tourism. Here Israel will also need to help its neighbors realize tourism's full potential.
Finally, Israel can use its existing Free Trade arrangements with the United States and the European Union in concert with emerging bilateral and regional trade agreements to ensure that the products of joint ventures enjoy duty-free access to the West's huge markets. In the long term, Israel and her neighbors will need to tap complementary capabilities to facilitate the flow of goods and services. Tariff barriers will need to be steadily reduced to allow fair, free market competition. Israel can lead the way in developing regionally based industries housed in free trade zones which target world markets.
On the horizon before us is a major opportunity to lay the groundwork for this overall approach. On October 29-31, King Hussein of Jordan will host the Amman Economic Summit. Senior executives from more than 700 corporations from all over the Middle East and all over the world will come together to discuss the opportunities that can be created to do business together. Unlike last year's inaugural Middle East and North Africa Economic Summit in Casablanca, this summit will be specially tailored to meet the needs of business people by helping them make contact with their potential partners, by briefing them on the opportunities for regional cooperation, and by providing them with information on how to do business in the Arab world and Israel.
President Clinton is co-sponsoring the conference with President Yeltsin. As an indication of his commitment to the summit's purposes, the American delegation will be headed by Secretary of State Christopher and Secretary of Commerce Ron Brown. They will head a delegation of 150 executives from major American corporations interested in doing business in the Middle East. At Amman, Israel's private sector will have a unique opportunity to meet its counterparts from the Arab world and the United States. They will have a chance to participate in a multilateral effort to link the last major trading bloc in the world to global business.
Israel's role in this regard was driven home to me in New York this week. One of America's largest and most successful financiers told me of an encounter he had with an Israeli and an Egyptian businessman who had come to him to seek backing for a joint venture. What impressed him much more than their interesting business plan was the relationship between them. It was obvious to him that the Israeli understood his Arab partner much better than an American could. This is the essence of the new partnership that can be built between Israel and its Arab neighbors, a partnership for peace and prosperity in which the private sector becomes the engine that pulls the Middle East into the global market of the 21st century.

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