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Guy Setton has an MA in International History from the London School of Economics and a BA in International Relations from the Hebrew University in Jerusalem. Guy was an IDF officer and today he lives near Jerusalem.
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By Guy Setton
August 13, 2005
One in every three Israeli children is living below the poverty line. For the third consecutive year the number of poor children in Israel rose. Following the 2004 Poverty Report, people have been arguing about the most effective means to turn this dangerous social trend around. The long term solution: gradual transformation of tourism into the country's top industry.
There are those, on the right of the economic spectrum, arguing that the government must continue with the structural reforms headed by former Finance Minister Benjamin Netanyahu. According to them, only this will lead to a modern liberal economy creating jobs and spreading wealth. They admit, however, this is a lengthy process before economic prosperity reaches the underprivileged, for example, in southern Tel Aviv, the Negev and the Galilee.
Then there are those, on the left of the economic scale, who claim that the structural reforms are unfairly taking money away from the poor and handing it over to the rich. Instead, they call for a series of social policies, such as increasing the minimum wage and welfare benefits so that poor people are not left behind without realistic means to improve their lives.
In 2005 the Israeli economy is growing but prosperity is limited to a very small and highly educated group, primarily working in the high-tech sector in the country's affluent center. Most of the population benefits very little, if at all, from the high-tech industry's prosperity. The projection that venture capitalists operating in Israel will raise about US $1.5 billion in 2005 means little to those living south of northern Tel Aviv or north of Herzliya Pituach, other than creating more frustration and disbelief in the system.
If Israel wants to remain competitive in the global economy of the 21st century, then the country must continue the vital structural reforms to complete its transformation from an outdated socialist economic market into a modern capitalist system. In that respect, Netanyahu made a very important contribution to the country's economic future. Meanwhile, increasing minimum wages and social benefits is a temporary solution. The state cannot do so indefinitely without facing economic collapse.
Israel cannot rely on its high-tech sector. Our programmers and scientists are world-leaders in their respective fields and the government must continue to encourage the industry's development in Israel. Fortunately, there is a prosperous private high-tech sector able to undertake most of the responsibility for the industry's future.
Instead, the number one priority of the government over the coming decades must be gradually transforming Israel into a world leading tourist attraction. Considering that Israel is the Promised Land to Jews but the Holyland to millions worldwide, it is inexcusable that the small island of Cyprus, with much less to offer, has consistently more tourists visiting it than Israel does on an annual basis. Even in 2000, the Millennium year and before the second Intifada, Cyprus attracted some 200,000 tourists more than Israel with about 2.6 million visitors compared to some 2.4 million here.
The Holyland, not only Israel, has to be marketed around the world. The government must invest significant funds into tourism related infrastructure making sure that the Biblical sites are in top condition and that there are hotels for all categories of travelers. The government needs to invest in the education of a labor force dedicated to tourism whereby customer service and knowledge of foreign languages are at the foundation. It is much more affordable and feasible to educate the masses to work in tourism than it is to provide them with the demanding skills required by the high-tech sector.
It is inevitable that more high tech jobs will go to China, India and other low-cost developing economies. We will be left with niche and higher-end technologies, precisely where we have an edge over the rest of the world. Yet an entire nation cannot depend on a niche industry. Tourism can spread wealth and better education to the masses. Tourism can reduce the social divide and transform the Negev and Galilee into prosperous regions.
Since the prospects for peace in our region are still very much in doubt, turning Israel into a world leading tourism destination will take a long time. Despite the risks, the national project must commence without delay. As a start, for example, the government needs to terminate its support for El Al; a private enterprise and no longer the national airline. There must be open skies delivering cheaper flights to and from Israel so that potential tourists do not have to abandon their plans to visit Israel. In the last year alone, Israel lost about $1 billion in tourist revenues due to a shortage of flights to the Holyland.
Our future is not so much in the twenty or so high-tech incubators around the country, but rather in the Biblical sites spread across the Holyland. Israelis can be proud of the leading corporations created by them such as Teva and Checkpoint. Our success stories, however, are relatively limited in a global perspective. We have no representative in the world's 100 Top Brands. We may not have a Nokia, an Intel, a Nestle or Ikea, but we do have potentially the mother of all brands: the Holyland!
Views expressed by the author do not
necessarily reflect those of israelinsider.
 
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