Does Liberman and Israel have cause for concern

By Ted Belman

Liberman is fearful that the EU will impose sanctions on Israel just as it has on Russia.

EU sanctions against Russia over Ukraine crisis

In response to the illegal annexation of Crimea and deliberate destabilisation of a neighbouring sovereign country, the EU has imposed restrictive measures against the Russian Federation.

Is there any reason why they wouldn’t do the same to Israel?

The sanctions and the precipitous drop in oil prices have necessitated government actions.

The Russian bailout begins: Central bank offers to help refinance $100-billion in foreign debts as bonds face ‘junk rating

Russia is entering ‘full-fledged economic crisis,’ warns former finance minister

As he spoke President Vladimir Putin prepared to hold emergency talks with Western leaders to try to resolve the stand-off over Ukraine, the central bank bailed out its first victim of the collapsing currency and authorities announced a tax on grain exports to protect domestic stocks.

A Reuters poll of 11 economists predicted that Russia’s gross domestic product would fall 3.6% next year, after only 0.5% growth this year.

Russia has been hit by what Economy Minister Alexei Ulyukayev recently called a “perfect storm” of plummeting oil prices, sanctions related to its military action in Ukraine, and a flight of investors’ capital — made worse by a lack of structural reforms that means the economy is overwhelmingly dependent on oil revenues.

Government officials have tried to minimize the impact of sanctions on the country and its ruble currency, which plunged 80% against the dollar last week despite a hike in interest rates to 17%. Putin has claimed “external factors” like oil were the key culprit behind the country’s “tough times.”

It seems to me that it is entirely possible that similar sanctions can be imposed on Israel by the EU. The EU considers that Israel and Russia are both occupiers. The question is could Israel turn to the US banks and markets for relief.

Could the sanctions be as crippling to Israel as they appear to be to Russia. At least we don’t have to worry about falling oil prices for a few years.

Now imposing these sanctions are not cost free to the EU, Germany in particular. ‘West shoots itself in the foot with Russian sanctions’

Similarly if Israel were to cut back on its imports from Europe, it would be harmful to the European economy.

Even Israel isn’t immune. Russia crisis spells devastating losses for Israeli farmers

Finally, the Search is on for diplomatic solution to Syria war. It seems to me that the sanctions on Russia give the west more leverage. Similarly the drop in oil prices is putting Iran under great pressure.

December 24, 2014 | 16 Comments »

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16 Comments / 16 Comments

  1. @ Bert:
    I agree in general.
    The Land of Israel is ours no matter what “the world” concede. Or not. The Roman Empire ended and we are back home. And we must expand over the whole of Eretz Israel.
    Will Netanyahu do that? No. And if the voters expect that he will do it we are in much more trouble than what is apparent.
    Muslims, as there is no such a thing as “pilistines”, murder. Period. It is the Arabic branch of Islam way of life. They usurp land of others as part of their inclination. They massacre each other by the millions. They slaughter other sections of Islam freely.
    The Europeans, in turn, incorporated Muslims to use them as cheap labor and to foment anti-Semitic plans through the murdering hordes. They turned the Islamic entities into proxies. And so did Peres and his associates.
    Regrettably the hordes do not need specific directions, they just murder. They attacked a train in Spain, discotheque in Germany, the underground in London, the Twin Towers in New York, etc. They murder in Chechnya and Boko Haram? rampages in Africa.
    Making those beasts acting as such a consequence of Israel’s executing its natural rights is far worse than incorrect.

  2. Some very thoughtful and creative discussion going on here. It is time for Israel to calculate the possibility of standing up to EU sanctions and inflicting pain back on them. If the EU does impose sanctions over Israel’s so-called ‘occupation’ then Israel has no reason to refrain from going full force to build in Judea and Samaria. Doing so should benefit Israel by lowering housing costs and removing the danger to Tel Aviv from a Palestinian State. And Muslim anger at Israeli expansion could also result in terror attacks inside Europe which could be blamed for provoking Israel’s expansion.

  3. @ yamit82:
    Yamit, switching the currency and bankrupting Hamas and Fatah is a marvelous suggestion, but the typical leaderships of Israeli governments lack the implacability to include in the way they treat Israel’s permanent enemies.

    As for Liberman and his party, I don’t see them as playing much of any kind of significant role in setting up opposing coalitions. If he and his leading candidates are indicted and convicted, it’s all over for them. I think the Jewish public in Israel is split about 2/3 – 1/3 in favor of tougher handling of the Arabs. So many if not most of Liberman’s voters will probably split that way as well. No government in Israel ever has included the Arab parties in a coalition, and from what I read about Kahlon, he has favored annexation on more than one occasion. Which, I think, means he will be more comfortable in a coalition with Bennett, if not Netanyahu. Which leads me to believe Bennett and his party will gain the most in the coming coalition-crafting. As for Livni and Peres, I regard them as little more than yesteryear’s political garbage, waiting at the curb to be collected and disposed of.

    My overall advice never changes: Keep on building Jewish settlements in all parts of Area C and in all those parts of annexed Jerusalem most likely to break up the continuity of the Arab neighborhoods. Israel doesn’t have to formally annex Area C right away. When the Jewish population of Area C and annexed Jerusalem continues to increment by 2 – 4 per cent per year, it will be no more possible to unscramble the omelet of Jewish Israeli planned urban sprawl than it has been possible to do anything about this interesting phenomenon around every large city in the USA. Do just that, and the day will come when annexation will be just an exercise in paper-shuffling.

    But writing as a Jewish nationalist, what I really want to see is Arab Moslem control of the temple mount in Jerusalem revoked by a strong Jewish government that knows exactly how to handle power once achieved. By the way. Is there any halachic reason that Jews could not pray inside that dome, standing right on top of the crest of the hill where Avraham the great partriarch of what became the Jewish nation, had what I think was the most fateful conversation in Jewish history, with HaShem? I thought of that while our eldest son lighted the candles these past eight nights.

    Arnold Harris
    Mount Horeb WI

  4. The erudite comments above caught the attention of a think tank that have been following Israpundit for years. In discussing Israel’s economic situation they preferred economic information that we supply to that of Brookings and the Rand Corporation. They wrote to the people with whom they were discussing Israel, the following:

    I appreciate your willingness to share with me your observations on Israel’s economic situation/problems.

    The following material is reproduced from ISRAPUNDIT.ORG. This is a site run by Theodore Belman, a Canadian lawyer now resident in Israel. This site was 1st suggested to me by David Sternlight. Since then I have received numerous references to this site from MIL-OPS , a site approved by the Defense Department for military education. Belman is regarded by them as a “right of center reliable source of information”.

    Unfortunately, my key sources of information on Israeli economics comes from Brookings. While there are several analysts who are objective and perceptive in this area, the overwhelming amount of their output is suspect. My other main source, Rand Corporation, is also subject to its leadership having inherent biases that do not favor Israel. For example, the leader of these studies, who has been very accepting and supportive of me, was a key debater against Israel in a public forum.

    They also communicate information from Israpundit to VP Joe Biden. I am co-copied with the emails.

  5. @ yamit82:
    Again you are correct. The Arabs in Y ^ S and Gaza can easily be shredded financially, economically, etc.
    Will it happen? Not with Netanyahu there.
    Dr. Landau and Mr. Shamir are the only two with Lieberman that one can care for. I have no idea about their plans if any. The voters likely will spread all over except to haredi or islamic parties..

  6. @ SHmuel HaLevi 2:

    Israel could bring down the whole PA structure in a month without firing a shot.

    The Palis and Hams structure are integrated and intertwined in the Israeli economy even their currency.

    Israel could one day change currency notes exchangeable for old notes only by Israeli citizens. That would leave PA and Palis holding billions of worthless banknotes. Institute sanctions against the PA and the population by banning sale of Israeli goods to them. Stop employing any Palis in Israel or the territories and stiff fines and jail for all Israelis caught employing them. They want a state let them declare on one the territories they hold today. We annex the difference and back it up with a thousand Merkavas ringing every town and village in the territories.

    Lots Israel can do if we had leaders with cojones.

    Police are providing Lieberman a near death blow politically so no other party will dare link with them.. Where will his constituents move too????

  7. @ yamit82:
    Excellent. I like in particular the deductions of losses from transfers to the Muslims in Y & S.
    They must also pay up their electricity supply debts or cut them off.
    No air travel to them from Israel.

  8. @ SHmuel HaLevi 2:

    Israel should react to sanctions and or the threats of sanctions as acts of war and act accordingly.

    No need to break diplomatic relations but to give Europe the absolute cold shoulder no government official access, no entry to Israel by members of any government or Parliament who favors sanctions against Israel banned from Israel and territories.

    Value of assessed losses to Israeli concerns due to sanctions will be deducted from transfers to Palis and passed on to those Israeli concerns.

    A lot more but EU will cave if Israel stands tall against them.

  9. Ted Belman Said:

    This huge trade deficit means that there is very large Israeli trade leverage – it means Israel has more to threaten EU by stopping these imports from EU and buying it from somewhere else. It seems that it is already happening as the growth in imports from EU is tiny (18,003.3 vs 17970.4), while growth in exports to EU still substantial (in spite of economic disaster in EU).

    I like this idea too (this has been part of Bennett’s grand plan as Trade Minister), but it also depends what you are buying from Europe, and where else can you get it….

    Israel’s biggest procurements are likely defense related material (those German subs and surface vessels) and cars. Now that Israel has so many German ships in her fleet, she is somewhat tied to the EU for procuring parts & maintenance for those ships (which over the life of the vessel, can cost more than the original vessel itself).

    I think future ships should be ordered elsewhere, like Korea or China, and while I don’t know what Israelis drive, it would be a good idea to decrease dependence of European cars and move over to Asian ones.

    The other thing those numbers do not likely address is tourism. While the USA and Russia are the top two sources of visitors for Israel, there is a sizeable chunk from the EU; I do not know what percentage of that is Jewish. Safe to say that I venture foreigners spend far more in Israel than Israelis spend abroad. Again, the route here is to encourage Asian business (tourism) — South Korea has a large Christian minority (as is clear to any American who has to take stuff to the dry cleaners), Filipinos are overwhelmingly Catholic, and even the fairly small percentage of Christians in China represents tens of millions of people.

  10. Israel maintains a reserves versus debts ratio that is one of the best in the world.
    Russia, much as the US works on a debt load type economy. They both owe a bit less and or just a bit more than their GNP. The US owes over 18 trillion and Russia far less but too much for its economic output.
    The people of Israel lived through rationing for years and came out fine.

    The ones concerned are the parasitic “elites” and high yield seeking foreign investors.

  11. Ted Belman Said:

    For example, in 2013 Israeli exports to EU were 18,285.6 (in USD millions), while imports were 24414.1.

    Israels imports from EU are 1/3 higher than exports. This is good. some businesses would be hurt but others might rise and expand.

  12. Liberman is fearful that the EU will impose sanctions on Israel just as it has on Russia.

    this is the mantra and election platform of the left. Liberman speaking of the imminent necessity for a diplomatic agreement is another mantra of the left, but he has no actual plan that shows any sign of acceptability by the arabs. Basically, he has no plans other than to parrot leftist mantras.
    On the other hand he may be seeking to draw off some votes moving to the right or center from the left. I nave no idea what he voted for when in gov that was different than BB requested.

  13. Email received:

    Ted, I work on Wall Street and understand what is going on with Russia. Russia is commodity producer and all commodity producers are suffering – Iran, Venezuela, Nigeria, Colombia, Chile, even Norway. The effect of sanctions on Russia is very small. The main cause of problem is lack of diversification in Russian economy.

    Secondly:

    what is important to highlight in your presentations is that Israel has the massive trade deficit with European Union. I am looking at the monthly data from Israeli Central Bureau of Statistics.

    http://cbs.gov.il/publications14/yarhon1014/pdf/h8.pdf

    For example, in 2013 Israeli exports to EU were 18,285.6 (in USD millions), while imports were 24414.1. The same trend persists for the first 9 months of 2014 for which data is available – exports to EU were 14,186.2 (vs 13220.7 the same period in 2013), while imports from EU were 18,003.3 vs 17,970.4 the same period last year.

    This huge trade deficit means that there is very large Israeli trade leverage – it means Israel has more to threaten EU by stopping these imports from EU and buying it from somewhere else. It seems that it is already happening as the growth in imports from EU is tiny (18,003.3 vs 17970.4), while growth in exports to EU still substantial (in spite of economic disaster in EU).

    It would be nice to create a historical time series of trade with European Union, North America, and Pacific Asia and to keep the track of the growth of Non EU trade. I just do not have time to do it. All the data is available on Israeli Central Bureau of Statistics.