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Spring 2000
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Comments of the President
By Robert J. Loewenberg
The Demise of a Free Zone
The lead business story in the May 5 edition of the Jerusalem
Post appeared under this five column headline: "U.S. group withdraws from Negev free trade zone project." And so, eight years almost to the day after
I'd corralled, along with Rabushka, a reluctant group of Institute friends and supporters into a meeting at the University Club in Manhattan, the FPZ project is dead. Calling it "A tragedy of turf and taxes," the same Post writer said "it's hard to think of another commercial project that has generated such heated passions, pro and con...." Truthfully the "pro" was almost entirely from outside of Israel, including from those in the U.S. Congress. The "con" was here in Israel where the "less con" was plainly tactical, for example the late Mr. Rabin, whom Mr. Silverstein (an heroic but late comer to the project) thought to be "pro."
Trojan Horses
The zone was a simple idea. A market reform with real markets in an environment of deepest socialism. The "deep" refers to the now unchallenged authority of Israel's deracinated political class that captured what others, for example in America, still don't have. This is the power to criminalize what it hates
-"capitalism," "nationalism" and perhaps also Jews, by destroying what everyone else loves (i.e., freedom) so that even the discussion of reforming socialism as an economic or political program puts one outside the pale as
anti-democratic, a fascist, a Nazi and so forth. This is why the zone was a Trojan Horse, really two Trojan Horses.
One of these "horses'' was inside Israel, the other outside it, actually in the American Jewish philanthropic community itself.
Inside Israel the Trojan Horse was the investors of IEDC bearing markets. The gambit was American Jewish businessmen were to put markets into the heart of socialist Israel leaving the body of Israel untouched. American Jewish businessmen were to set an example of hated capitalism (and of envied American millionaires) at work. Would the Manufacturers Association permit even this? Would its leaders, Dov Lautman or Dan Propper, show how the system really works by teaming up openly with the Histadrut and the nomenklatura in the universities and the media? And, most of all, would the operators of the system in the Finance Ministry, calling in their satellites in the Ministries of Trade and Industry, Education and the rest, sit still as their ideals and 11% annual raises were put at risk by a Trojan Horse in the desert? As for the politicians who power it all and hold it together - by breakfasting with millionaire Jewish businessmen who work the Congress and other places to assure that Israel gets the one thing most needed for its socialism and its political class, namely outside money -would they give in? Would they put the zone through out of fear that the businessmen would stop supporting Israel, either because they'd see what Israel really is or because they're capitalists and greedy?
The Israelis never doubted they could string the Americans along for 8 years using their main paid hostage, the Israelis themselves. The system watched and used the $7 million the investors of IEDC spent on their project as yet another American contribution. Like pressing buttons, the politicians watched as the American Jewish philanthropists were paraded in the press like enemy pilots. The economics editors of
Ha'aretz and Yediot Aharonot, men who are at this moment doing their utmost to "sell" Mr. Shohat and the ministry's tax reform that Rabushka explains nearby, insured that only bad was uttered about the zone and the rapacious Jewish capitalists from America. One
Ha'aretz commentator even wrote a nearly pornographic account of the zone to show that what he seemed really to believe was a plan to enslave Israelis, was also, even worse, a kind of titillation for perverted American Jews to dream about just like Mr. Babbit. And poor Mr. Tisch, dragged into IEDC as "a name," was humiliated when an especially
quick-witted Israeli bureaucrat/politician "revealed'' the great entertainment industry titan joined IEDC to destroy chicken farming. He planned to raise cheap chickens in the Israeli zone. Not to be outdone, Tel Aviv University law professors added the final blow; the zone as a teaching experience. At a moot court, their students debated if the zone law was legal. The students represented the Manufacturers Association and Histadrut as plaintiffs challenging the law. Defending the law were the professors acting on behalf of the Finance Ministry. How appropriate.
