IASPS

Quarterly Report
Spring 2001

IASPS Conference: The Water Crisis and a Regional Alliance

Comments of the President

The Director's Column

Two Prologues and a Future

Koret Fellows Month in Washington

Back to the IASPS Homepage

The Director's Column

By Dr. Alvin Rabushka
Director, Division for Economic Policy Research

---

Midsummer Night's Dream  

Last night, I dreamt about Moses, that he returned to earth. He did not go to Egypt to tell the pharaoh to "let my people go." No. Instead, he appeared in Washington, D.C. Dressed in a flowing robe and carrying a staff, accompanied by his faithful companion Aaron, he walked into the halls of Congress and the White House. He told U.S. government officials that "free money" was keeping his people in bondage to state socialism. He pleaded with the U.S. government to end its foreign aid program in order to "let my people go." 

The Americans listened. Moses and President Bush, flanked by Congressional leaders of both parties, held a press conference on the White House lawn to announce the change in U.S. policy. Immediately, Israel's prime minister, finance minister, and every other minister canceled travel plans to Washington, D.C., where they had planned to ask for new chunks of free money. Changed financial circumstances forced them to contemplate self-support. But where would they find billions oof dollars to replace the lost aid?

Nice — and Easy

Actually, it turned out to be rather easy and straightforward. Israel's politicians moved quickly to sell state-owned land. They privatized state-owned water, electricity, telecommunications, transportation, railroad, harbor, military, and all other public corporations in which the government held shares. They eliminated trade barriers. They cut marginal tax rates in half. They eliminated subsidies to politically favored firms. They fired striking public employees. They slashed the bureaucracy. They rationalized reserve duty. They reinstated the Free Processing Zones Law. In short, they denationalized, demonopolized, decartelized, and deregulated. Decades of free-market talk finally materialized. 

Suddenly the Israeli people were free. But not everyone was happy. My dream was a nightmare for Israel's nomenklatura. The politicians, bureaucrats, media, intellectuals, managers of state firms, and unions lost power. 

I awoke to find Israel in a real nightmare, its worst crisis since the 1973 war. This is not a crisis of violence, as you might think. It is something more basic. Simply put, the country is running out of fresh water. In the desert, water is everything. The government of Israel has so badly mismanaged its water resources that a land of farms, lawns, and trees -- a land of milk and honey -- may revert to desert. All of Israel may soon look like David Ben-Gurion's beloved Negev desert.

Below the Red Line

Israel has countless state agencies and committees. One, the Water Management Committee, is supposed to be responsible for safeguarding the country's water resources and insuring supplies of fresh water. The committee consists of "experts" from the State Hydrological Service and the state-owned Mekorot water company. It has, of late, repeatedly warned of imminent catastrophe. State control wasted and misallocated large portions of Israel's water supply since the country's founding. Now, adding to government mismanagement, three consecutive winters of drought have lowered Israel's three main sources of fresh water, the Coast and Mountain aquifers and the Sea of Galilee, below their respective red lines. Red lines were established to insure that seepage of salinity into fresh water does not cause irreversible damage to water quality.

A Drop in the Bucket

To be sure, the United States has its own water problems. However, per capita water consumption in California, a state with severe water problems, is 10 times that in Israel -- and this is before Israel's agreements to supply water to Jordan and the Palestinians. Nor does it take into account what might happen to a third of Israel's water supply, the Sea of Galilee, if Israel signs a peace agreement with Syria. Barring record rainfall next winter, there is a risk that Israel will soon run out of reasonably priced fresh water, unless the government dramatically overhauls the entire water production and distribution systems. Unfortunately, prospects of serious overhaul, that is, letting private firms and market forces take over the production and distribution of water from the government, are not encouraging.  

The socialist system that produced Israel's water disaster is ill equipped to correct it. The government is considering buying water from Turkey, but the finance minister and his ministerial colleagues first want to determine if desalinization is a better option, hoping the Turks will give them a better price. The government has asked firms to submit bids to construct Israel's first national desalinization plant at Ashdod, which would be capable of producing 50 million cubic meters of fresh water annually. The project is expected to cost taxpayers $150 million. The likelihood is that the state-owned water monopoly, Mekorot, will be given preference. Murphy's Law will frustrate this limited effort. It will cost more than $150 million, it will not be completed on schedule, and the quantity of fresh water will not meet stated goals.  

But suppose the desalinization plant were to come on line tomorrow. How much is 50 million cubic meters of water? For purposes of comparison, the Water Management Committee is urging an immediate further cut of 250 million cubic meters of water this year, on top of previous cuts. In normal years, the Sea of Galilee ordinarily supplies 420 million cubic meters of water. This year, any water pumped in excess of 87 million cubic meters will cause the level of the lake to drop under the "new red line," which has been lowered beneath the "old red line" to permit pumping in excess of previously established safe levels. The government of Israel is playing with fire with water.

Where Have All the Flowers Gone?  

New Water Management Committee recommendations include total bans on watering private lawns and the establishment of new municipal parks or gardens, the introduction of water quotas to local government authorities (which will brown out local parks and gardens), further cuts to industry (semiconductor manufacturing requires a steady supply of clean water), and drastic further cuts to farmers (which have already been cut 50 percent). To add insult to injury, farmers want taxpayers to compensate them for the water they aren't getting, which they previously received at subsidized rates.  

IASPS feels like the boy who cried wolf. We have published several papers on Israel's water crisis and how to resolve it. We have written more NBNs and op-eds on water than on any other topic. We regret to report that the government has yet to bite the bullet and proceed on a path of real reform. 

Next Story

Back to the IASPS Homepage