Al-Aqsa Intifada deals heavy blows to zionist economy ... Intifada cost “Israel” $3-billion last year

Jerusalem - zionist losses incurred during the Palestinian intifada ran to between $3-billion and $3,6-billion (about R30-billion) in 2002, or 3,1 to 3,8 percent of gross domestic product (GDP), the Bank of “Israel” said on Thursday.

The intifada, or Palestinian uprising which broke out at the end of September 2001, has brutally curbed “Israel's” income from both tourism and exports to the Palestinian territories.

Without taking into account the world recession, the ongoing violence in “Israel” and the Palestinian territories has created a "climate of uncertainty" which has hit investment, both local and foreign, causing it to fall between 11,5 and 14,4 percent last year.It also hit private consumption, which fell 3,5 to 4,3 percent, slashing some 1,4 to 1,8 percent from the GDP.

A key indicator of growth, “Israel's” GDP fell by one percent in 2001 and 0,9 percent in 2002, and most experts fear it could recede even further in 2003.

Foreign deposits into zionist banks dropped by $263-million in February, compared with $208-million a month earlier, the Bank of “Israel” said in a report.

It also warned that foreign investment figures for the first quarter of 2003 were likely to be worse than those registered in the last quarter of 2002, when the fall hit a record low of $479-million.

Since the start of the year, capital flight also increased as a result of a new fiscal reform passing into law which, for the first time, imposes taxes on bank deposits.

”Israel” is currently undergoing the worst economic recession in its history as a result of 30 months of violence with the Palestinians and the crisis in the high-tech sector, which has been the Zionist  state's main engine of growth since the end of the 1990s.

To try to reduce the budgetary deficit, the government of Prime Minister Ariel Sharon this week adopted an austerity budget which aims to cut $2,3-billion from government spending, and slashes tens of thousands of public sector jobs.

The drastic plan, proposed by new Finance Minister Benjamin Netanyahu, also includes an eight to 10 percent reduction in public sector spending and heavy cutbacks in social payments.

Although it was passed by the government earlier this week, the plan still has to be approved by the parliament, or Knesset, and is slated for a first reading in mid-April, with second and third readings scheduled for May. As “Israel”  readied itself for the deep economic cuts, the US government committed itself to provide the Jewish state with $10-billion in aid.

 If lawmakers approve the plan, “Israel” will receive $1-billion in military financing and an additional $9-billion in loan guarantees, which will help the country impose preferential tariffs on borrowing on the international financial markets.
 
 The military aid comes in addition to the annual three billion dollars of funding “Israel” already receives from the US administration, of which $2,1-billion is earmarked for military assistance.

 Three quarters of the military funding will be funnelled to the purchase of US weaponry, while the remainder will be used by the Zionist  defence establishment for purchasing military hardware locally.

 Commenting on the allocation of funds to “Israel”, the White House said the loan guarantees would help Israel "to face up to the economic costs brought about by the war in Iraq and to put in place important economic and budgetary reforms."

 But the aid package came with a proviso - that the loan guarantees would only be used to support activities in areas under “Israel's” control since before the 1967 Six-Day War.

 The proviso appeared to be a warning that the money should not be used for expanding Jewish settlement activity in the West Bank and Gaza Strip, both of which were occupied by “Israel” in 1967.