BY AHMED NIMER
RAMALLAH The resignation of Israeli Prime Minister Ariel Sharon on November 5 means that elections will be held within 90 days, most likely next February. Sharon's resignation was forced by his inability to form a new right-wing coalition following the resignation of Labour Party members from the government.
Labour's withdrawal from the 19-month-old National Unity government was ostensibly caused by a dispute over the Israeli budget, passage of which has been stalled in the Knesset (parliament) for many months.
Labour leader Benyamin Ben Eliezer had demanded that funding levels for Israeli settlements in the West Bank and Gaza Strip be at parity with funding for other sections of Israeli society. When Sharon refused to make this alteration to the budget, the Labour Party resigned from the coalition.
Israeli settlers in the Occupied Territories receive more government funding than any other Israeli citizens despite having the highest per-capita income.
The real story behind the collapse of the National Unity government has nothing to do with settlement funding. Instead, it is a reflection of the massive economic crisis that Israel is facing a crisis unprecedented in its history and the continuing Palestinian intifada.
On November 4, the government released a report that indicated one in five Israelis is living below the poverty line, with 27% of Israeli children living in poverty.
These broad figures obscure much deeper divisions in Israeli society. Among Palestinian citizens of Israel (living within the 1948 borders), poverty rates are much higher than among Israeli Jews, with 50% of all Palestinian children living in poverty (these figures do not include Palestinians living in the West Bank and Gaza Strip). Poverty rates are also significantly higher for Israeli Jews from African, Asian and Arab countries (Mizrachi Jews).
The backdrop to this crisis is a massive income gap the gap between the lowest and highest income deciles is the second largest in the industrialised world. The situation is getting worse, with unemployment predicted to reach 12% next year and the Israeli economy expected to show negative growth for the second consecutive year (2001 was the first year of contraction in 48 years).
The Palestinian intifada has badly damaged two of Israel's key industries tourism and construction. Tourism traditionally accounts for around 3% of Israeli GDP and has dropped by half since September 2000. Over 50% of all hotel employees have lost their jobs due to the drop in tourist numbers. Investment in the construction industry, which relies heavily on cheap Palestinian labour, has dropped by around 18% in the last two years.
The key reason for Israel's precipitous economic decline, however, is the downturn in the global economy. Since the mid-1980s, Israel's economy has undergone a transformation in which most state-owned companies were privatised and there was an increase in foreign investment and ownership of Israeli companies. The economy shifted away from its traditional dependence on military exports and the textile industry and attempted to catch the coattails of the high-tech wave.
This produced a profound change in the ownership structure of Israeli capital: US companies came to control large sections of the Israeli economy and traditional low-tech industries were closed down or shifted to neighbouring countries such as Egypt and Jordan where labour costs were cheaper.
The 1993 Oslo accords were the political reflection of this process. Israel's "new" capitalists were highly supportive of political negotiations with the Palestinian leadership because they looked towards the markets and cheap labour of neighbouring Arab countries. Moreover, a "peace" settlement was necessary in order to open Israel's economy to foreign investment and allow the expansion of exports to the rest of the world.
In reality, the "peace process" was a form of bantustanisation of Palestinians in the West Bank and Gaza Strip under the control of a subservient Palestinian Authority that would be granted some crumbs from the table of capitalist globalisation.
The inevitable outcome of this transformation was the immiseration of large sections of the Israeli working class and a precipitous decline in living standards for the Palestinians, who also had none of the their political hopes fulfilled.
The Israeli ruling class is now faced with a dilemma of its own making. It is clear that the strong-arm tactics of the National Unity government under the leadership of Ariel Sharon have failed to crush the Palestinian uprising.
More and more voices from Israel's ruling circles are calling for a political solution and a return to the quiet bantustanisation policies of the Oslo accord years. This is the reason why Sharon was unable to form a coalition with Israel's ultra-right parties, which set the mass expulsion of Palestinians and the destruction of the Palestinian Authority as their precondition for joining a government with Sharon.
On the other hand, the Israeli Labour Party the traditional party of the Israeli capitalists is in crisis. Ben Eliezer is likely to lose the Labour Party primaries in two weeks' time, partly because he has been so closely associated with the policies of the Sharon government in his position as defence minister.
The challengers to Ben Eliezer Haim Ramon and Amram Mitzna are both closely linked with the so-called peace camp and the Israeli ruling class. All polls show that one of these contenders will become the new leader of the Labour Party.
Sharon also faces a competitor in the form of Israel's former prime minister, Benyamin Netanyahu, who has formed close links with the ultrarightists and is a strong champion of the settler movement. At the same time, Netanyahu's right-wing populist rhetoric does not preclude him from imposing a political solution along the lines of the Oslo accords. He has powerful financial backers among US capitalists and, unlike Sharon, does not come from a military background.
The Israeli capitalist class and the US government are agreed on the final goal a political solution that will give Palestinians a quasi-state closely resembling the South African apartheid-era bantustans and which allows the free movement of capital in the area.
Both Labour and Likud defend the neo-liberal austerity measures of the last decade and will not deviate from this program. While the media pundits will undoubtedly present the contest between Labour and Likud as a contest between peacemakers and warmongers, neither offers any just solution to the Israeli occupation of Palestinian territories, the fundamental obstacle to peace in the Middle East.
From Green Left Weekly, November 13, 2002.
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