Had Israel voted its pocketbook in the June 23 elections, the Likud party, led by Yitzhak Shamir, would have won easily. For the fact was—a fact obscured by campaign rhetoric, the obsessive preoccupation with American loan guarantees, and the monthly scare figures of unemployment—that the Israeli economy had made remarkable progress in the six years of Shamir’s premiership.

Indeed, within the last two of those six years, Israel had managed to house, feed, and clothe over 400,000 immigrants—more than a tenth of the state’s Jewish population—from the former Soviet Union, and to employ over 60 percent of them. That this could happen while the Western world was enduring an economic slowdown made Likud’s feat all the more impressive.

Furthermore, of the 6,000 scientists and research-and-development engineers who had arrived in Israel since the beginning of the current immigration wave in November 1989, more than half had found jobs in their own professions. Forty percent had joined the industrial sector, another 40 percent had been absorbed by institutes of higher learning, and 20 percent had been appointed to positions in government research institutions, research laboratories in hospitals, and technological colleges.

To be sure, this still left nearly 40 percent of the new immigrants unemployed. Yet even counting them, the nation’s overall unemployment rate (11 percent), of which only half were hard-core job seekers, was no higher than in many Western countries. And in contrast to those countries, there were virtually no homeless in Israel, and no one was going hungry.

Nor was this all. By the time the election took place, inflation was clearly being curbed (the cost-of-living index for May was negative, something as rare in Israel as spring snow), and other economic indicators were just as encouraging. Thus, in March and April, mercantile exports were up 10 percent compared with the previous two months, and retail sales were 5 percent higher. Industrial production was back to the record high set in the pre-Gulf-War period of July-August 1990. Imports of investment goods rose a whopping 17 percent (including a 20-percent jump in imports of machinery and equipment).

Nor could these pre-election improvements be considered a fluke. In the preceding four years, Israel had chalked up a 20-percent growth rate. The 1991 rate was well over 6 percent (putting Israel fourth in the industrial world, after South Korea, Taiwan, and Singapore, and ahead of Japan, Germany, the U.S., and Great Britain). The gross domestic product (GDP), which approached $54.4 billion in 1991 (against $28 billion in 1986), was the highest in the nation’s history. Israel also recorded a sharp decline in the trade deficit as a proportion of the balance of payments, and a decline in the relation of American aid to the GDP—from 10.7 percent in 1986 to 5 percent in 1991.

Given the recession in the countries to which 80 percent of Israel’s exports were directed, and considering the $1.6 billion losses inflicted on the country by the Gulf War early in the year, the Israeli growth rate was well-nigh incredible.

The improvement was felt also on the individual level. From 1986 to 1991, the money supply rose by almost 90 percent, and savings went up to $13.2 billion, which amounted to 25 percent of the GDP, a record level, comparable to that of Germany. The 1991 turnover of the stock exchange was $12.3 billion, 23 percent of the GDP, close to that of the industrialized states. The number of small businesses employing fewer than 100 workers—the traditional backbone of modern economies—grew considerably. There was expanded investment from domestic sources—an indication of public confidence in the value of the shekel and the economy. Another such indication was the $1 billion returned to Israel by citizens who had been keeping their money overseas.

Since 1986, too, there had been a significant per-capita increase in the purchase of cars, television sets, VCR’s, and air-conditioning units, as well as a precipitous rise in travel abroad. And—no trivial matter where daily life is concerned—there had been a dramatic improvement in the quality of telephone service: the waiting list for telephones, a source of bitter jokes since the establishment of the state, had virtually been eliminated.



In spite of all this, the conventional wisdom, which even many in Likud began to believe, was that the economy was in a hopeless condition and that the absorption effort was a total disaster. The very same critics who two years earlier had blamed Shamir for unpreparedness, and had forecast thousands of homeless immigrants camping out on the streets, now blamed the government for overbuilding. They also blamed it for not providing immigrants with jobs. Had jobs been made available, they insisted, the immigration would not have begun dwindling, and the 200,000 immigrants once projected for 1992 would not have shrunk to the 60,000 expected this year.

Like all projections, however, these were at best educated guesses, as were the predictions in 1989 that if the Soviet Union’s gates opened, only 50,000-100,000 Jews would want to come to Israel. When those estimates were proved wrong and the rate became 200,000 a year, the pendulum swung to euphoric expectations of a million-and-a-half newcomers within two or three years.

Yet the initial unexpected flood of immigrants was caused not by a sudden awakening of Zionist passions, or by the confident expectation of better material conditions, but by uncertainty about Soviet policy. Soviet Jews feared—not unreasonably—that a successful putsch would reverse Gorbachev’s liberalization, or that the disintegration of the regime would beget pogroms and persecutions. But when it became clear that the freedom of Jews to emigrate would not be reversed, and that in the new climate entrepreneurs could thrive, many of the potential immigrants decided to wait and see. Of course, had Israel been able to secure a job for every cellist and petroleum engineer, more Jews would have come. But to expect such “goldene medine” opportunities anywhere today was to dream the impossible dream.

Not that the Shamir government’s economic policies were all that they might have been: greater investments in infrastructure, faster auctioning of government-owned land, more intensive privatization, greater exposure to imports, and more tax reduction would have spurred the economy even more, with a concomitant rise in the number of jobs available to the new immigrants.

Nevertheless, the absorption process was undoubtedly succeeding. There was no better indication of this than the fact that only a few hundred immigrants had left the country. (By comparison, of the Soviet immigration of the 1970’s, universally considered a spectacular success, about 10 percent—20,000 people—left, and that was one of the lowest rates of “defection” in the history of immigrations anywhere.)

To add to Likud’s troubles, the public linked the alleged failure to attract more immigrants with Shamir’s inability to secure the Bush administration’s guarantees for $10 billion in bank loans. Had the administration’s refusal been interpreted merely as an expression of hostility toward Israel, the voters might have rallied around Likud. But the general impression, abetted by a highly partisan press, was that Bush’s policy was motivated by a desire to topple Shamir, and that another government would fare better by being “more flexible” on settlement policy.

Realizing, however, that recommending surrender to an American diktat might backfire, Labor, Meretz (the other opposition party of the Left), and much of the press launched a brilliant and a thoroughly effective campaign against the Shamir government’s “wasteful expenditure of billions” on settlements in the “occupied” territories. Israel should stop building homes in the settlements, they declared, not because the Americans said so but because it would be best for Israel.

As it happens, government expenditures in Judea, Samaria, and Gaza in 1991—the year of greatest activity in these areas—amounted not to “billions” but to $315 million, less than 1 percent of Israel’s budget. Moreover, it was not the “settlements” which were being subsidized but the people living in them. Had the same people decided to live in the Tel Aviv area, government expenditures on roads and infrastructure would have been, if anything, greater. And had all the settlers been persuaded to live in the Negev and Galilee, the costs would have increased, since the greater distance of these areas from employment opportunities would have necessitated still larger expenditures on roads and infrastructure. What is more, government housing subsidies in outlying areas of pre-1967 Israel are as high as they are in Judea, Samaria, and Gaza.



Amazingly, rather than defending its policies in these terms, Likud concentrated instead on trying to smear Labor’s candidate, Yitzhak Rabin, by suggesting that he was unstable and a drunk. Yet Likud had been perfectly happy to have Rabin as Defense Minister for over five years in a national-unity government, during the major part of which he had served under Shamir’s premiership. To aver now that he was unfit to be Prime Minister was as asinine as it was offensive to the public’s intelligence.

Likud would have done better to paint Rabin as a front for a party which was in every respect far to the Left of him. For example, Rabin advocated a substantial reduction in taxes and drastically diminished government intervention in business activity. Nothing could be more contrary to Labor’s centralizing philosophy. Yet Likud, once again grossly underestimating the electorate’s capacity to follow a reasonable argument, failed to make a big issue of this discrepancy.

Similarly, on the issue of security, Likud permitted Labor to hide behind Rabin, whose hawkish reputation reassured many voters who would otherwise have been put off by the dovishness of his party. Indeed, with Rabin at the head of the ticket, the security argument, usually a strong point for the hawkish Likud, for once worked in Labor’s favor. Thus, Labor used incidents like the murder of a fifteen-year-old-girl in a Tel Aviv suburb—incidents as endemic to the Middle East as drug-related killings are to Washington—to push its “territorial-compromise” position (it vowed in this instance to “get Gaza out of Tel Aviv”).

Now, most Israelis still believe that the “land-for-peace” formula—a euphemism for a return to the pre-1967 lines—is suicidal, which is why Meretz, which advocates this policy, got only 10 percent of the vote. But about half of the Israeli Jewish population is now readier than in the past to consider “territorial compromise”—i.e., withdrawing from some of the territories taken in the Six-Day War of 1967.1 The reason is not only that the intifada has taken its toll and eroded public resolve. It is also that most voters today are too young to remember the constant dread of terrorism and the fear for the country’s survival of the pre-1967 days. Indeed, the Israeli media, and particularly television, commemorated the 25th anniversary of the Six-Day War, which occurred three weeks before the election, with self-flagellating reassessments whose conclusion was that the victory—hitherto seen as one of the great moments in the history of Israel and even of the Jewish people in general—had been an unmitigated disaster for the country.

As against this body of sentiment, Shamir’s unflinching resolve never to yield so much as “one inch” of territory could no longer prevail. Likud was simply unable to convince today’s electorate that Rabin’s reassuring middle position—the forfeiture of the areas in the territories heavily populated by Arabs—is a political impossibility, and that withdrawal from a part of them will ineluctably lead to withdrawal from the rest and the eventual establishment of a new Palestinian state there. (A new Palestinian state is an outcome still overwhelmingly opposed by the Israeli public, and by Rabin himself, though favored by Meretz and—if not always openly—by a growing number of Laborites.)

Even so, Likud had so much to crow about in the area of defense that its failure to score more heavily on this issue was even more astonishing than its ineptitude in making the case for its economic achievements. After all, Israel’s strategic position had been vastly improved under Shamir, and—thanks largely to a new tactic devised by Shamir’s Defense Minister Moshe Arens and Chief of Staff Ehud Barak—the Israeli army had put the intifada on the run.2

While displaying no-nonsense toughness against Arab violence, Likud had also shown the requisite “flexibility” by entering into negotiations with Syria, Lebanon, Jordan, and the Palestinians, talks that had been set up according to Israel’s prescription: they were direct, bilateral, and independent of international control. And a second track of multilateral talks, though still in an embryonic stage, had brought Saudi Arabia and other Arab countries to sit for the first time at the table with Israel.

With this record, victory at the polls should have been assured. But Likud could not overcome the disunity and the internecine feuding which so often afflict a party long in power. In the pre-election contest for the Knesset list, the Shamir-Arens wing of the party defeated Foreign Minister David Levy’s candidates. Levy, a pompous mediocrity who had used his Moroccan origins to climb the ladder of politics, then accused his colleagues of ethnic discrimination. Instead of firing him for undermining and slandering the party, Shamir placated him yet again. But the damage was done. Likud’s support among Israelis of Moroccan origin shrank considerably and Shamir appeared indecisive and weak.

The party also made the cardinal error of taking the Russian immigrants for granted. Assuming that victims of Communism would never vote for a left-wing party, Likud politically neglected them. Labor, on the other hand, did a good job of exploiting the natural resentments of new immigrants toward the ruling bureaucracy and the ingrained distrust all ex-Soviet citizens have for the party in power. They voted overwhelmingly for Labor.



But the two decisive factors in the Likud defeat had little to do with economic and defense policies or internal bickering. First of all, Shamir, convinced that Israel must retain control of Judea, Samaria, and Gaza if it is to survive, always believed that this goal justified even the most egregious domestic compromises. Needing the support of the ultra-religious parties (the haredim) to stay in power, he gave in to their outrageous demands for subsidies. That Labor had promised to accommodate precisely these same demands to entice the haredim away from Likud was quickly forgotten. Shamir was blamed for coddling non-Zionist parties whose followers did not serve in the army and whose Knesset members—some of whom are under police investigation—were unabashedly extorting taxpayers’ money for their projects and institutions. (One of the main reasons Tsomet quadrupled its strength in this election, going from two to eight seats in the Knesset, was that it was the only Right-of-Center party to attack the haredim.)

The most telling blow to Likud, however, was of its own creation. What became clear in the campaign was that only Rabin could defeat Likud. It was only his image as a security-conscious military man—a former general who, as Defense Minister in the early phase of the intifada, had been very tough in dealing with the uprising—that enabled voters who felt it was time for a change to take a chance on Labor. Without him, Labor’s dovishness would have been an insuperable obstacle to victory. In fact, even with Rabin, Labor’s victory was far from being the “decisive turn,” let alone the landslide, described by the New York Times and other Western media. Had Likud retained just two more seats than it did (34 instead of 32), this, together with the combined forces of the right-wing and religious parties, would have given it a majority of 61, and Shamir would now be heading the government.

That Rabin had a glorious military record certainly helped in the establishment of his reputation. But what really gave him the stamp of a hawk who—as he himself put it—could “tame the doves” within his own party was the unreserved trust he had enjoyed as Defense Minister under Shamir. It was this trust which defeated Likud: not the government’s record, not Shamir’s alleged “zealotry,” not the party’s many campaign blunders, not the ganging-up of the media at home and abroad, and not the Bush administration’s palpable hostility toward Shamir. In the most ironic twist in Israel’s political history, Likud was beaten not by Labor but by one man—and a man for the creation of whose favorable image it had itself largely been responsible, Yitzhak Rabin.

1 Actually the proportion would seem to be less than half, since (excluding the Arab parties) a majority of the electorate voted for the Right-of-Center parties.

2 The intifada of 1992, it should be noted, barely resembles the uprising that began in December 1987. Its main feature now is the activity of armed terrorist units which occasionally ambush Israeli vehicles but mostly torture and kill fellow Arabs who are allegedly collaborating with the Israelis. Responsible for the vast majority of Palestinian Arab casualties today, these gunmen have instituted a reign of terror throughout the territories. Faced with this new situation, Arens decided that instead of using the old (and often counterproductive) techniques of collective punishment, the army should concentrate on stopping the gunmen. He thus began sending specially trained squads to penetrate their strongholds and apprehend suspects. In the first six months of 1992, about 1,500 such gunmen were arrested, about twenty were killed, and scores came to army posts to surrender. It was by far the most successful tactic yet devised to combat the intifada.

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