Economy high on list of Sharon's priorities

Israel's re-elected leader pledges to increase efforts on a worsening situation

January 30, 2003|By Peter Hermann | Peter Hermann,SUN FOREIGN STAFF

JERUSALEM - Ezra P. Gorodesky was walking through the Bell Tower shopping center downtown yesterday, pausing to peer into the windows of every shuttered shop. Many more stores were closed than open.

"I'm surprised to find that this whole place is dead," Gorodesky, a retired museum curator, said, slowly shaking his head at the stark evidence of Israel's economic troubles. On the shopping center's uppermost level, a tableware shop is the only tenant, but its business hours have been reduced to one day a week.

"There certainly are no customers here," Gorodesky said.

Israel's sinking economy looms as one of the major issues that will confront Prime Minister Ariel Sharon, whose Likud Party decisively won Tuesday's parliamentary elections and is about to begin negotiations to create a coalition government.

260,000 jobless

Economic issues have never been Sharon's main focus. His critics point out that he has presided over an economy that has shrunk for two consecutive years, after a period of rapid growth before he took office.

About 260,000 Israelis were unemployed as of November, 8 percent more than before the start of the Palestinian uprising in September 2000. The government predicts that the number will rise to more than 300,000 by the end of this year.

The country's currency is losing value, and large numbers of businesses are closing, especially those relying on tourists.

`Deepest recession'

"This is by far the longest and deepest recession that Israel has ever had," said Nadine Baudot-Trajtenberg, an economist for Bank Hapoalim.

Its causes go far beyond the Palestinian conflict to include flawed government policies and the worldwide slowdown in technology-related industries, she said.

"It's easy to blame the conflict, and the public seems to have swallowed it," she said. "The security situation is so bad that you can easily believe that all your woes are because of that, which is certainly not true."

The Bell Tower shopping center, for example, on King George Street near Jaffa Road, opened about eight years ago with fashionable clothing shops and boutiques. Now, the few remaining stores advertise half-price sales, and the clerks sit mostly idle.

"I make a living," said David Baruk, a 45-year-old hairdresser who moved to Israel from France five years ago. "I don't make money. But I don't have a choice. This is my country. I don't want to go anywhere else. But it is very bad here. There are no tourists, and nobody wants to go downtown. There are too many bombs."

In a subdued victory speech early yesterday, Sharon spoke of an "economic crisis that is ripping Israel apart." He ranked the priorities for the new government as "security, prosperity, quiet and peace."

Unofficial results released by election officials showed Sharon's Likud Party winning 37 seats in the 120-member parliament, and the center-left Labor Party winning 19. The Shinui ("center") Party finished as the third-largest party, with 15 seats; the religious Shas Party won 11.

Working on a coalition

Sharon said he has ruled out forming a coalition that includes only parties on the right, and expressed preference for a broader-based government that would include Labor.

The Labor Party leader, Amram Mitzna, has pledged not to join a coalition led by Sharon. The leader of Shinui, Tommy Lapid, has pledged not to join a government that includes ultra-Orthodox parties, a concession that Sharon would be hard-pressed to make.

But there were already hints of possible compromises. Some Labor Party members are in favor of replacing Mitzna as party leader, and Lapid said that his Shinui Party would be willing to join Sharon and the ultra-Orthodox if a war involving Iraq led to the creation of an emergency government.

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