News Highlights May 2012


The Second 100 years

The year 2010 was the hundredth anniversary of the establishment of Kibbutz Degania, which was the first kibbutz to be established in Israel. 
The Kibbutz population now numbers approximately 141,000 persons, which is an increase of more than 22% over the past 10 years. 85% of the kibbutzim absorb new members. 
Over 70% of the kibbutzim are in the north and south of the country. The average population is 500 persons per kibbutz. 
The total annual gross income of the kibbutzim is NIS 30 billion with Gross profit around NIS 10 billion and operating profit around 6 billion. The breakdown of revenue shows that industry is the main contributor with 20 billion shekels of gross revenue from 250 manufacturing establishments (72% in the periphery) and employs 30,000 workers. The share of industrial output of the kibbutzim amounts to about 7% with approximately 9% of total export turnover.

 At present there are 200 privatized kibbutzim, 60 collective kibbutzim and 14 partly privatized kibbutzim.

96% of the kibbutzim pay pensioners the pension basis or more. 80 communities pay more than 3 400 shekels a month, representing 40% of the average wage.

The kibbutzim formed the backbone of the country before Israel gained independence in 1948 and during the first few years after independence. There was an established infrastructure in place because of the kibbutzim and many notable persons from kibbutzim took part in the political and defense organizations as the new state came into being. The kibbutzim were also the bread basket of Israel providing a large percentage of the country's food needs. Kibbutz enterprises diversified over the years and now cover almost every type of business.

In the agricultural sector the avocado industry sold 23 thousand tons this year, an increase of 1,000 tons from the previous year, 75% of which was exported. This is the leading fruit industry of the Western Galilee kibbutzim.


The banana industry however is not in good shape. After a period of good crops and good prices the prices of summer bananas were very low. Decline in demand led to large surpluses of bananas and these are almost impossible to store over time and also cannot be exported. Excess production flowed into the Palestinian territories and this also lowered the prices. Large-scale plantings have caused an excess capacity which has resulted in a sharp decline in profitability.



Israel-Palestinian Chamber of Commerce


Business between Palestine and Israel is growing despite the political difficulties. Palestinians like to buy Israeli products because of the quality, even if they are more expensive than the Turkish or the Egyptian products. A recent conference hosted by the Faculty of Business and Management at Ben-Gurion University brought together top Israeli and Palestinian trade experts to seek ways to enhance cross border business.
The conference included a competition between Israeli and Palestinian business students to brainstorm on areas of business cooperation. Participants stressed the importance of holding business meetings between both sides in order to strengthen the personal ties which are essential for business relations. 
The public relations officer of the Hebron Chamber of Commerce and Industry said that the Chamber has a website where Palestinian produce is offered for sale. The website allows Israeli businessmen to make deals with manufacturers from the Palestine through the website’s network. 

Two-way trade between Israel and the Palestine reached $4.3 billion in 2011. Trade is heavily in Israel’s favor, with exports amounting to $3.5 billion while Palestinian exports were just $816 million. However last year, Israel increased Palestinian purchases by 18%. The chairperson of the Association of Traditional Industries in Palestine gave some examples of some the trade ties that exist. Artisans in Hebron manufacture Kiddush cups and Seder dishes, for Jews from Israel and the entire world. There are also regular interactions between Palestinian and Israeli businessmen.

Both sides are not familiar with one another. The Israeli government allows tours for Israeli businessmen within Palestine and for Palestinian businessmen within Israel in order to allow both sides to learn about the other, and to create a wider forum for joint business opportunities. At present Israeli Arabs often act as mediators in business interactions between Israelis and Palestinians because of their ability to bridge gaps created by mistrust between the parties.


The growing business interactions will serve to narrow these gaps and thus promote economic ties that will one day be a factor in making peace between both parties. The Israeli-Palestinian Chamber of Commerce is an organization whose aim is to represent the Israeli private sector and push sales in the Palestinian markets and to promote Palestinian business interests in Israel.



Prince Philip and Israel

The British Royal family does not allow its members to visit Israel in an official capacity and for fifty years they were also prohibited from visiting in a private capacity. It has been stated that the Queen doesn't want to offend the Royal family of Saudi Arabia, other Royal Families and also the Governments of Syria, Palestine, Lebanon and Jordan as well as the governments of countries in the British Commonwealth. Although the Queen has visited many countries in the world the British Monarch is not allowed to visit Israel as part of the official policy of the Royal Household.

Queen Elizabeth prohibited her husband from attending his mother's funeral in Israel in 1988 even as a private person. It was reported at the time that Prince Philip was highly distressed by not being allowed to attend his mother's funeral in Jerusalem.

The Duke of Edinburgh's mother Princess Alice risked her life in Nazi occupied Athens to save the lives of Jews. She stated in her will that she wished to be buried in Israel and specifically in Jerusalem on the Mount of Olives. Princess Alice was awarded the honor of Righteous among the Nations by Yard Vase the Israel Holocaust Museum.

The Royal Family has distanced itself from Israel since independence and does not recognize Jerusalem as part of or as the capital of Israel and actually this is in line with every other country in the world. No country in the world recognizes Jerusalem as capital of Israel and consequently there are no embassies in Jerusalem.

Princess Alice continues to give the British Royal Family a headache, even from the grave. After the princess died in 1969, her remains lay at first in St George's Chapel, Windsor. But her final wish was to be buried at the White Russian convent on the Mount of Olives, near her Aunt Elizabeth, cousin of the last Tsar of imperial Russia. Grand Duchess Elizabeth was murdered by the Bolsheviks and declared a Russian Orthodox saint.

In recent years the Queen has allowed her husband to visit Israel more often but anonymously and in a private capacity in order to visit his mother's grave.

China Radio holds Competition for Jewish Refugees

Several thousand Jews made the painful decision to leave their homes in Europe and travel thousands of kilometers over land and sea driven by fear of Nazi persecution.

Now, on the 20th anniversary of the establishment of diplomatic ties between the Communist China and Israel and 67 years after the war ended, China Radio International is inviting former Jewish refugees who lived in the country during that period to submit accounts detailing their life story for a contest.

“In recent years ties between Israel and China have been strengthening and there has been a noticeable improvement in economic, political and cultural ties,” said Ma Weigong, deputy editor of China Radio International.

“This project called ‘My China Experience’ will bolster ties between refugees and their descendants with China.’” The winner, who will be announced in July, will win a free trip to China with his or her family.

Some families lived a Spartan existence in and around Kunming, the capital of Yunnan province, narrowly avoiding Japanese air raids and learning the local culture. They sometimes worked barefoot in the rice fields with the local peasants. Other families lived in Tientsin.

One refugee wrote: “I learned to participate in all phases of the rice-growing cycle, from the seeding of the small plots, to the watering of the germinating buds, to the collecting of the green shoots, to the replanting of the individual shoots in flooded fields, to the cutting of the grown and ripened stalks, to the threshing and winnowing of the rice grains and the stacking of the straw. We will forever be grateful to the kind Chinese people for saving our lives from the atrocities of the Holocaust”.

Desert Storage Site for Aircraft 

An area in the Negev will soon become a service and dismantling center for hundreds of aircraft. The Committee for Principal Planning under the Interior Ministry’s National Planning and Building Council approved the project on a 642-acre site that has been allocated next to Ovda Airport, where it will be integrated with the Ovda facility’s operations.

The service station will improve the economy of the region, and provide about 800 jobs, of which 500 will be in engineering. This will be a major boost towards development of the periphery.
Regarding the ecological impact, the Interior Ministry said that the Environmental Protection Ministry had already approved an environmental assessment of the location. Despite heavy criticism from green groups, the Committee for Principal Planning decided that aircraft scrapping would be a vital component of the site’s operations. To make sure that scrapping is kept to a low environmentally friendly volume, the ministry said it had assigned a Committee for Surveillance and Inspection to monitor the scrapping programs. The planning committee cited Eilot Regional Council head Udi Gat as expressing his approval of the plans and stressing that the site’s establishment would bring development opportunities to the region.

The Society for the Protection of Nature argued, however, that the site would infringe on the ecological uniqueness of the area. Green group’s complained that it will bring hundreds of tons of trash per year and turn the South of Israel into the garbage bin of the world. Project leaders stressed that there had been a comprehensive environmental survey and that the program includes a commitment to recycling and reuse whereby at least 90 percent of the parts dismantled will be recycled. Approximately 15 planes will be dismantled per year and the resulting waste will not exceed the amount of waste that the city of Eilat produces in one day.

The site, the company continued, would provide hundreds of jobs to those in technical professions and would encourage immigration to the southern region of Israel.


Israel Festival


A group of street musicians from the Democratic Republic of the Congo will perform in the closing slot of this year’s Israel Festival. Most of the members of the band are polio victims who live in makeshift shelters near the grounds of the zoo in the Congo capital of Kinshasa and play music that is rooted in rumba, with elements of old-school rhythm, blues and reggae. The four core members, who play guitars and sing, are backed by a rhythm section of socially disadvantaged youngsters, including Roger Landu, who made his own instrument out of an empty fish can, a piece of wood and a guitar string and produces incredible Hendrix-like sounds on his rudimentary invention.

“When we recorded, the zoo was our headquarters, so for us it was very familiar and probably the best place at that time for us to record the first album,” notes Lickabu. The band eventually got international exposure when the musicians performed in France. They won the prestigious Artist Award at world music expo Womex in 2009 and have enchanted music audiences across the world.

“Most of the countries we traveled to are richer and much more organized than our country, but in the end we discovered that there is no paradise, and each country and its people have more or less similar problems. When we are traveling in Japan and Europe and we can see homeless in the streets, we feel at home,” says Lickabu.

He adds that one of the greatest sources of happiness for him and the rest of the band is that others in Congo have followed their lead and are taking their destiny in their own hands.

“There are now more and more disabled people in Kinshasa creating music bands; but even before our success, many disabled people in Congo worked hard to get out of their misery, as there is no support from the government so this is the only way.”

While he says he is aware that the public relates to the band members’ physical appearance, Lickabu believes audiences quickly get hooked on the musical vibes they put out. “I think it’s a combination of things – we are disabled, musicians and human beings, but there is always a specific way of looking at us and always will be.”

New York’s Annual Celebrate Israel Parade

The annual New York’s annual Celebrate Israel Parade draws thousands of marchers, performers, bands and floats each year.

Manhattan will turn blue and white with musical performers, 18 marching bands and 35,000 marchers and entertain hundreds of thousands of spectators for the largest yearly gathering of support for Israel in the world, New York City’s annual Celebrate Israel Parade.


Israel’s Minister of Public Diplomacy and Diaspora Affairs Yuli Edelstein says he’s delighted that his ministry is involved in the event. “More than just a parade,” Edelstein said, “this day is a celebration of the special relationship between Israel and America that is rooted in common values and goals. Like America, Israel is a strong, vibrant democracy, a symbol of freedom, tolerance and understanding. My ministry strives to strengthen our relationship with Jewish communities in the United States, and events like these are critical to both nations.”


The parade is part of the larger Celebrate Israel Project, which, according to Miller, celebrates the positive impact the Jewish and democratic state of Israel has on the lives of people around the world. Related events include Celebrate Israel Night and an Israel Run in Central Park during the morning of the parade, with some 7,000 New Yorkers running a four-mile course.


The parade will be televised live in the New York metropolitan area by WWOR-TV My9 from 12–2 p.m. and streamed online at for three full hours, from 12–3 p.m., so Israelis and Israel supporters throughout the world can watch.


Additionally, the Empire State Building will celebrate the state of Israel by shining its world-famous tower lights blue and white for three days.


Food in Israel 20% More Expensive than OECD

The Kedmi Committee was established by the government one year ago following a consumer revolt against dairy manufacturers Tnuva, Strauss and Tara.

Israeli consumers paid 10-20 percent more for food in 2008-10 than their counterparts in the rest of the OECD group of developed economies, the report concluded. It said that prices have since risen more rapidly here than in other developed economies.

The report blamed this rapid appreciation on over-concentration in the supply and retail sectors. It said Israel’s two largest retailers hold a 64% market share making this country’s retail sector the fifth-most concentrated in the OECD.

The committee recommended regulating supplier-retailer relations through prohibiting suppliers from purchasing shelf space, placing salespeople inside stores, providing incentives to retailers, obtaining exclusivity to sell specific products or to offer exclusive discounts, and signing agreements that fix a minimum price or guarantee them a minimum market share.

The report proposed a series of measures for dealing with over-concentration in the supply sector, including: removing barriers to market entry and encouraging existing small businesses; adopting US and EU standards on import licenses; and ordering the Antitrust Authority to examine whether acquisitions of small food manufacturers by larger suppliers have damaged competition.

Small- and medium-sized enterprises have an important role to play in increasing competition in the food industry, the report said. It proposed designating SMEs a minimum amount of shelf space within supermarkets, giving them preference in government tender applications, subsidizing their participation at exhibitions, and instructing the Industry, Trade and Labor Ministry’s SME division to conduct market research on their behalf.

Private branding - products which retailers buy in bulk and label with their own name - will be encouraged, after the report concluded that such products typically cost 5-10% less than other products.  But retailers with a market share of more than 25% will be prohibited from purchasing their private brands from any manufacturer with above 30% market share.

For the retail sector, the report recommended increasing the number of competitors though a series of measures including: reducing regulatory barriers to opening new supermarkets in regions already suffering from high concentration; restricting the leading retailers from increasing their market share by preventing them from expanding their outlets; tightening state control over property agreements involving retailers; and encouraging online and local retailers.

In response to the report, Manufacturers Association Director-General Amir Hayek said that Israelis are tired of complex recommendations. Hayek proposed that Prime Minister Binyamin Netanyahu reduce the Value Added Tax on food from 16% to 8%, saying that such a reduction would impact prices immediately and make Israeli food products cheaper.

Israelis were not protesting for nothing. The people of Israel pay a price for competition and a price for monopolies for their food products as well.



Israel and the Global Competitiveness Index

Israel dropped two places to 19th in Swiss business school IMD’s 2012 World Competitiveness Index, despite displaying improvement in inbound direct investment, real GDP growth per capita and the unemployment rate. Hong Kong maintained its position as the most competitive of the 59 economies ranked by IMD, edging out the United States, Switzerland, Singapore and Sweden. Qatar (10th) and the United Arab Emirates (16th) were the top two Middle Eastern countries.

Israel’s score of 78.57 from a possible 100 put it directly behind the United Kingdom and directly ahead of Ireland. The IMD World Competitiveness Center is considered as a leading indicator of economic competitiveness, it assesses countries in four categories – economic performance, government efficiency, business efficiency and infrastructure – based on national statistics and surveys of top executives.

Israel improved strongly in the area of direct investment flows inward, which increased to 4.69 % of GDP in 2011. It was also judged positively on real GDP growth per capita, which rose to 2.98% in 2011 from 2.27% the previous year, and its unemployment rate, which dropped from 6.6% to 5.6% in 2011.

The “Startup Nation” continued to lead by example in business efficiency and infrastructure, maintaining its number one ranking for business expenditure on R&D (3.52% of GDP), total expenditure on R&D (4.41% of GDP), and public and private sector ventures. It ranked second in entrepreneurship, innovative capacity, scientific research and several other sub-categories listed under infrastructure.

On the other hand, Israel was punished for its poor current account balance, which dropped in 2011 and is expected to fall even further in 2012. It also lost points for its higher rate of consumer-price inflation, and for direct investment flows abroad.

Israel continued to be let down by its economic performance, ranking 36th in that category for the third successive year. In particular, it was downgraded for relatively high cost of living, low workforce participation (38.63% of the population), and exports of goods (27.38% of GDP).

According to the report, Israel’s main challenges now are to maintain growth, reduce bureaucracy and the burden on the business sector; invest in periphery infrastructure, including education and support of small- and medium-sized enterprises; increase labor force participation amongst minority groups; and decrease economic gaps.

Israeli Housing is Overcrowded and Expensive


Israel’s housing conditions are among the worst among the OECD’s 36 member states, according to the Better Life Index. In contrast to other components of the index, where Israel is outstanding (a score of 8.5 out of 10 for life satisfaction and 8.8 for health), Israel is failing when it comes to housing. Israel received a score 4.1 for housing, 4.1 for environment, 4.9 for education and a dismal 1.8 for civil engagement.

The OECD ranked Israel No. 28 out of 36 member states in housing, below Mexico. The index cited crowding, expenditure on housing and a home’s basic facilities. Israel ranked No. 30 in rooms per person, at 1.2, compared with the OECD average of 1.6 rooms per person. Canada was No. 1, with 2.5 rooms per person, and Turkey was last, with 0.9 rooms per person.

Israelis spend an average of 22 percent of their net disposable income on housing, more than the 19% or less spent by Norwegians, Mexicans, Irish, Portuguese and South Koreans. Russia was No.36, at 11%. New Zealand was No. 1, at 29%. 

Ninety-six percent of Israelis live in homes with basic facilities, which ranked No. 27. That means 4% of Israelis, or 300,000 people, lack a toilet at home. Denmark, the Netherlands, Spain and the United States topped the list, with 100% of residents in homes with basic facilities.

Nonetheless, 83% of Israelis said they were satisfied with their homes, which was still below the OECD average of 87%.

Parking Lot will serve as Hospital

The Rambam Medical Center in Haifa is this week dedicating a NIS 600 million, three-story underground facility, which in peacetime will serve as a parking lot with capacity for 1,400 vehicles and in wartime will function as a 2,000-bed hospital to service the entire northern region.

The unusual facility – in which beds, oxygen tanks, dialysis machines and a large variety of other equipment are stored within the walls, will become totally operational in October. The cement walls store dozens of kilometers of oxygen tubes, medical supplies, water and electricity. All the equipment is locked, secure and guarded against vandalism. Twice a year, the equipment will be examined, and anything that expires will be replaced.

The emergency hospital has being built at a depth of eight meters below sea level. It will have the capacity to generate its own power. Haifa and Ashkelon hospitals have been exposed to missile attacks in recent years from inside Lebanon and Gaza, creating a need for such facilities.

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