There is no basis for the assumption that Israel's economy depends on a peace agreement, and that it cannot withstand threats of boycott and sanctions.
Since 1949, Israel's gross domestic product has jumped from $1.5 billion to $300 billion in 2014, from $50 million in exports to $97 billion, and from the absence of foreign exchange reserves to $92 billion in 2014. The jump stems from waves of immigration, budgetary restraint, quality of manpower, innovative technologies, exports, military deterrence, and natural gas, and not from peace agreements with Egypt and Jordan and the Oslo Accords.
And for reference, the gross domestic product grew by 14%-8% per year following the 1967-1972 war, and by 9% as a result of the wave of immigration from the USSR that began in 1990. In contrast, growth after Oslo (1993-1996) was 7%-4% and was fueled mainly by the wave of immigration, but was hampered by budget deficits and the trade balance.
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Likewise, inflation soared from 42.5% in 1977 – on the eve of the peace initiative with Egypt – to 111.4% in 1979 and 445% in 1984. Inflation was suppressed to 19.7% in 1986 and 2% today by unprecedented budgetary restraint, not by peace agreements.
The limited impact of threats of boycott and sanctions can be seen in the improvement in the trade balance with Britain and Turkey, despite the hostility of the British Parliament and the Turkish government. About 90% of Israeli exports are to governments and companies – not to consumers – and are essential for upgrading the level of national security, medicine, technology and agriculture of the importing countries. Exports are also rapidly diversifying to India, China, Russia and the former Soviet republics, Japan and South Korea.
The Turkish daily, "Zaman" , reported that the Turkey-Israel trade balance improved from $4 billion in 2011 to $4.86 billion in 2013; Turkish ships unload trucks carrying goods to Jordan and the Persian Gulf at Haifa Port; Iraqi oil is sold to Israel through Turkey; and Erdogan's son's shipping company is active in the Ashdod Port.
India is becoming a leading importer of Israeli weapons. Rafael won a tender to supply anti-tank missiles and launchers worth $525 million; India purchased Barak-1 missiles worth $300 million; and India and Israel successfully tested the Barak-8 cruise missile and aircraft defense system. Although the Israel-India trade balance is $5 billion, compared to China-Israel's $10 billion, it will be doubled through a free trade agreement.
Despite the economic slowdown in the last quarter, the OECD expects economic growth of 31.3% in 2015 and 3.5% in 2016. Indeed, foreign investors are expressing confidence in Israel's long-term vitality. For example, Lockheed Martin, the manufacturer of the F-16 fighter jet, plans to add about 1,000 employees to its subsidiary in the cyber park in Beersheba, alongside the subsidiary of the American storage giant EMC. Microsoft operates research and development centers in Israel - like 250 other high-tech giants from the US - and acquired the Israeli company Aorto for $200 million. The giant company 3D Systems acquired the Israeli company Symtron for $97 million, and venture capital funds from the US, China, India, Singapore, Europe and South Africa are investing in Israel.
These investors are acting on the opinion of the president and CEO of the world's largest risk management company, AON: "Our clients are aware of the risks and opportunities in Israel.... The risks in Israel are similar to other regions of the world.... Israel has an innovative and growing economy.
Yoram Ettinger, Israeli Ambassador to the United States (retired), First Class News
