Northern Israel needs investment to bolster it — security and development are linked

The graffiti on the Galilean bomb shelter that greeted Prime Minister Ehud Olmert wasted no words: “Wake up Sharon, Olmert’s in a coma.”

Watching Olmert tour upgraded and refurbished bomb shelters in the north after the release of the Winograd Report last spring prompted jokes in Israel about rearranging chairs on the deck of the Titanic. Much worse, the hapless images of Olmert checking the bomb shelter shower knobs suggested unfortunate associations for more than 1 million Israelis who fled the war temporarily, many of whom have been scouting for new locations ever since.

As a former intelligence chief told me upon reading Milken Institute’s data on Galilean economic conditions: “You are right. There is negative out migration from the north to the center of the country and from the center to the Diaspora.”

And that out migration is Israel’s enemies’ ultimate objective in launching wars they can’t win in conventional terms. They seek to create the perception that the country has no future.

Thanks in part to the Israeli government’s inaction, that plan is succeeding. The economic situation of northern Israel was deteriorating even prior to the outbreak of the Second Lebanon War. Five years before rockets fell, the north experienced net negative out migration of 23.2 percent. In other words, 33,000 Israelis had already abandoned the north even prior to rockets falling.

These problems were only exacerbated after the war. Poverty levels continue to hit 29 percent of families in the north vs. 20 percent nationwide. Regional family income in the north is only 74 percent of the national average, and unemployment rates run 20 percent higher in the north than in the rest of country.

But now we are told, the showers in the bomb shelters now are supposed to be working, even if the people aren’t.

All measures of the growing social and economic gaps in Israel are refracted and amplified in northern Israel. According to national security authorities, the strategy of Iran and Hezbollah is to weaken Israel’s northern region — what Israelis call “the periphery” — economically and make a small country claustrophobic.

This strategy successfully weakens morale and created military and diplomatic advantages during and subsequent to the war. Facing conditions of asymmetric warfare, where the home front and front lines of conflict blur, the linkage between national security and economic security become central. Investment is of urgent importance to fully integrate regions of Israel that are peripheral, due to lack of physical, transportation and social infrastructure.

Many long-term and long-promised projects by the central government in the sphere of infrastructure and commercial/industrial development have been postponed. Emergency aid that poured into the north was insufficient and targeted to relief, rather than economic development. Conditions in northern Israel remain vulnerable and its status is worsening.

According to the evaluation by the government examiner’s report (May 21, 2008), most of the Israeli government’s actions in response to the north remain unfulfilled. The report concludes:

• The government budgeted NIS 4 billion for northern Israel economic development but only allocated NIS 1.6 billion since the war.
• The government based the budgetary increase upon contributions from abroad that failed to materialize or were deployed to the southern front with the attacks on Sderot and the northern Negev.
• The government did not operationally execute the rehabilitation plans proposed by government ministries.
• Government ministries were not obligated to execute northern Israel rehabilitation plans and failed to allocate budgets for that objective.

The next Israeli prime minister, like all the others, will speak loudly and often about national security. But the goal of national security is inextricably linked to economic development.

The next government must lead a private-public partnership that will invest billions in infrastructure and economic projects to fully integrate the north to the country’s dynamic growth center. Israel and the Diaspora have the resources to make “periphery” an anachronistic word in the Hebrew lexicon. But we don’t have much time.

Glenn Yago directs the Milken Institute’s capital studies program and the Koret-Milken Institute Fellows program in Israel. Further information can be found in their report on northern Israel at www.milkeninstitute.org.