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Why ICSEP

To provide the know-how for Israel to overcome resistance to and implement reform

Israel needs a sound, highly productive economy to meet the serious problems and challenges facing it in the foreseeable future. Only a prosperous economy can enable Israel to pursue peace through strength (in the last decade alone a laggard productivity growth rate – 0.6% per annum – has cost Israel a loss of over $100 billion in product, the equivalent of 50 years of US military aid!); to provide ample employment opportunities for its young, who suffer from high unemployment and, on the average, earn little more than the minimum wage; and to effectively to absorb immigrants.

	Binyamin Netanyahu, now Finance Minister, receiving an economic reform action plan from ICSEP Director Daniel Doron

Most of Israel's social and economic problems are caused by its state-dominated economy. It has encouraged the growth of huge "private" monopolies that severely curtail competition and promote inefficiency and inflated costs, especially in financial markets.

Basic structural reforms enabling market forces to free the tremendous productive potential of the Israeli worker and entrepreneur (evident in its high-tech industry) should be a national priority. Breaking up monopolies could also reduce by about one third the cost of all consumer goods, now grossly inflated by monopoly rents. This would enable millions of Israelis dependent on government supplementary income to make ends meet on their own, and enable government to cut its costs considerably.

But despite efforts by several government and public commissions recommending basic reforms over the past decade, progress is painfully slow. Powerful vested interests possess huge political clout. They are supported by Israel's media oligopoly which promotes a statist ethos and deprives the public of information needed to understand and support reform.

It is ICSEP's critical role to provide the information and know-how that facilitate reform and reduce resistance to it. It also provides a compelling alternative to the prevailing ethos of a government-dominated welfare state. It is almost alone in undertaking these tasks.

Since its inception in 1984, ICSEP has led the effort to create a consensus for economic liberalization and deregulation. Indeed, the Israeli economy has been transformed in the ensuing years, but not nearly enough. ICSEP is continuing to push reform forward by all the means it can employ within its mandate by providing concrete tailor-made reform proposals in many markets — and facilitating their implementation.

ICSEP is also the chief spokesperson and educator in market economics. Through its extensive contacts and cooperation with other institutions, it acts as a major catalyzer and facilitator of reform. The challenges facing ICSEP are daunting and require considerable resources for their implementation. Friends of Israel are addressing these problems as a high priority through their assistance for our work.