Obama for Change: Netanyahu for more of the Same

Tuesday, 26 May 2009 19:00 Yacov Ben Efrat Editorial Dept - Middle East

Barack Obama's first 100 days as US President show what a far cry he is from his predecessor. The changes Obama has wrought in this short period amount to a major divergence from American policy of the last eight years.

The closing of Guantanamo and the absolute ban on torture are important trail markers on the new path the White House has chosen.

Israel's new/old Prime Minister Binyamin (Bibi) Netanyahu, by contrast, has opened his term with a series of proclamations: what Obama is doing in the US may be fine over there, but it doesn't fit us. We shall persist in the Bush policy of political and economic conservatism.

Obama's approach to the Middle East is clear. He will shift the military effort from Iraq to Afghanistan and Pakistan. He seeks a dialogue with Iran, having declared Bush's sanctions to be ineffective. He sends a delegation to Damascus to discuss the Iraqi situation, with the aim of detaching Syria from the Iranian axis and bringing it into a peace process.

In order to succeed in this complex mission, however, Obama needs Israel's assistance. He needs an Israeli commitment to a two-state solution for the Palestinian conflict and withdrawal from the Golan Heights for peace with Syria. After 100 days, the differences are clear as day.

Bibi's Agenda

Netanyahu's agenda is very different. He rejects the two-state principle. He rejects withdrawal from the Golan. The big issue for him is the Iranian nuclear threat. He thinks the US administration should act decisively to defeat the extremist regime in Teheran. After that, he believes, it will be easier to bend the wills of the Syrians and Palestinians.

The US agrees indeed on the importance of isolating Iran and stopping its enrichment of uranium, but in contrast with Netanyahu, it thinks that as a precondition for achieving these goals, the Israel-Palestinian conflict must be defused. In the view of the White House, Iran derives its popularity, as well as the justification for its nuclear policy, from its clever use of the worldwide anger aroused by the Israeli occupation and, most recently, by Israel's barbaric siege of the Gaza Strip.

If Obama and Netanyahu are at odds politically, they are all the more so economically. For 100 days Obama hasn't ceased talking to the American public. Over and over he drives home the message that the US faces its biggest crisis since the Great Depression. He doesn't miss a chance to point an accusing finger at Wall Street and the banks. He describes the American economy as severely distorted, based on making money from money and not on production. He blames the ill-fated real-estate bubble on the greed of the bankers. He repeatedly promises to change the rules in the money market to prevent "exaggerations." He wants to build the capitalist economy anew on firm foundations.

Netanyahu, for his part, does not see the American program as a guide to an alternative economic policy, but rather as a public relations campaign. Although he served as Finance Minister in the Sharon government from 2003-2005, Bibi doesn't find himself to be at all responsible for the current crisis. More than that, he views the crisis as an "opportunity" to deepen the reforms he put through then. What Obama is doing may be good for America, he thinks, but it would be very bad indeed for Israel.

The economic crisis, in Bibi's view, is an American phenomenon. It does not imply any need to change anything in Israel. He finds no structural flaw in his conservative market economics. Rather, the crisis is just another of the recurrent downturns that the business cycle must inevitably undergo. It will end when the "invisible hand" of the market, helped by trillions of taxpayer dollars poured in by the US Federal Reserve, makes the necessary adjustments. The process will purge the economy of failing companies, while the successful will thrive all the more. All Israel needs is to exploit the next surge in the world economy. The way to emerge strong from the crisis, then, is to lower taxes, especially on companies, making the economy attractive to foreign investors.

While Obama taxes the rich, Netanyahu does the opposite. While Obama creates a budget deficit amounting to 12% of GDP, Netanyahu intends to increase the current deficit by only 1.7%. While Obama wants to strengthen the labor unions, Netanyahu wants to freeze wages in the public sector, counting on cooperation from his new friend, Histadrut head Ofer Eini. While Obama seeks a graceful way to moderate the market economy, Netanyahu wishes to privatize the national electric company, the ports and more.

Apparently Bibi does not read the financial headlines. The back page of Israel's The Marker stated on April 30, 2009: "The freeze on debt arrangements in the bond market threatens to bring down huge corporations." In other words, the tycoons, to whom Netanyahu sold government companies last time around, and who bought these with money the banks lent them, are unable to return their debts to the people who purchased their bonds. Fantastic sums, which could have been invested in Israel's economy, instead flowed into real-estate speculation abroad. The private sector was supposed to be better at managing the former public firms and the banks. It has failed, and it is dragging the economy toward the abyss.

Captive of the System

The future of Israel is not determined in Jerusalem, however, rather in Washington. A huge responsibility rests on the shoulders of Barack Obama: what happens in America during his term will decide the fate of billions of people. Meanwhile, statistics are not encouraging. Despite the Administration's tremendous efforts, America's economy is shrinking, unemployment is climbing, and bank credit remains frozen. Even more worrisome is the fact that the banks continue to have the upper hand. Wall Street's economic might has dictated policy for the past thirty years. If it continues to do so, Obama will not be able to implement the needed structural change—namely, to re-establish the priority of the real economy over the financial.

In order to bring about real change, Obama needs political power. Congress, composed of parties still in thrall to an old conception, will stymie the emergence of such power. The differences between Democrats and Republicans are over nuance, not substance. The preference for capital over labor and for consumption over production are the unquestioned norms of the entire political establishment. These have been the norms from Reagan to Clinton to Bush. They amount to a deep consensus favoring unbridled monopoly capitalism. The banks, therefore, have plenty of room to maneuver.

Even if he cannot achieve real change, Obama attempts to calm the American people by showing he understands the crisis. Netanyahu, however, does not seem to have a notion how bad things are. Instead he attempts to calm the public with stories of a rosy neoliberal future.

Captive to a system that has reached a dead end, without any outlook for peace, and without an economic emergency plan, Netanyahu stands blindfolded on the brink. Obama has all the right reasons to give this weird Israeli government—in which Avigdor Lieberman shares the sack with Ehud Barak—a final push into the void. That said, the failure of Netanyahu will have a devastating effect. Those who pay the big price will not be the tycoons, rather the little people, especially the working public, who will lose their jobs and their futures.

Image Courtesy of Harvard Middle East Studies

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