IN BIBLICAL discussions, the circumstances surrounding the remarkable, indeed miraculous, development of an autonomous Jewish state in the Middle East are not normally considered in an economic context. Emphasis is usually placed on the miracle of preserved national identity and the fact that the State has been established in the ancient land itself. However, there is strong evidence to indicate, on economic grounds alone, that these recent events have been guided by Divine will.

Limited economic resources

Consider the overall position from an economic point of view. The land of Israel, in its present state, is poor in natural resources; it has a limited supply of arable land and water resources; and there is no coal or iron and only a very limited amount of oil. While immigration has certainly augmented labour resources very substantially, a large proportion of immigrant labour has had to learn new occupations, imposing very heavy demands on the economy. Further, the restricted scope of the domestic market does not permit economies of scale in industry, and the boycott and blockade of neighbouring Arab states have caused difficulties in the development of foreign trade. The country’s export trade is rather limited in scope and relies to a large degree on diamonds and citrus fruits; the former is particularly vulnerable to fluctuations in business activity abroad, while the latter is subject to the usual vagaries of the weather and fluctuating prices in commodity markets. Overall, an export base which rests predominantly on these two commodities can hardly compare with the oil-based export industries of many of the neighbouring Arab states.

Despite this general scarcity of economic resources, pressures on limited supplies have been intense. Very large expenditures have been required for housing, health, and education, while further spending has been needed to establish an infrastructure necessary for adequate economic growth in the future—in particular, investments in transport, roads, housing for immigrants, plant and equipment, and a variety of other capital goods. At the same time, the nation has had to undertake particularly heavy defence spending, amounting in the 1972/73 Budget to about 30 per cent of total official outlays, and rising to over 50 per cent in 1973/74; this is a staggering 45 per cent of gross national product. Hence, a major part of government spending is geared to activity Which is essentially unproductive in an economic sense. Above all this, demands of private consumers have had to be met. Over recent years, Israel has increasingly assumed the characteristics of an acquisitive society, expecting to maintain standards of living not markedly dissimilar from those enjoyed in the Western World generally. Indeed, in the period prior to the October 1973 war, private-consumption spending by Israelis was expanding at a very rapid rate.

This situation of limited economic resources, coupled with sharply expanding demands on available supplies, has imposed very heavy strains on the economy. And yet this conjunction of very pronounced pressures of demand and supply is experienced by a broad range of developing countries. What, then, are the elements in Israel’s  economic situation which suggest something more than the ordinary? They seem to hinge on two factors. First, the Israel economy has achieved a remarkable rate of growth and prosperity, despite the defence burden and other impediments to economic expansion. Second, the availability of vast financial resources abroad has greatly facilitated the development effort; indeed, without this external assistance, Israel could have seen only very limited economic development and viability. We can consider these two factors in more detail.

As far as the second aspect is concerned, it should be remembered that a typical constraint on economic development for many countries is the difficulty of obtaining foreign funds with which to make import payments. This factor is especially important for Israel in view of its heavy dependence on imports due to the scarcity of raw materials and supplies at home. The availability of massive financial help from abroad at a time of critical need for the economy is an evident indication of the Lord’s provision for Israel. No other country has received anywhere near the consistent pattern of external economic assistance—if judged, say, on a per capita basis—as has Israel over the past 25 years. The existence of this wealth and sympathy abroad at a time When it is crucial for Israel’s  existence is as much a miracle as the ingathering from dispersion and the location of the State in the Land of Promise. It is part of a Divine framework by which the otherwise impossible is achieved.

Overseas assistance

Turning to the actual achievements of the Israel economy, they stand comparison with countries which have far fewer impediments to growth. Over the 1960s and 1970s, gross national product, excluding price increases, rose at an annual average rate of about 9 per cent. This was much higher than the international average, even for the developed industrial countries. Of course, the Israel economy commenced from a low level of activity in the late 1940s and was sustained by substantial immigration, factors which would promote a high rate of economic growth. Nevertheless, the fact that a rate of expansion of that magnitude could, on average, be sustained over the two decades—and continued into the 1970s—is a testimony to the strength of the economy. Indeed, the standard of living is high in Israel by international standards. For example, the average level of private consumption spending is similar to that of such developed countries as the Netherlands and Norway, and exceeds that of Italy. These achievements reflect the dedication of the population to the task of developing the country; this is particularly evident in the rapid increase in labour productivity in Israel over recent years, exceeding by a substantial margin the average increase in most other countries. Thus, while “the desert has blossomed as the rose” in a strictly agricultural sense, the country has also blossomed in a more general way with its notable success in economic development. All this has been achieved despite the fact that a significant part of total resources—including manpower—has been geared toward preserving the security of the State.

Sacrifices by the people

Nonetheless, these achievements have required major sacrifices by the Israel public. The taxation burden in Israel is particularly heavy and, of course, increasingly so since the October war. Indeed, even before the war, taxation rates were very substantial; for example, between 1966 and 1970, government taxation revenues were about 50 per cent of national income—one of the highest proportions in the world. An annual salary equivalent to US$6,500, for example, falls in the 65 per cent marginal tax bracket. The burden of the taxpayer increased markedly following the October war, largely because individuals were required to make subscriptions to compulsory loans, ranging from 7-12 per cent of incomes. There were also very large increases in a whole range of sales taxes, which imposed additional burdens on the public. A further hardship for many has arisen from the severe inflationary pressures which have recently developed. Over 1973, consumer prices rose by about 26 per cent, which was very high by any international comparison. Additionally, there were heavy costs arising from disruptions to manpower and supplies during and after the war.

How does this characterisation of Israel as a state engaged in strong economic growth, achieved through substantial domestic effort and massive external assistance, fit into a general picture of prophetic interpretation? The sketch provided in Ezekiel 38 of the situation in Israel prior to the Gogian intervention is very largely as described above. The picture is one of a “people that are gathered out of the nations, which have gotten cattle and goods, that dwell in the midst of the land” (verse 12). The position is clearly one of substantial accomplishments in developing the country and “restoring the waste places”. If a period of peace and safety is to precede the Lord’s  return, it is very likely that there will be even more substantial achievements. Some relaxation of the defence burden, for example, would allow the use of resources for more productive purposes and would certainly generate further prosperity. Jeremiah suggests that the period following the return to the Land will be marked by development and reconstruction—for example, “the city shall be built upon her own heap and the palace shall remain after the manner thereof” (30:18).

References in Scripture also allude to the assistance which Israel is to receive from overseas sources. While such help will clearly have its full realisation when the Lord has returned to Zion, it is again very likely that events already witnessed in Israel give a foretaste of future fulfilment. Thus, Isaiah records:

Of course, there are various ways in which the “strangers” will participate in Israel’s  future progress, but already they have contributed materially through foreign aid and assistance.(Footnote 1) Of course, a considerable part of the support has come from world Jewry where the terms “strangers” and “sons of the alien” might not apply. However, the United States and Germany, on an official level, have assisted Israel very substantially in a way which suggests a preliminary fulfilment of this prophecy.

Suffice it to say that if so much has been achieved by Israel in times of adversity, how much greater will the accomplishments be when spiritual purity and peace are restored in the Land.

FOOTNOTE