Economist: The next generation of Israeli

Special report
Israel
April 3rd 2008

The Next Generation

The next generation

Israel at 60 is as prosperous and secure as it has ever been, but its future looks increasingly uncertain, says Gideon Lichfield (interviewed here). Can it resolve its problems in time?

THREE years ago, in a slim volume entitled “Epistle to an Israeli Jewish-Zionist Leader”, Yehezkel Dror, a veteran Israeli political scientist, set out two contrasting visions of how his country might look in the year 2040.

• In the first, it has some 50% more people, is home to two-thirds of the world's Jewry and, as today, is four-fifths Jewish itself. The other fifth, its Arab citizens, have accepted the state's Jewish identity, thanks to efforts to end discrimination against them and to the creation of a viable Palestinian state next door. The country enjoys a flourishing knowledge-based economy, a thriving cultural life and a just society, and has good relations and strong trade links with most of the Middle East. A serene balance of Zionist and humanist values infuses both state affairs and everyday life. Reforms have stabilised the political system. Fast public transport has minimised the country's already small distances, encouraging mobility, and many of its citizens happily divide their lives between Israel and other countries.

• In the second scenario, Israel has only half the world's Jews, their majority in Israel itself is down to two-thirds and shrinking, and “Zionism” has become a term of ridicule among the young. Jews abroad see Israel as increasingly backward and irrelevant to them, and Jews of different streams within Israel are at loggerheads. Pressure is rising, both at home and abroad, for Israel to become a fully democratic, non-Zionist state and grant some form of autonomy to Arab-Israelis. The best and brightest have emigrated, leaving a waning economy. Government coalitions are fractious and short-lived. The different population groups are ghettoised; wealth gaps yawn. Israel is in conflict with a hostile Palestinian state that was declared unilaterally; Islamic fundamentalism in the region is on the rise; and any peace deals between Israel and its neighbours—some of which now have weapons of mass destruction—are looking shaky.

Mr Dror's future dystopia at first sight looks closer to today's Israel. That, of course, is because he wants to catch his readers' attention and unsettle them. The way he associates failure with more Arabs and fewer Jews in Israel also reflects the audience he is aiming at (“If you are in fact a 'post-Zionist'...then this epistle is not meant for you, and don't bother to read it,” he explains in the introduction).

Yet whether Jewish or Arab, Zionist or otherwise, Israelis have good reason to wonder what their country will look like in 2040—or, for that matter, in 2020. Compared with much of its past, Israel's present is prosperous and secure. But its future is as uncertain as at any time in its 60 years of history.

The country has emerged stronger from the second Palestinian intifada, which between 2000 and 2004 killed 946 Israelis and over 3,100 Palestinians. Israelis are now much safer, though Palestinians certainly are not, thanks to aggressive security measures in the West Bank and Gaza (see chart 1). The Gaza disengagement in 2005 broke a taboo on removing Israeli settlements from the occupied territories. The war against Hizbullah in south Lebanon in 2006 was botched, but served to shake up the army. In the autumn of last year peace talks with part of the Palestinian leadership began again for the first time in seven years, though as this report went to press they were looking increasingly shaky.

Meanwhile, the high-tech boom that began in the 1990s has not only survived the intifada but gone from strength to strength, fuelling impressive economic growth. Tourism is rebounding and property prices have shot up. The massive influx of immigrants from the former Soviet Union is melting slowly but smoothly into Israeli society. Even some of the social conflicts of the early years—between religious and secular, and between eastern and European Jews—seem to be settling down.

On the other hand, economic growth has widened wealth gaps rather than easing poverty. And growth will slow inexorably unless several serious structural weaknesses are fixed, including a faltering education system, low workforce participation and a sometimes sclerotic public sector. A volatile political system makes these reforms hard to achieve.

Moreover, talks on a Palestinian state look doomed to failure. If they do succeed, the need to give up the West Bank will re-ignite internal Jewish conflicts, but if they don't, fears will grow that a separation from the Palestinians may no longer be possible, forcing Israel to choose between enshrining a form of apartheid and relinquishing its Jewish character. Arab-Israelis are increasingly angry about being treated as second-class citizens.

Many Jews from the diaspora already view Israel as spiritually impoverished and uninviting. And when Israelis look at their neighbourhood, they see looming threats: a potential nuclear bomb in Iran; one of the world's most powerful guerrilla armies in Lebanon; growing extremism among the Palestinians; and everywhere the rise of popular Islamist parties that threaten to topple reluctantly pro-Western Arab autocrats. For the first time since 1948, real existential threats to Israel, at least in its Zionist form, are on the horizon.

Some of these things are out of Israel's hands, but Mr Dror reckons that what happens to the country in future will depend mostly on its own decisions. This report will consider how well equipped it is to take the right ones.