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Intifada Success: Foreign Investments Shrinking
29 July, 2002


In yet another blow to the Isr**li economy, foreign investors withdrew a net $152 million from Isr**l in June 2002, according to the monthly report by the central Bank of Isr**l. Although the bank did not specify the reason for the drop, economists said it was a result of the unstable political situation caused by the deepening Isr**li-Palestinian conflict, the Jerusalem Post reported.

Isr**l’s atrocities and war crimes in the West Bank refugee camp of Jenin, and recently in Gaza have drawn worldwide condemnation and several calls for boycotting Isr**l as a terror state.

The bank report mentioned that in June 2002, foreign resident investments amounted to $152 million of profit-taking, mostly withdrawals from deposits, following an ongoing period of decreasing deposits which started in early 2000 and increased through April of this year, when it became a redemption trend.

Despite a net rise in investments in the private sector of $362 million, bank account withdrawals and the sale of government bonds of more than half a billion dollars canceled them out. Foreigners invested $1.06 billion in the first half compared to $4.4 billion in all of 2001 and a record $11.3 billion in 2000.

Isr**li investments overseas dropped in June by $31 million. Isr**lis repatriated $191 million as a result of the sale of bonds worth $493 million and investments in stocks and companies worth $302 million.

Individual investors sold $40 million worth of foreign currency, while companies began selling after the second increase of 2 percentage points at the end of the month after a 1.5 percentage point increase at the beginning of the month.

A sharp fall in the foreign residents investment was witnessed as investments reached the microscopic sum of $31 million in Isr**l in Q2 2002. This is compared to $1.025 billion in the first quarter of the year and $4.368 billion in 2001, most of which was invested during the first half of the year.

The withdrawal of foreign investments marks a new drop for the already failing Isr**li economy, with inflation, tourism crisis and unemployment presenting greater problems.

Isr**l's cost of living index rose a sharp 1.3 percentage points in June, pushing the inflation rate to 6.3% since the start of the year, the official statistics bureau announced Monday, July 29.

It warned that at the current rate, inflation could reach nine percent for the year, more than double the treasury's target of 4%.

The rise in prices was largely due to the devaluation of the shekel, which has slumped more than 20% against the dollar this year amid the almost two-year Palestinian Intifada against Isr**li occupation. By contrast, Isr**l had zero inflation for the whole of 2000, and 2.7 percent in 2001.

Another report by the central Bank of Isr**l said that about half of Isr**l’s potential work force of 4.8 million aged 15 to 64 did not work and only 255,000 of them were actively searching for work in the first quarter of the year. While many developed countries have made employment reforms, Isr**l has taken no action, said the report.