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Flowers beat missiles
For profits that is. Why Israel’s military situation hobbles her most
worthwhile industries.
Joseph Morgenstern__ 27 Jan 04___15:30
The export sales price for one flower stem grown in Israel's Negev
wilderness is five times the cost of growing it. Leora, a young flower
farmer assisted by only by a few laborers, produces no fewer than
3,000,000 flowers a year. These include new species of flowers and flower
bulbs grown with fresh, brackish, and hot water, all under plastic cover.
Israel has attracted attention as the world's leader in flower exports to
Europe, according to statistics provided by the Flowers Growers
Association. Flower exports gross about $1.5 billion, which is about 30%
of all flowers imported by Europe. Leora has been selling flowers to
Europe for many years, and though located very far from her markets, she
also ships flowers to Boston florists on three-day notice.
Israel's rapidly expanding pharmaceutical industry produces drugs at a 40%
or greater profit margin. The country has a proven capacity for producing
goods that find overseas markets. Were it left to its own devices, its per
capita GDP would be $32,000, and not $16,000, as at present.
Israel, unfortunately, is being pushed continuously to accelerate the
development and production of defense weaponry. Since its inception in
1948, Israel has endured a state of war, and its economy has been on a war
footing. Being always under the threat of military or terror attack,
Israel constantly falls short of reaching its true economic potential.
The need for defense weaponry has always existed. Early in its existence
Israel was dependent for weapons on the USA, France, and Britain. Until
1967, France almost exclusively, supplied airplanes. Dependence on foreign
suppliers left Israel in dire straits when France refused to supply arms
to Israel as "punishment" for its victory against the seven aggressor Arab
nations, in the Six Day War in 1967.
In the 20 years after that war, Israel continued on a course of building
its domestic arms industries. A few years later, it proved its abilities
when it produced a fighter jet, though its production was discouraged by
the US. Rafael, the Arms Development Research Authority, began to develop
missiles that were intended to protect Israel, but subsequently found
eager takers overseas.
In 2004, and most likely in the years that follow, Israel will become a
major defense supplier. Its Phalcon Early Warning platform, the Arrow
Anti-Ballistic Missile System, its smart missiles and electronics, along
with other military systems, should reach a $5 billion annual sales level.
The Home Front Security requirements in the United States, have given
birth to a rapidly upward moving industry in this country. Many countries
are envious, as Israel continues to receive military orders from Turkey,
India and China, all of which consider Israel as a trusted, quality
supplier.
However, the margins in defense sales are small. Offsetting transactions
are often demanded. Israel's water supply has improved over the past two
years, but the Government has explained that its purchase of massive
amounts of drinking water from Turkey was connected to defense sales.
Kenneth Galbraith and other economists have pointed out that war economies
are counter productive, because they divert resources from those sectors
of the economy that need the greatest support.
Defense manufacture denies the people of this country the fruits of
productive labor, because it is not the market but defense considerations
that dictate what will be produced. There is no weapons system that can
generate the profit margin of the Negev flower, or smell as sweet.
Until peace comes to this region, we will write more and more about the
sophistication of the weapons industry, though we would prefer reporting
about flowers, and about robots that can automatically pick water melons.
Published by Globes [online] - www.globes.co.il - on January 27, 2004
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