Hever: 18 families control 60% of the equity value of all companies in Israel
PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I’m Paul Jay, and we’re in Jerusalem. Now joining us is Shir Hever. He’s an economist at the Alternative Information Center and author of the upcoming book Political Economy of Israel’s Occupation. Thanks for joining us Shir.
SHIR HEVER, ECONOMIST, ALTERNATIVE INFORMATION CENTER: Hello.
JAY: So, in talking to people in Israel, one thing I hear constantly is the fight here is about national identity, it’s about the defense of the Jewish state. I don’t hear very much about economics of Israel or the economics of occupation. So how does national identity relate to the economics here?
HEVER: Well, the economic reality of Israel, of course, plays a part in every aspect of Israel’s existence—in the politics, in the society, and, of course, also in identity issues as well. The occupation of the Palestinian territories defines Israel’s economy in a large way. About two-thirds of Israel’s history, it has been occupying power, controlling Palestinian territories. But even before that occupation, Israel has created a very particular system of economic control, which is designed to promote the idea of a Jewish state. The Jewish state is not merely a cultural idea; it’s not merely a symbolic idea; it’s a material reality which is designed to redistribute wealth in order to draw as many Jews as possible to this area and to maintain a sustainable control of the Jewish population over a piece of land which is by nature binational.
JAY: Now, in terms of the Israeli economy, what percentile at the top controls the majority of the Israeli economy in terms of ownership?
HEVER: Israel is very centralized in terms of capital, far more than most developed economies in the world. About 18 families in Israel control roughly 60 percent of the equity value of all companies in Israel. So it’s concentrated in the hands of 18 families. Of course, there are other rich people in Israel who control some more of that other 40 percent.
JAY: So what are we talking about? What kind of things do they control, in terms of what makes up the bulk of the Israeli economy and the ownership?
HEVER: The Israeli economy has a very strong banking sector and financial sector, which also includes insurance companies, so that’s a very big part of the Israeli economy. But Israel’s also one of the world’s biggest exporter of diamonds, Israel is one of the world’s biggest exporters of chemical fertilizer, and there are a lot of high tech industries. Much of that high-tech industry actually ties with a very large and very famous industry in Israel, which is the arms trade, the arms industry. A lot of the high-tech development in Israel is actually for what is known as homeland security technology. And so a lot of companies, especially companies set up by former military officers, specialize in developing homeland security products designed to track individuals and to help governments or corporations—.
JAY: Which we know have been sold in the past to South Africa, to Colombia, to Honduras.
HEVER: Yeah. Well, until the year 2000, Israel was about the tenth biggest arms exporter in the world, but the fourth biggest arms exporter to the developing world, because Israel was willing to sell weapons to clients, to customers which other countries were reluctant to sell to, such as South Africa during the apartheid and so on. But after September 11, after the attacks, there was a famous quote by Benjamin Netanyahu, who is currently Israel’s prime minister. He said these attacks are good for Israel; they show the world that Israel fighting terrorism—or fighting Islam, basically—is a good thing.
JAY: So these 18 families, we’re talking families that are all billionaires, then, in terms of, amongst the families, the wealth that’s been accumulated. In terms of the size of the fortunes on a global scale, are they significant fortunes?
HEVER: Well, they are significant in those sectors. In the diamonds sector and the weapons sector and in the fertilizer sector Israel is a global player. In the high-tech sector not so much, but definitely in the homeland security sector.
JAY: So, then, these families, in terms of the Israeli politics, political parties, and the various governments that come and go, are the families split? Or are they involved in all the parties?
HEVER: Well, all the Zionist parties in Israel, starting from the so-called Zionist left or the liberal parties and all the way to the extreme right-wing, almost fascist parties, are almost indistinguishable from each other. And the controlling—the wealthy families, they know that. They contribute about equally to the centrist parties, or the so-called centrist parties, because they know that it doesn’t really matter whether it’s going to be Likud or Labor or Kadima. These parties have the same agenda, the same strategy, and the same platform.
JAY: Now, to what extent does the struggle with the Palestinians take attention off the 18 families? Or how visible are the 18 families in terms of popular perception?
HEVER: Well, they are visible. I think people know to a certain extent that there are these people who own the companies that they pay money to every day. You know that your cellular phone comes from a very large and powerful company that you see their signs every day. And so they do know about these companies. Many people also know even the names of the owners of these companies. But when you want to tie it to the struggle with the Palestinians, then, of course, that plays a role through different ways. You hinted that perhaps the struggle with the Palestinians helped to draw attention from the centralized capital in the year 2002. The chairman of the Manufacturers Association in Israel said that because of the struggle with the Palestinians, because of the intifada, Israelis have to learn that they cannot expect an increase in the minimum wage, or perhaps even they should expect a decrease in the minimum wage, meaning that the security constraints are used as a justification to stifle social struggle.
JAY: So 18 families, you said, own 60 percent of capitalization in Israel?
JAY: Now, in terms of general social programs, social safety net, how much redistribution takes place amongst Israeli citizens?
HEVER: Well, Israel is the most unequal country in the developed world, second only to the United States. In the year 2009, Israel bypassed Mexico for the first time as more unequal than Mexico, making Israel indeed one of the most unequal countries in the world. And that is because while most countries in the developed world spend some of their budgets in redistributive efforts such as health care, unemployment benefits, infrastructure, creating jobs, that sort of thing, Israel actually spends about 75 percent less, in ratio comparisons, with most of these countries, with OECD countries, and that is because Israel spends so much on security, on the military.
JAY: Well, how much is it because they spend so much on security, and how much is it because of the accumulation of the 18 families? I guess, let me ask the question the other way: how taxed are the 18 families?
HEVER: Well, they are slightly less taxed than in most developed countries, mostly because Israel created a system of loopholes which allow, especially, wealthy Jewish people from around the world to bring their property to Israel with no questions asked. So there have been many cases of very wealthy Jews coming to Israel with their property, saying they’re doing a Zionist act, but in fact there were standing lawsuits against them in other countries. Israel will not extradite them, stating against the Zionist argument. And that was one of the reasons that Israel was able to draw a lot of capital in the past two decades.
JAY: So if great concentration of ownership and wealth in the top tier, not that much taxation, not very much social safety net—so to what extent is there a social movement demanding more economic justice for Israelis?
HEVER: Well, Israel historically had a very strong social movement and was considered an almost socialist state. In 1965 there was a survey of all countries in the world in terms of equality, and Israel was ranked between the Netherlands and Finland—one of the most equal countries in the world. Today, as I said before, Israel is one of the most unequal countries in the world. So something did happen.
JAY: Okay. So in the next segment of our interview let’s find out what happened. Please join us for the next segment of our interview with Shir Hever.
End of Transcript
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