The Endless War

Hungry Gaza Farmers And The Price Of A New Year’s Tomato In Israel

Last year, the price of vegetables surged 140% during the high holiday season, yet the Israeli government still opposes the import of cheap, high-quality produce from Gaza.

Stacking tomato crates in Rafah in the southern Gaza Strip
Dani Rubinstein

TEL AVIV â€" Israeli Agriculture Minister Uri Ariel recently launched a preemptive strike against the surging prices of vegetables (mainly tomatoes) before the upcoming Jewish New Year holiday season, declaring that the ministry will grant a duty-free status to importers of tomatoes from countries that are members of the International Trade Organization.

Ariel, however, has made it clear that the ministry will not allow the importing of hundreds of tons of vegetables from Gaza, although Palestinian agriculture ministry officials and Palestinian vegetable merchants alike not that their prices are low, the quality of produce is high and passes all of Israel’s health authorities’ inspections.

We've seen this film before: In September 2015 the Gisha organization â€" a nonprofit aimed at increasing the freedom of movement between Israel and Gaza â€" suggested to the Israeli agriculture ministry that promoting the sale of vegetables from Gaza in Israel would address the problem of produce shortages and rising prices. The ministry declined that offer last year, even as it allowed importing from Jordan to address the shortages. That didn’t help. The price of a kilogram of tomatoes surged to 12 NIS ($3.18) during the high holidays, as much as three times the price during the rest of the year.

Orthodox exception

A year ago the retail chains accused farmers of exploiting the holiday season in order to drive prices up, though the farmers blamed the produce shortage on pests and bad weather. Back then, the ministry did make an exception to allow limited amounts of vegetables to be imported from Gaza to the markets of Israel's ultra-orthodox community because of the Jewish sabbatical year in which cultivation of the fields is prohibited.

Palestinian farmer near Hebron â€" Photo: Dion Nissenbaum/TNS/ZUMA

While expanding the access would allow the rest of Israel’s population to enjoy affordable vegetable prices during the holiday season, it would also help Gaza’s economy, which is in desperate need of a boost. Although Gisha has renewed their request, the agriculture ministry will most likely refuse to accept it as it hopes that granting a limited time duty-free status to importers will drive prices back down.

In the past, Israel was the main market for Gaza’s farmers, especially during the holiday season when demand would increase since Israel’s farmers could not supply the local market’s needs. However, since the implementation of the Israeli blockade on Gaza in 2007, there has been almost no exporting from that strip of Palestinian territory. Meanwhile, farmers from the West Bank have been selling an annual amount of almost 100 tons of agricultural produce to Israel.

After the war in the summer of 2014, Israel’s defense apparatus tended to favor access to agricultural produce from Gaza in Israel in order to support the population in Gaza. From a legal standpoint, there is no problem because Gaza and the West Bank are subject to the same customs system. But while the reality in the West Bank has been one of almost full cooperation with the Israeli economy, in Hamas-controlled Gaza the situation is very different. And the Israeli public, especially during the holidays, pays the price.

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Economy

Merkel's Legacy: The Rise And Stall Of The German Economy

How have 16 years of Chancellor Angela Merkel changed Germany? The Chancellor accompanied the country's rise to near economic superpower status — and then progress stalled. On technology and beyond, Germany needs real reforms under Merkel's successor.

Chancellor Angela Merkel looks at the presentation of the current 2 Euro commemorative coin ''Brandenburg''

Daniel Eckert

BERLIN — Germans are doing better than ever. By many standards, the economy broke records during the reign of outgoing Chancellor Angela Merkel: private households' financial assets have climbed to a peak; the number of jobs recorded a historic high before the pandemic hit at the beginning of 2020; the GDP — the sum of all goods and services produced in a period — also reached an all-time high.

And still, while the economic balance sheet of Merkel's 16 years is outstanding if taken at face value, on closer inspection one thing catches the eye: against the backdrop of globalization, Europe's largest economy no longer has the clout it had at the beginning of the century. Germany has fallen behind in key sectors that will shape the future of the world, and even the competitiveness of its manufacturing industries shows unmistakable signs of fatigue.

In 2004, a year before Merkel was first elected Chancellor, the British magazine The Economist branded Germany the "sick man of Europe." Ironically, the previous government, a coalition of center-left and green parties, had already laid the foundations for recovery with some reforms. Facing the threat of high unemployment, unions had held back on wage demands.

"Up until the Covid-19 crisis, Germany had achieved strong economic growth with both high and low unemployment," says Michael Holstein, chief economist at DZ Bank. However, it never made important decisions for its future.

Another economist, Jens Südekum of Heinrich Heine University in Düsseldorf, offers a different perspective: "Angela Merkel profited greatly from the preparatory work of her predecessor. This is particularly true regarding the extreme wage restraint practiced in Germany in the early 2000s."

Above all, Germany was helped in the first half of the Merkel era by global economic upheaval. Between the turn of the millennium and the 2011-2012 debt crisis, emerging countries, led by China, experienced unprecedented growth. With many German companies specializing in manufacturing industrial machines and systems, the rise of rapidly industrializing countries was a boon for the country's economy.

Germany dismissed Google as an over-hyped tech company.

Digital competitiveness, on the other hand, was not a big problem in 2005 when Merkel became chancellor. Google went public the year before, but was dismissed as an over-hyped tech company in Germany. Apple's iPhone was not due to hit the market until 2007, then quickly achieved cult status and ushered in a new phase of the global economy.

Germany struggled with the digital economy, partly because of the slow expansion of internet infrastructure in the country. Regulation, lengthy start-up processes and in some cases high taxation contributed to how the former economic wonderland became marginalized in some of the most innovative sectors of the 21st century.

Volkswagen's press plant in Zwickau, Germany — Photo: Jan Woitas/dpa/ZUMA

"When it comes to digitization today, Germany has a lot of catching up to do with the relevant infrastructure, such as the expansion of fiber optics, but also with digital administration," says Stefan Kooths, Director of the Economic and Growth Research Center at the Kiel Institute for the World Economy (IfW Kiel).

For a long time now, the country has made no adjustments to its pension system to ward off the imminent demographic problems caused by an increasingly aging population. "The social security system is not future-proof," says Kooths. The most recent changes have come at the expense of future generations and taxpayers, the economist says.

Low euro exchange rates favored German exports

Nevertheless, things seemed to go well for the German economy at the start of the Merkel era. In part, this can be explained by the economic downturn caused by the euro debt crisis of 2011-2012. Unlike in the previous decade, the low euro exchange rate favored German exports and made money flow into German coffers. And since then-European Central Bank president Mario Draghi's decision to save the euro "whatever it takes" in 2012, this money has become cheaper and cheaper.

In the long run, these factors inflated the prices of real estate and other sectors but failed to contribute to the future viability of the country. "With the financial crisis and the national debt crisis that followed, economic policy got into crisis mode, and it never emerged from it again," says DZ chief economist Holstein. Policy, he explains, was geared towards countering crises and maintaining the status quo. "The goal of remaining competitive fell to the background, as did issues concerning the future."

In the traditional field of manufacturing, the situation deteriorated significantly. The Institut der Deutschen Wirtschaft (IW), which regularly measures and compares the competitiveness of industries in different countries, recently concluded that German companies have lost many of the advantages they had gained. The high level of productivity, which used to be one of the country's strengths, faltered in the years before the pandemic.

Kooths, of IfW Kiel, points out that private investment in the German economy has declined in recent years, while the "government quota" in the economy, which describes the amount of government expenditure against the GDP, grew significantly during Merkel's tenure, from 43.5% in 2005 to 46.5% in 2019. Kooths concludes that: "Overall, the state's influence on economic activity has increased significantly."

Another very crucial aspect of competitiveness, at least from the point of view of skilled workers and companies, has been neglected by German politics for years: taxes and social contributions. The country has among the highest taxes on income in Europe, and corporate taxes are also hardly as high as in Germany anywhere in the industrialized world. "In the long run, high tax rates always come at the expense of economic dynamism and can even prevent new companies from being set up," warns Kooths.

Startups can renew an economy and lay the foundation for future prosperity. Between the year 2000 and the Covid-19 crisis, fewer and fewer new companies were created every year. Economists from left to right are unanimous: Angela Merkel is leaving behind a country with considerable need for reform.

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