Israeli governments have traditionally discriminated against the Arab community in Israel in resource allocation, Finance Minister Yair Lapid said on Monday.

Speaking at the launch of a new parliamentary caucus for the advancement of the economy of the Arab community in Israel, Lapid noted the lack of adequate transportation to Arab villages and unequal investment in education as major impediments to the growth of a thriving Arab economy in Israel.

“Historically, Israeli governments have done little at best to advance the Arab economy, and sometimes even harmed it,” Lapid told the gathering. “This was not only unjust, but also silly in terms of economy-building.”

According to data presented by the caucus, which is headed by MK Bassel Ghattas (Balad), Arab Israelis, constituting 17.6% of the country’s population, contribute just 8% to the country’s GDP, estimated at over NIS 1 trillion ($285.3 billion).

A report conducted last year by Tel Aviv University on the Arab labor market in Israel found that high rates of low-skilled jobs, usually manual labor, had led to early retirement among Arab men. Low participation of Arab women in the workforce compared to Jewish women also accounts for the remarkably high levels of poverty in Arab society: 54.3% compared to 14% in Israel’s Jewish society. The report recommended the government invest billions of shekels in the Arab community in order to solve “structural market problems.”

Lapid said that creating “honors programs,” targeting the community’s best and brightest, would be key to advancing the Arab economy, creating “a generation of young Arabs who will become role models.”

The minister added that he was holding talks with heads of local Arab authorities to find solutions to the economic woes of their communities.

“This should have been done 30 years ago, but it’s good we’re doing it now,” he said.

Avishay Braverman, chairman of the Knesset Finance Committee and a former minister of minority affairs, said Israel has discriminated against its Arab citizens for years both in education and infrastructure.

“The State of Israel has not done what it should have,” he said. “It is not only just for Israel to give Israeli Arabs what it gives Jews, it’s also good for the Jews and good for the economy,” Braverman said.

Knesset Finance Ministry chairman Avishay Braverman (photo credit: Flash90)

Knesset Finance Ministry chairman Avishay Braverman (photo credit: Flash90)

Avner Stepak, former CEO of Meitav Dash investment House, said that institutional funds could easily funnel hundreds of millions of shekels into the Arab economy as investments, generating high annual profits of 6-8%. All that the Finance Ministry must do, he argued, is to grant the institutional investors a guarantee on their returns during the first two years of investment.

“After two years, the free market will work on its own,” he said.