Israel joins Paris Club of rich creditor nations

Membership marks recognition of Jewish state’s economic achievements, low unemployment

Finance Minister Yair Lapid (photo credit: Yonatan Sindel/Flash90)
Finance Minister Yair Lapid (photo credit: Yonatan Sindel/Flash90)

PARIS — Israel on Tuesday joined an influential group of rich nations that help poor indebted economies, giving the country an international boost of recognition for its economic accomplishments.

The news that Israel had been accepted into the Paris Club of creditor nations was welcomed by Israeli policy makers, who are facing calls to reduce high levels of poverty and inequality even as the country’s economy hums along.

The Paris Club announced Israel’s induction, bringing the club’s membership to 20 countries. The club is an informal group of governments, including the United States, that collectively negotiates deals with poor countries struggling with huge debts. It was created in 1956 and has worked out loan deals for 90 countries.

It can cancel or restructure debts when countries are at risk of default. Argentina agreed in May with the Paris Club on a plan to resolve $9.7 billion in debts that have gone unpaid since its economic collapse in 2001-2002.

Finance Minister Yair Lapid lauded the Paris Club announcement, saying it “shows Israel’s economic might and presents additional proof that Israel’s place is alongside the strongest countries.”

Once a tiny farming nation, Israel has evolved into a high-tech economy with numerous start-ups and companies in communications, software and military technology. Its economy continues to grow, and unemployment is roughly 6 percent, well ahead of the double-digit levels seen in many parts of Europe.

After a 16-year effort, Israel was accepted into the Organization for Economic Cooperation and Development, a policy forum for the world’s most developed economies, in 2010. Still, more than 20 percent of Israelis live in poverty, nearly double the OECD average. This week, a government committee urged Israel to pump nearly $2 billion into social services and welfare programs.

“We are like two Israels in one,” said economist Dan Ben-David, executive director of the Taub Center for Social Policy Studies, an independent Jerusalem think tank.

One Israel “is cutting-edge by every stretch of the imagination, and fortunately for us, it’s leading the country,” he said. “The problem is that we have another Israel here, and that other Israel isn’t receiving either the tools or the conditions to work in a modern economy. That other Israel is huge and growing.”

Times of Israel staff contributed to this report.

read more: