Thursday, October 25, 2007

The Shifting U.S. Public Opinion on Free Trade and the Disastrous Consequences for Israel


“By a nearly two-to-one margin, Republican voters believe free trade is bad for the U.S. economy, a shift in opinion that mirrors Democratic views and suggests trade deals could face high hurdles under a new president.” By John Harwood, The Wall Street Journal, October 4, 2007.

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With the Turkish troop buildup on the Iraqi border, and U.S. Secretary of State Rice announcing new sanctions against Iran this morning, it is easy to lose sight of dangers to Israel other than military.

The shift in U.S. public opinion regarding free trade is one such danger that is easily obscured by war headlines.

Free trade has lead to global prosperity. It has taken hundreds of millions of people out of poverty in China and India alone.

Israel is a prime beneficiary. Its standard of living has risen appreciably because of free trade with Europe and the U.S. Its standard of living would fall dramatically if free trade were curtailed.

Today we live in dangerous times.

Nearly 80 years ago, the Smoot-Hawley Tariff Act was enacted in the U.S. to help it out of recession. Instead, the Act exacerbated the economic downturn by inviting retaliatory tariffs worldwide. Smoot-Hawley helped push the globe deeper into recession, and ultimately toward World War II.

What happens if the U.S. housing and credit crisis causes its economy to stall next year as many expect? What happens in the likely event that Democrats—the political party that traditionally is more wary of free trade—win control of the Presidency and both Legislative branches of government next year?

Legislation limiting free trade could very well be enacted into U.S. law.

The U.S. must look after U.S. interests, but if political pressure causes it to adopt a mistaken policy, it’s not only the U.S. that will pay the price.

Anti-free trade legislation in the U.S. would almost certainly trigger worldwide retaliatory measures. The consequences would be most painful in the emerging countries where, at the very least, millions will be thrown back into poverty. Political instability would increase worldwide.

For Israel, a country that needs to import water, oil and grain, and has very limited natural resources, limiting free trade would be a disaster. Beyond the economic pain, curtailed free trade would be disastrous for Israel because a weakened economy leaves Israel more vulnerable to enemies that wish it destroyed.

The upshot is this: Israel needs to be large enough to be independently viable so that it does not suffer too dearly when a foreign power makes a mistake.

Israel must not be so tiny and insignificant that it risks withering. It is ironic that "success" in Annapolis will greatly expose Israel to serious dangers in the long run.

Through technological, medical and scientific achievements, Israel massively contributes to the well being of all people on the planet. It must have a fair chance to survive and thrive in all economies, not just global good times.

The risk to Israel’s long term well being would be significantly lower if it had geography enough to make it self-sufficient in an age where trade may become more limited, and ensuing international calamities occur.

Please read The Case for a Larger Israel and then make up your mind.

--David Naggar

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