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Friday, July 20, 2007

How the Branja controls Israel's economy

Haaretz reported yesterday that nineteen families control approximately one third of the revenues of Israel's 500 largest corporations. That's a level that would be intolerable in just about any other country in the world. But it gets worse:
The annual income of the 19 families is equal to 88 percent of the state budget or 54 percent of the business sector's share of GDP.
Let those numbers sink in for a while.

But here's what Haaretz is not telling you: Guess which side of the political spectrum most of these nineteen families support?
The families all have given campaign contributions to Israeli Prime Minister Ehud Olmert and foundations associated with newly installed Israeli President Shimon Peres, WND has learned. Most of the families support major leftist Israeli organizations.
Even among these nineteen families, the wealth is not evenly distributed:
The top five families on the list, including U.S. media mogul Haim Saban, control 61 percent of the income of these 19 families – up from 54 percent in 2005.

Saban is a top supporter of Peres and of major Israeli and international organizations petitioning for an Israeli withdrawal from the West Bank, Gaza Strip and sections of Jerusalem. Israel evacuated Gaza in 2005; since then rockets have been regularly launched into nearby Jewish population centers. The West Bank is within rocket-firing range of Jerusalem, Tel Aviv and Israel's international airport.
How did this happen? A Forbes Magazine report last year - that found that twelve groups control 60% of Israel's economy - explained that it wasn't through hard work and competition:
Forbes contended the groups constructed their empires, which own about 60 percent of the aggregate market value of all Israeli public companies, using organizational methods that were abolished in the Western world in the 1930s.

The groups reportedly achieved tight economic ownership by structuring their companies in pyramid-style, putting top holding companies in charge of smaller companies that all are beholden ultimately to the 12 groups. The U.S. largely eliminated this style of privatized influence nearly 80 years ago through a series of restrictions on ownership and the implementation of double taxation of dividends paid by a company to its parent organization.

The Forbes article stated the 12 groups have a disproportionately large amount of control over Israel's economy and the country's media through ownership of many of Israel's top banks and large media companies.
I spent four years working at one of Israel's top financial regulators. In the days when Israeli companies were just starting to list their shares in the US, we once had a meeting with a representative of NASDAQ. Someone from the Tel Aviv Stock Exchange asked what rules they had for listing subsidiaries of listed companies. The NASDAQ representative looked at her like she had come from outer space. You cannot do that in the US.

But in Israel, money talks. And now maybe some of you understand why the politicians are looking to give away all of our land and couldn't care less about the consequences. After all, Jewish technology works anywhere.


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