The first year – last time
By Binyamin Netanyahu, Jerusalem Post, May 19, 2000
In its first year, my government was guided by two major
tasks: restoring the security of Israel’s citizens and halting the
dwindling of the state to its 1967 borders; and speeding up Israel’s
transformation from a closed socialist economy to a free, competitive
economy, with increased investment in education for the distressed sectors.
On the diplomatic front, I abolished the formula of “promoting peace as
if there were no terror, and fighting terror as if there were no peace.”
I initiated and inculcated the reciprocity principle, and demanded that
the Palestinians honor the obligations outlined by the Oslo Accords, the
first of which was fighting terror. When the Palestinian Authority gave
the green light to two terrorist actions, my government halted the
diplomatic process and prevented the transfer of funds to the PA for two
As a result, in our government’s first year, the number of terror
attacks and terror victims was reduced significantly.
We signed and executed the Hebron agreement. In exchange I demanded,
and received, from the US a letter acknowledging Israel’s right to
determine the scope of its withdrawals under the Oslo Accords. This laid
the foundation for my subsequent request that the Wye agreement include
President Clinton’s obligation to support Israel’s decision to hand over
only 1% in the third phase – a request that was granted.
By these moves, my government limited the scope of the three Oslo
withdrawal phases to a total of 14%, placing the lion’s share of Judea,
Samaria, and Gaza – with no Arab population – in Israeli hands, while 99%
of the Palestinian population moved to PA control.
I made no compromises on Jerusalem. My government closed six PA offices
in east Jerusalem, and stopped the Orient House from serving as a
Palestinian foreign ministry.
Despite Palestinian opposition and international criticism, we approved
the construction on Har Homa. We doubled the number of Israeli police in
east Jerusalem, and allocated record funds to Jerusalem’s development.
Vis-a-vis Syria, we demanded, and received, a letter from the American
secretary of state clarifying that the US viewed all previous Israeli
government statements regarding withdrawal from the Golan as non-binding.
This step eliminated any possible pressure on Israel to leave the Golan
and withdraw to June 4, 1967, lines.
In contrast with the “not one inch” policy, I was willing to reach
cautious agreements in which Israel handed over a minimum and demanded
reciprocity and security in return. This firm stance on Israeli interests
moderated Arab expectations and allowed us to achieve, in Hebron and Wye,
balanced agreements that protected our interests.
My policy also ran counter to the policy of “an agreement at any
price,” which unfortunately has been all too evident in recent months, and
which has led to increased pressure on Israel to make concessions on all
fronts, including Jerusalem.
On the economic front, we carried out an extensive reduction of the
massive NIS 15 billion budget deficit that we inherited from our
predecessors. My government cut the deficit from 4.7% to 2.5% of the GNP,
and decreased inflation from 12% to 7% – without levying new taxes –
largely through massive privatization of government companies, totalling
NIS 8 billion in the first year alone.
We broke up monopolies and opened up markets to competition – including
the international call market and the introduction of a third cellular
carrier, and also introduced private mass transportation.
Unlike every previous government, we opened up the financial markets.
We eliminated control of foreign currency, transformed the shekel into an
international currency, and permitted Israeli citizens to hold foreign
bank accounts. With these moves, we made Israel an integral part of the
global economy. During our term, foreign investment increased
significantly, particularly in hi-tech.
On the social front, my government initiated the country’s first long
school day, and free preschool education beginning with distressed areas.
We promoted the “Computer for Every Child” project in these areas, and
implemented a program for preventing domestic violence and helping
children at risk.
My government arranged a NIS 1 billion recovery program with local
authorities, and significantly increased the development budget for the
minority sector, despite general budget cuts.
It is generally estimated that without my government’s economic
measures, the economic situation would have severely deteriorated
following the Asian crisis one year later. The International Monetary
Fund, the US government, and other bodies determined that our government
made the greatest progress yet in transforming Israel into a free,