Wednesday, January 20, 2010

Issues before Israel joins OECD

January 20, 2010
Issues Stand Before Israel in Joining Elite Group
By ETHAN BRONNER

JERUSALEM — Israel, which has catapulted in the past two decades from a minor state-dominated economy to a market-driven technology hothouse, is in the final stages of accession to the exclusive club of advanced countries, the Organization for Economic Cooperation and Development. But its secretive weapons trade, patent-bending drug industry and occupation of Arab lands are raising last-minute questions.

The secretary general of the O.E.C.D., Ángel Gurría, currently in Israel to discuss the issues with senior officials, said that he was confident they could be resolved and that Israel might miss the original target of May but would become a member this year. But he acknowledged that Israel, unlike other small countries in the process of accession — Chile, Slovenia and Estonia — might face objections unrelated to the technical questions still to be answered.


“We have to keep the substantive issues on the straight and narrow,” Mr. Gurría, a former Mexican finance minister, said in an interview held after meetings at the Bank of Israel. “We should not allow technical issues to be used as masks for something that is in reality a political issue.”

That political issue is Israel’s declining international reputation because of its Gaza war a year ago and its continuing construction of Jewish housing in the occupied West Bank and East Jerusalem. Professional staff employees of the O.E.C.D., which is based in Paris, say all 30 member states must approve the accession of a country, and it remained unclear if any would object. But the three technical issues all still needed to be solved.

Let those nations free of issues lead the charge of the pure.

The first involved the organization’s convention to combat bribery of foreign officials, which it considers one of its more significant accomplishments. Some years ago, bribes were tax-deductible in several European countries. Now, all of the organization’s members are required to fight bribery through domestic legislation and regulation.

The arms trade is notoriously filled with palm-greasing across the world, and Israel is a large arms trader. It has signed the antibribery convention as part of its accession process, but the way it handles the issue is causing difficulty, O.E.C.D. officials say.


The main concern is that Israel’s Defense Ministry has the power to censor the results of any investigation of bribes paid by Israeli companies to foreign officials on the grounds that the publicity could harm Israel’s national interests. The censor can ban publication and is under no obligation to tell the authorities about the investigations. The O.E.C.D. wants both practices changed.

The second concern, regarding intellectual property rights, involves the Israeli company Teva Pharmaceuticals, one of the world’s largest producers of generic drugs. Major American and Swiss companies have long accused Israel of insufficient regulation of the way Teva markets its products in the face of patent regulations in other countries.

Finally, the O.E.C.D. is unhappy with Israel’s definition of its territory in collating economic data. Israel includes activities in East Jerusalem and the Golan Heights, both of them won in the 1967 Arab-Israeli war; most of the world views those areas as occupied, but Israel considers them its own through annexation.

All three issues, Israeli Foreign Ministry officials say, are being addressed at the technical level and will be solved.

Israel’s candidacy got off to an unusual start. Mr. Gurría, the secretary general, said that four years ago Israel’s widely admired central bank governor, Stanley Fischer, began attending O.E.C.D. functions with large studies of Israel’s economy aimed at demonstrating its readiness for membership.


“It’s the only country that’s ever done that,” Mr. Gurría said. “They were actually using O.E.C.D. regulations to modify their practices so as to qualify. In May 2007 Israel was invited to join because of its good economic management focused on knowledge, technology and education. The O.E.C.D. can gain from its membership, and so can Israel.”

The O.E.C.D.’s purposes are to bring together market-oriented democracies, promote good business and economic practices, and increase employment and international trade. For Israel, membership would not only help it continue to modernize its economy but also fight efforts to delegitimize and ostracize it over its dispute with the Palestinians.

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