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Steinitz: Sequestration Could Drag Down Israel's Economy

Finance Minister Yuval Steinitz called the latest fiscal developments in the U.S. “worrying"
By David Lev
First Publish: 3/3/2013, 5:33 PM

Finance Minister Yuval Steinitz
Finance Minister Yuval Steinitz
Israel News photo: Flash 90

Speaking at Sunday's cabinet meeting, Finance Minister Yuval Steinitz called the latest fiscal developments in the U.S. “worrying,” expressing concern that the “sequestration” process in the U.S., in which budgets across the entire spectrum of the U.S. government will be cut, could affect Israel. With that, he said, Israel had a strong economy, and Israel's was one of the only economies in the past three years to achieve growth.

Whether or not military or direct aid to Israel will be cut is not known, Steinitz said, and the Treasury had not yet developed contingency plans to deal with the possibility. This wasn't a case of negligence, he said, but due to the fact that the new government, which, if Binyamin Netanyahu is to lead it in the current Knesset, will have to begin working on the 2013 budget almost as soon as it is formed – and the budget will address the issues.

Regardless, said Steinitz, “the international economic atmosphere is a very difficult one right now, and we must act very responsibly and with daring to ensure a healthy economy for Israel and Israeli citizens. It is precisely for this reason that we nee a strong and stable government,” Steinitz said.

Steinitz expressed hope that Israel could avoid the worst effects of the sequestration. “The U.S. is still the world's economic engine and a prime target for Israeli exports.” Nevertheless, he said, the U.S. economy has been dragging for several years – and Israel had managed to develop itself into a situation where the U.S. economy had not dragged Israel's down along with it. “Israel managed to isolate itself from this situation and continued to grow nicely.”

Still, he said, Israel's economy would have done even better if the American economy had had a better recovery. “We hope the latest crisis in the U.S. will be resolved and that its effect on us will be mild, or pass us by altogether,” Steinitz added.