CONFIDENTIAL WORLD WATCH® REPORT ­­ON­­ Israel Date: 05/22/2015 19:37:50 GMT / UTC UnitedHealthcare Global Risk | 2925 Briarpark Drive, 11th Floor | Houston, Texas 77042 | ph: (713) 430­7300 | email: [email protected] | url: www.uhcglobal.com World Watch® is confidential and is intended solely for the information and use of UnitedHealthcare Global's clients. Given the nature of the information, UnitedHealthcare Global does not guarantee the accuracy or completeness of the information because agencies outside the control of UnitedHealthcare Global contribute information to World Watch®. 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For Terms and Conditions go to Terms Of Use World Watch® Report from UnitedHealthcare Global Israel Executive Summary for Israel Israel is led by Prime Minister Benyamin Netanyahu, who won re­election in March 2015. Netanyahu traditionally embraces a hardline approach to foreign policy, and at present there is no evidence that this will change in the short term. A key issue in Israeli politics is the Israeli­Palestinian peace process, which is stalled. Israel has a history of dissolved governments and snap elections; therefore, it remains to be seen whether this government will serve its full term. The economic situation is stable; however, discontent with the cost of living or austerity measures occasionally serves as a catalyst for protests and demonstrations. Typically, non­violent crime is the security concerns that travelers and expatriates are the most likely to encounter in Israel. Labor strikes and demonstrations are not uncommon in Israel. Such actions are generally peaceful; however, violence occurs on occasion. There is an ever­present threat of terrorism in Israeli cities, even though Israeli authorities are effective in deterring or foiling most attacks. The threat of regional conflict affecting Israel is a longstanding concern, especially issues associated with Syria, Lebanon and Iran. Israel Information Country Facts Current Analysis Official State of Israel Country Name The Likud Party of Prime Minister Benyamin Netanyahu performed well in the Type Of Parliamentary Democracy early parliamentary elections held on 17 March 2015, allowing him to retain Government the premiership. Leadership President Reuven "Rubi" Rivlin; For the time being, security and foreign policy issues will remain the foremost Prime Minister Benyamin priorities for the Netanyahu administration. Netanyahu The government also needs to address domestic concerns, such as the cost Capital Jerusalem of living. Overall, however, Israel is a strong performer and offers an attractive Official Hebrew and Arabic business environment for foreign firms Language Population 7.7 million (2013) Political Situation Ethnic Jewish (75.6%); Muslim (16.0%); The Likud party of Prime Minister Benyamin Netanyahu performed better than Divisions Christian (2%); Druze (1.7%); Other (3.8%) forecast in the parliamentary elections that were held on 17 March 2015. In May 2015 Netanyanhu formed a ruling coalition; however, the process was more Religion Jewish (76%), Muslim (16%), Arab Christians (1.7%), Druze (1.6%), difficult than was anticipated immediately after the March elections, and the Other (4.3%) government commands a very narrow majority in the legislature. Israel has a history of dissolved governments and snap elections; therefore, it remains to be Growth 1.5% (2013) seen whether this government will serve its full term. For the time being, security Inflation 1.7% (2012) and foreign policy issues will remain the foremost priorities for the Netanyahu Unemployment 11.6% (2011) administration. However, it will also need to focus on socio­economic conditions, which were a major topic in the latest election. Currency New Israeli Shekel (ILS) Office Work Sunday­Thursday Israeli­Palestinian Relations Week The state of Palestinian­Israeli relations is complex. The main obstacles to a negotiated settlement are the status of Jerusalem, the borders and nature of a Time Zone UTC+2 (UTC+3 during daylight Offset saving time) future Palestinian state and the status of Palestinian refugees. On Jerusalem, the Palestinians aim to make the eastern part of the city the capital of a Palestinian Country Phone 972 state, while the Israelis ­­ and Netanyahu in particular ­­ insist that the city will not Code be divided and will remain the capital of Israel in its entirety. On the issue of Capital City 2 borders, the Palestinians want to use borders that were in place prior to the 1967 Phone Code World Watch® Report from UnitedHealthcare Global war, but Israeli officials have long opposed the idea. The Israelis also commonly Nationwide 100 (police), 102 (fire), 101 insist that the Palestinian state should observe certain restrictions to ensure that it Emergency (medical) does not become a threat to Israel, a demand which the Palestinians view as Number(s) infringing on their sovereignty. The Palestinians also maintain that Palestinian Electricity 220 volts, 50 Hz AC refugees should have the right to return to their ancestral homes, including those Plug Styles round two­pin plugs located in Israel proper, a demand which Israel opposes as endangering the Jewish nature of the state. The coalition that Netanyahu led until the March 2015 election gravitated toward hardline policies. During the electoral campaign, Netanyahu announced his rejection of the idea of a Palestinian state, a position from which he backtracked following the election. At present there is no reason to expect any major progress toward a solution of the Israeli­Palestinian conflict. The stalemate is not without cost for Israel. Continued Palestinian frustration is one reason that contributes to the ever­present threat of terrorism in Israel. The long­stalled peace process also creates a situation in which hostilities can escalate quickly, as occurred most recently during the Israel­Hamas conflict of July­August 2014. The ongoing conflict with the Palestinians also tends to place Israel in awkward situations with the international community, including at times the United States, Israel's most important ally. Despite these drawbacks, absent any dramatic regional developments, a Netanyahu government will likely conclude that the status quo is preferable to making painful concessions to the Palestinians. Economic Situation Overall, Israel’s economy is stable and a relatively strong performer. The government is pursuing policies aimed at fostering continued economic growth, and Netanyahu’s experience as Israel’s finance minister has aided him in reviving the country’s economy. Despite a stable economy, the government faces opposition in regard to its policy plans. The populace remains concerned about the socio­economic situation; for instance, the country has a relatively high cost of living in some areas ­­ especially Tel Aviv ­­ and limited opportunities for its young and growing population. Such discontent often sparks civil actions. The political situation also affects the economy; continued failed peace negotiations and construction of settlements can result in boycott campaigns that could impact Israel’s export economy. A major gas reserve discovered off the coast of Haifa in 2010 may improve the independence and economic stability of Israel in the future. The reserves ­­ which contain as much as 25 trillion cubic feet of natural gas ­­ will establish energy security in Israel and allow the country to become a gas exporter. The discovery is not without issues. According to Lebanon, the location of the reserves is at least partly in Lebanese territorial waters, raising claims that Israel would be “stealing” Lebanon’s natural gas. Both countries continue to explore the reserve, though Israeli infrastructure is far more advanced. Nevertheless, this issue warrants continued monitoring in the coming years, as Israel is keen on developing the resources, which could be a source of a future conflict with Lebanon. Israel’s business environment remains attractive to foreign firms. Israel is typically among the top ranking countries within the Middle East and North Africa region in various business environment benchmarks. On the 2014 World Economic Forum’s Global Competitiveness Report, Israel stands 27th out of 144 countries. While corruption is not completely absent in Israel, it is not a major hindrance to doing business; for instance, Transparency International’s Corruption Perceptions Index for 2013 ranked Israel 36th out of 177 countries. Security Issues Despite the de­escalation of the July 2014 conflict; tensions between Israel and the Palestinians remain a concern, as do Israeli relations with Syria and Lebanon. The threat of terrorism is an ongoing security concern in Israel. Crime is not a significant concern for travelers, but it