Israel & the Palestinian Territories

Money & costs

Costs

Israel is not a cheap country and you can expect to pay standard Western prices for most goods and services. Backpackers can expect to spend between US$20 and US$40 per day, about half of that going towards accommodation. For a little more comfort in a midrange hotel and meals other than felafel and shwarma, think about spending between US$50 and US$100 per day, or more if you don’t have someone to share a room with. To live comfortably at the top end, staying in three- and four-star hotels, dining at fine restaurants and renting a car, you can expect to spend US$120 to US$180 per day. A student card will save you some shekels at museums and historic sites. Look out for special internet-only deals for hotels.

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Economy

Despite its lack of natural resources, Israel has developed a robust and diversified economy. Images of kibbutz farms are, however, a little obsolete, and the country is now a world leader in the tech industry.

As a sign of the times, Newsweek recently named Tel Aviv one of the top 10 most technologically influential cities in the world. IBM is a major player but Israel has a total of 4000 technology companies, second only to California. IT spending is nearly US$4 billion annually.

An extension of the tech boom is Israel’s manufacturing sector. The country produces aeronautical equipment, electronic and biomedical equipment and construction materials. Iscar, a world leader in metal working and metal cutting tools, recently caught the attention of American investor Warren Buffet, who bought 80% of the company for US$4 billion.

Diamond cutting and polishing is also big business – the Israel Diamond Centre in Ramat Gan is the world’s largest diamond exchange.

Israel’s economic miracle is not entirely homegrown; the US$3 billion per year aid package (most of which is for military spending) it receives from the USA accounts for 10% of the GDP. The economy is also greatly affected by its security issues and confrontations with its neighbours. The second intifada (2001–2005) stymied economic growth, largely due to the implosion of the tourism sector. In 2000 the country received 2.4 million tourists; recent years have seen the number cut in half. War does not come cheaply either; the second Lebanon War in 2006 cost Israeli taxpayers US$1.36 billion.

Problems aside, Israelis have enjoyed the growth and the national average earning is around US$21, 000 per year, ranking Israel in the top 30 countries worldwide. Palestinians, however, have shared in little of this prosperity. Many Palestinians who worked in Israel have been cut off from work, and job prospects in their own territory are gloomy at best. The average Palestinian in Gaza makes an abysmal US$600 per year, while in the West Bank the figure is around US$1100. Poverty is estimated at around 50%. A remittance economy supported by Palestinians abroad helps to support hundreds of families.

The Palestinian economy includes a small-scale textiles industry, olive wood carvings and soap manufacturing. Olive and citrus farms still dot the countryside but land use has been affected by the construction of the Security Wall, which has slashed through open farmland. Palestinian farmers have also been severely affected by export restrictions to Israel and an inability to get their produce to market. This problem hit hard in Gaza, where vegetable growers had taken over the greenhouses left behind by departing settlers. The closure of checkpoint crossings prevented the farmers from exporting their crops and the incident became a media circus when the farmers staged a protest by throwing boxes of ripe tomatoes off the back of their trucks.

The biggest of recent blows to the Palestinian economy came in the aftermath of the Hamas election in January 2006. Hamas’ refusal to recognise the state of Israel caused international donors (the USA and the EU) to suspend aid to the Palestinian Authority, while Israel cut the transfer of US$55 million in tax receipts. Civil servants were left unpaid while the cash deficit grew by US$110 per month. Heading off a humanitarian crisis, donors have circumnavigated the Hamas government by providing food and cash aid directly to charity groups.

If and when the borders are relaxed, Palestinians can expect a return to some form of normality. Before the military crisis of 2006 boiled over, Israel had arranged for 20,000 workers to enter Israel from the West Bank and a newly constructed passenger terminal at Erez is able to handle up to 35,000 commuters per day.

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Money

Moneychangers

Exchange rates vary little from place to place, but banks may charge a 4% commission. The best deals are the independent exchange bureaux common in most cities and towns, which usually do not charge a commission.

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Travellers cheques

Travellers cheques may be changed at most banks, but commission charges can be as high as 20NIS, regardless of the cheque amount; instead use a no-commission exchange bureau or the post office. Post offices also operate instant Western Union international money transfer services.

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