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Israel’s best hope lies in a single state

In East Jerusalem, vigilantes prowl, hunting for Jewish girls who consort with Arab men. Slavoj Žiže

In Israel, there is a growing number of initiatives - from official bodies and rabbis to private organisations and groups of local residents - to prevent interracial dating and marriage. In East Jerusalem, vigilante-style patrols work to stop Arab men from mixing with local Jewish girls. Two years ago, the city of Petah Tikva created a hotline that parents and friends can use to inform on Jewish women who mix with Arab men; the women are then treated as pathological cases and sent to a psychologist.

In 2008, the southern city of Kiryat Gat launched a programme in its schools to warn Jewish girls about the dangers of dating local Bedouin men. The girls were shown a video called Sleeping With the Enemy, which describes mixed couples as an "unnatural phenomenon". Rabbi Shmuel Eliyahu once told a local newspaper that the "seducing" of Jewish girls is “another form of war" and a religious organisation called Yad L'Achim conducts military-style rescues of women from "hostile" Arab villages, in co-ordination with the police and army. In 2009, a government-backed television advertising campaign, later withdrawn, urged Israeli Jews to report relatives abroad who were in danger of marrying non-Jews.

It is no wonder that, according to a poll from 2007, more than half of all Israeli Jews believe that intermarriage should be equated with "national treason". Adding a note of ridicule late last year, Rabbi Ari Shvat, an expert on Jewish law, allowed for an exception: Jewish women are permitted to sleep with Arabs if it is in order to gather information about anti-Israel activity - but it is more appropriate to use unmarried women for this purpose.

The first thing that strikes one here is the gender asymmetry. The guardians of Jewish purity are bothered that Jewish girls are being seduced by Palestinian men. The head of Kiryat Gat's welfare unit said: "The girls, in their innocence, go with the exploitative Arab." What makes these campaigns so depressing is that they are flourishing at a time of relative calm, at least in the West Bank. Any party interested in peace should welcome the socialising of Palestinian and Jewish youth, as it would ease tensions and contribute to a shared daily life.

Until recently, Israel was often hit by terror attacks and liberal, peace-loving Jews repeated the mantra that, while they recognised the injustice of the occupation of the West Bank, the other side had to stop the bombings before proper negotiations could begin. Now that the attacks have fallen greatly in number, the main form that terror takes is continuous, low-level pressure on the West Bank (water poisonings, crop burnings and arson attacks on mosques). Shall we conclude that, though violence doesn't work, renouncing it works even less well?

If there is a lesson to be learned from the protracted negotiations, it is that the greatest obstacle to peace is what is offered as the realistic solution - the creation of two separate states. Although neither side wants it (Israel would probably prefer the areas of the West Bank that it is ready to cede to become a part of Jordan, while the Palestinians consider the land that has fallen to Israel since 1967 to be theirs), the establishment of two states is somehow accepted as the only feasible solution, a position backed up by the embarrassing leak of Palestinian negotiation documents in January.

What both sides exclude as an impossible dream is the simplest and most obvious solution: a binational secular state, comprising all of Israel plus the occupied territories and Gaza. Many will dismiss this as a utopian dream, disqualified by the history of hatred and violence. But far from being a utopia, the binational state is already a reality: Israel and the West Bank are one state. The entire territory is under the de facto control of one sovereign power - Israel - and divided by internal borders. So let's abolish the apartheid that exists and transform this land into a secular, democratic state.

Losing faith

None of this implies sympathy for terrorist acts. Rather, it provides the only ground from which one can condemn terrorism without hypocrisy. I am more than aware of the immense suffering to which Jews have been exposed for thousands of years. What is saddening is that many Israelis seem to be doing all they can to transform the unique Jewish nation into just another nation.

A century ago, the writer G K Chesterton identified the fundamental paradox facing critics of religion: "Men who begin to fight the Church for the sake of freedom and humanity end by flinging away freedom and humanity if only they may fight the Church . . . The secularists have not wrecked divine things but the secularists have wrecked secular things, if that is any comfort to them." Does the same not hold for the advocates of religion? How many defenders of religion started by attacking contemporary secular culture and ended up forsaking any meaningful religious experience?

Similarly, many liberal warriors are so eager to fight anti-democratic fundamentalism that they will throw away freedom and democracy if only they may fight terror. Some love human dignity so much that they are ready to legalise torture - the ultimate degradation of human dignity - to defend it. As for the Israeli defenders of Jewish purity: they want to protect it so much that they are ready to forsake the very core of Jewish identity.

Slavoj Žižek is a philosopher and critic. His latest book, "Living in the End Times", is published by Verso (£20)

This article first appeared in the 07 March 2011 issue of the New Statesman, The great property swindle

photomontage by Dan Murrell
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Greece is just the canary in the mine – there are still crises aplenty to come in global finance

While all eyes are on the eurozone, larger troubles are brewing.

“People only accept change when they are faced with necessity and only recognise necessity when a crisis is upon them,” said Jean Monnet, the French political economist whom many consider to be the founding father of the project of European integration. The decisive No vote against the terms of an international bailout in the Greek referendum has certainly plunged Europe further into crisis – but will it also bring change? And, if it does, what are the implications for Greece, the eurozone and the rest of the world?

At the heart of the Greek crisis are two interconnected questions. Both have become especially urgent in the case of Greece but the same issues are hotly contested throughout the world’s advanced economies. The first is how to deal with public debt when it becomes too high. The second is what the proper role of a country’s central bank is – and who should decide that.

The problem of public debt is the better known of the two. Greece’s public debt is very large, at about 180 per cent of its gross domestic product. Private investors will not lend to the country as a result: Greece has “lost market access”, as the jargon goes.

The rest of the 19-member eurozone maintains that a combination of fiscal belt-tightening and liberalisation can pull Greece back into a virtuous circle of growth, shrinking debt and falling interest rates. The country’s governing Syriza party argues that the past five years have shown this to be wrong: it says that only an upfront write-off of a significant part of Greece’s public debt will work. Who is right? The referendum on 5 July provided a partial answer by indicating that the debt has reached the limit of political sustainability. But technical arguments, too, are needed to sway Greece’s creditors. The critical intervention on that front came a few days earlier.

On the evening of 2 July, the International Monetary Fund – one-third of the so-called Troika that bailed out Greece in 2010 and 2012 – shocked all sides by publishing its latest analysis of the country’s predicament. It concludes that Syriza’s position is, in essence, correct: it is implausible that the public debt can be put on a sustainable footing without substantial debt forgiveness.

The importance of this announcement lies less in the verdict – it had long been whispered that the IMF had lost faith in the creditors’ plan – than in how it has been put in the public domain. Now that the IMF has backed a write-off, the strategy of “extend and pretend” is no longer credible. Why would private investors step back in if the official arbiter of global finance has publicly decreed that Greece’s debt is unsustainable?

The fundamental issue at hand is of a relevance far beyond Greece. Since the financial crisis of 2008, the developed world has opted to sweat off excessive public debt over time, rather than confront it by negotiating a one-off relief. The result has been sloth-like economic growth and a chronic dent in confidence over the future. Whether preserving the sanctity of contract law or promoting economic dynamism is the better way to ensure that creditors ultimately get a better deal is the question of the age.

Following the IMF’s volte-face, could the alternative path finally be tested in Greece? Breaking the spell of constructive ambiguity could simply force Greece’s creditors to disown the debt problem as insoluble. Yet it might just provide a face-saving way out: a justification to grant debt relief that will pass muster with national electorates, in Greece and perhaps even beyond.




So much for the debt question. The other conundrum at the heart of the Greek crisis – concerning the proper role and governance of the central bank – is even more urgent. For weeks, there has been a slow-motion run on Greece’s banks. Depositors uncertain of how the debt problem will be resolved (and fearful that the only way out is an exit from the euro) have been withdrawing cash or transferring money abroad. As is normal in such a situation, Greece’s banks have had to borrow from their central bank to fund these withdrawals. Until recently, that central bank – the European Central Bank (ECB), the second member of the Troika – was happy to comply.

On 28 June, however, that changed. Greece’s banks were told they would have to manage on their own. But no bank can hope to meet withdrawals during a bank run from its own reserves. So the banks were forced to close and capital controls were introduced. Cash withdrawals are restricted to €60 per day and there are strict limits on the transfer of funds abroad. The resulting economic disruption and social distress risk ­overtaking any negotiations on the debt problem.

The ECB’s decision is unprecedented in the annals of banking. The raison d’être of a central bank is to preserve the stability of the banking system – to act as the lender of last resort, should there be a run on a commercial bank. Yet the ECB has decided to do the opposite: to exacerbate a bank run in Greece by abrogating that cardinal role.

Why did it do it? The ECB cites an unavoidable conflict of interests peculiar to running a currency union. It claims that its mandate is to operate in the interests of the citizens of all the eurozone member states, and that has required it, in exceptional circumstances, to act against the interests of one of them. In a narrow and lawyerly sense, this defence is valid. Politically, it is toxic. A country’s unelected central bankers seem to be dictating the fate of its elected government – and of its citizens’ deposits.

Because all modern banking systems depend on trust, this political flaw carries risks of practical disaster. The euro will not survive long if suspicions of the ECB’s political motives spread beyond Greece. Who in Portugal, Spain or Italy will trust that their savings will not be locked up, too, if they have the temerity to elect the wrong leaders?

The role of the ECB is unique – because it is the single monetary authority for a collection of separate states. The question of whom a central bank should answer to, however, is universal. The absurdity of the current situation in Greece shows that if a central bank is to underpin a modern financial system, it must be accountable to the people that the system serves, rather than to anyone else – or, even worse, to no one.

Yet are these questions of Greece’s debt and its banks so important, after all? The immediate reaction in the financial markets has been muted. The euro has not collapsed and there has been no panic selling of shares. However, even if Greece’s banks reopen and its debt is resolved, there is another respect in which the long-term impact of the Greek crisis on the international financial system threatens to be profound. This is that it has accelerated, probably beyond the point of no return, the decline of the system of global economic governance that lasted from the end of the Second World War to the mid-2000s.

At its centre is the IMF – a global finance equivalent of the UN Security Council – an institution with a reputation for inflexibility but one that in reality underwent three significant transformations in the 1990s and 2000s on the back of three existential crises. The first came out of the east Asian crisis of 1997-98, when the IMF learned that imposing conditionality on crisis-hit countries was neither practically effective nor politically wise. As a result, it rewrote the design rules for international bailouts; henceforth, conditions should be limited to a small number of high-level monetary and fiscal targets and the detailed policies required to hit them should be left to the discretion of the domestic political authorities.

The second big reform came out of the Argentinian crisis of 2001-2002. There, the IMF made the error of succumbing to private creditors’ pleas to increase lending months before Argentina’s default. Afterwards, the rules were once again revised. There would be no more lending to overindebted countries without imposing substantial debt write-offs on existing creditors first.

During this period, the IMF was confronting a constitutional problem: the disproportionate voting power of the United States, Japan and its European members and the convention of giving Europeans the top job. By the late 2000s, with the emerging markets contributing a substantial portion of the world’s GDP, such a situation was increasingly untenable. Here, too, things were on the brink of changing – but then, in 2010, the Greek crisis struck.

Everything went into reverse. Governance reforms were shelved. The Europeans needed control, and that required having no change on votes and first one former French finance minister (Dominique Strauss-Kahn) and then another (Christine Lagarde) in charge. Meanwhile, a bailout was hatched with no time for the lessons of the 1990s. Witness the latest negotiations, bogged down by recriminations over the minutiae of VAT and pension reforms; and the belated admission that Greece’s debt is unsustainable without significant debt relief.

The IMF’s stark regression has not been lost on the emerging markets, which have responded by moving away from the existing international architecture. Many countries have accumulated substantial foreign exchange reserves to insure themselves against crisis, rather than risk having to resort to the IMF. The Brics countries (Brazil, Russia, India, China and South Africa) have gone further still, establishing a mini-IMF for themselves, the Contingent Reserve Arrangement. China has set up its Asian Infrastructure Investment Bank. The message in each case is the same. Since the old global system has failed to change, the new powers will make one of their own.




All eyes are now on the eurozone but larger troubles are brewing elsewhere. The Chinese economy is slowing, more quickly than anyone expected. Japan is going for broke, printing money with deliberate abandon. Meanwhile, the most powerful central bank in the world, the US Federal Reserve, has begun to reel back in what once seemed like a limitless supply of dollars that has underwritten global finance for the past seven years.

Cracks are beginning to appear – strange portents in the economic heavens. The Japanese yen has lost a third of its value over the past two and a half years. The Swiss franc gained the same amount in a single day in January. The latest shock comes from China, where on 12 June the Shanghai index commenced a crash that has so far wiped off almost a third of its value. That is more than €1.5trn destroyed: as if Greece’s debt had been written off five times over.

So there are crises aplenty to come for the international economy – and change, as Monnet argued, there will undoubtedly be. But for the first time in 70 years, we will confront it with an international system that has been severely weakened – not least by the debacle in Greece.

Felix Martin is the author of “Money: the Unauthorised Biography” (Vintage, £9.99)

Macroeconomist, bond trader and author of Money

This article first appeared in the 09 July 2015 issue of the New Statesman, The austerity war