TIME TO GET REAL
ON ISRAEL AND MIDEAST
BY STEVE FORBES, EDITOR-IN-CHIEF
THERE ARE TWO THINGS the u.s. should do about the widening war in Gaza.
First, stop the mindless calls for a cease-fire.
Like Pavlovian dogs, Washington officials always push for a cessation of hostilities whenever violence flares between Israel and Palestinian forces. This is supposed to show "evenhandedness" and to set the stage for yet another "peace initiative."
Why can't Washington face facts?
Hamas wanted this war. It had dissed all of its Mideast patrons. Isolated, it figured a big conflict would change the political calculus, refurbishing its credentials as a major force and pressuring other states to pony up
more money. That's why it summarily rejected
Egyptian attempts to arrange a cease-fire- for which the Israelis were game, wanting
to avoid, if possible, waging a bloody ground
campaign in Gaza.
But Hamas needed war.
For Washington to treat both parties as morally equivalent is repugnant.
Hamas is using civilians as human shields and murderous fodder
for propaganda images, hence its attempts to
prevent civilians from evacuating areas that
Jerusalem has warned will be hit militarily.
The U.S. should remember
that since Israel totally and unconditionally withdrew from Gaza in
2005 the territory has used the billions of dollars it's received in foreign assistance not to build its economy but to wage war. Its system of tunnels through which it attacks Israel (and until a year ago received weaponry and supplies from Egypt) is elaborate. Its arsenal of rockets-and their sophistication-has expanded exponentially.
The FAA decision to ban (for a day and a half)
u.s. commercial flights to Israel, where tourismis a big part of the economy, handed Hamas its first political victory. Under the circumstances, a now physically isolated Israel must totally destroy Hamas' military capabilities: no more tunnels, no more caches of rockets. To do less would only make Jerusalem's increasingly dangerous security situation worse. John Kerry should pack his bags and stay away from the region, and President Obama should cease indulging his anti-Israeli predilec-
tions and let Jerusalem do what has to be done.
The second thing Washington should do
is of a longer-term nature: focus construc- tively on what it can do to help Egypt achieve a rapidly growing economy it la those of South Korea, Taiwan, Singapore and, yes, Israel, whose high-tech achievements now surpass those of all the EU members.
The Egyptian economy is in shambles, on life support from Saudi Arabian subsidies and IMF loans. The steps needed to be taken are basic.
• Currency board.
An economy can't function
well without a stable currency. The Egyptian pound is prey to speculative attack. Cairo should fix it to the dollar via a currency board, whereby the pound would be backed 100% by the green- back. Currency boards done properly always work. Hong Kong has had one-with its dollar fixed to the U.S. dollar-since 1983. Bulgaria, Lithuania and other countries also have currency boards, with their monies fixed to the euro. The IMF will object, because it's addicted to the notion that funny money hastens economic growth, even though it actually does the opposite. The agency should firmly be told to take a hike.
• Taxes. Adopt a low-rate flat tax the way Hong Kong and over 30 countries have done. This will encourage local entrepreneurship and job creation.
• New businesses. Make starting a new, legal business a simple formality, a process that could be completed within minutes. Follow the example of New Zealand. This, along with a simple tax code, would encourage new business- es and reduce the informal economy.
·Subsidies. Don't phase them out until the economy improves markedly.
• Labor laws. Remove restrictive
labor laws; they hobble hiring and fuel the shadow economy.
The combination of a very benign tax regime and a stable currency would put Egypt on the road to impressive growth. Given its history and overwhelming size, this would have a profoundly positive impact on this treacherous and bloody region.