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The Economic Implications of the Disengagment Plan

The Annual Economic Conference, 2005

Professor Zidon also states that the inability of the ruling government in Israel to change its priorities will cost the state, will limit future political procedures and will harm the democratic structure in Israel.

A research team dealing with the subject of the economic implications resulting from the evacuation has submitted its findings and recommendations, including great criticism of the ruling parties in Israel who refuse to realize that the evacuation was set by the government as a national task of utmost importance.

The researchers determined that the implementation of the evacuation at this point is crucial. They also note that the social and the economical costs of non-compliance of the evacuation is ten times as great as the cost of implementation.

The researchers warned that if the state does not execute the evacuation due to a change in priorities, the country will fall into a recession that is likely to be more severe than the recession following the last Intifada. The researchers believe that another recession will come before the country has recuperated from the first recession. The economy will deteriorate, and the gaps will widen and the country will be in such a state that it will be difficult to cope with political and social challenges.

Accordingly, the damage to the market will materialize through sharp reduction of product of at least 2% and 10% in local investment.

The team lead by Professor Dani Zidon of Tel-Aviv University Economics Department,, determined that if the various ruling parties would realize that this national task is of the utmost importance and comes before day-to-day life, it would be easier to execute the task and to save on costs. Instead of this, the evacuation became a belligerent-bureaucratic priority of the government offices. The research report reviewed the principles and significance of compensation, the economic cost of the program, and the economic cost of non-compliance of the program. In addition, the team analyzed the influence of the evacuation on the West Negev, the Palestinian economy, and the influence on future evacuations.

The researchers claimed that the expected budget cost of the evacuation program, if done in the best possible manner, is supposed to be NIS 5 billion of which NIS 3.5 million is for evacuee compensation, and if done in the best possible manner, the economic cost would be substantially lower and would not hurt the economic standard of living of the evacuees.

As of today, claims the study, despite the fact that the basic principles of the compensation have not been changed, the estimated budgetary cost is at least one third higher than the planned cost (over NIS 7 billion), and the economic cost is higher than the budgetary cost.  According to the research, an average family will receive compensation equivalent of 25 years average salary.

As a result, instead of the plan bringing about the moderate improvement in the economic quality of life of the

evacuees compared to their economic quality of life prior to the evacuation as would be expected, the opposite situation has been created in which the plan does not improve the situation of the evacuees in the same way in which it hurts the state budget.

The researchers pointed out two main forces responsible for the measure of unsuccessfulness in the implementation of the disengagement - the political power, which used the failing of the correct organizational process for the disengagement in order to prevent the disengagement itself, and the government in Israel, and specifically the public administration, which has refused to internalize the fact that the disengagement has been set by the government as a national mission of utmost importance, a mission that has been expressed by law.

Furthermore it was claimed by the researches in their research that one of the big faults of the plan is in all that is connected to the failure in t