Israel and the OECD – The Truth

This is a guest post by Jonathan Hoffman
Seth Freedman’s article on Israel’s imminent accession to the OECD is a mixture of ignorance and prejudice – perfect for a “Comment Is Free” article on that country, in other words. For a former investment banker, his ignorance of economics, statistics and the workings of the OECD is shameful. For a Jew who took advantage of the Law of Return and still lives in Israel even though he makes a living from badmouthing it in the Guardian, his prejudice is despicable.
He reveals his ignorance for all to see by assuming that the OECD is a political organisation, like the European Union, and that therefore there is some kind of political ‘test’ which aspiring members need to pass (as for example Turkey does in relation to EU membership). That is incorrect. The OECD is an economic cooperation organisation, best thought of as an economics version of “Weightwatchers”. Thus Freedman’s phraseology (eg “welcoming Israel in from the cold” and “willingness to overlook”) is entirely inappropriate. Freedman’s final sentence (“it can only be hoped that the OECD’s opposition to Israel’s misdeeds comes late rather than never”) is simply crass.
Freedman digs himself in further by suggesting that “Israel’s credit rating will be upgraded as a result” of OECD entry. There is absolutely no link between OECD entry and movements in a sovereign’s credit rating. While it is true that OECD members have higher average ratings than non-OECD members, the point is that a country would not be granted accession unless its economy was considered strong. And as has been seen with Greece recently, OECD membership is no guarantee at all that a country’s credit rating will not be downgraded.
Now to the prejudice. Freedman suggests that a statistical issue has the potential “to derail” accession. The issue in question is said to be the coverage of the West Bank statistics that Israel submits to the OECD. But the truth is that the OECD decided to commence the accession process over two years ago and that since then Israel has fully followed and implemented the guidance of the OECD, including far reaching regulatory amendments. It is very common for countries to accede to the OECD and then fine tune their economic procedures afterwards, including statistical coverage.
Even the Abu Dhabi newspaper article to which Freedman links – written by Jonathan Cook, no friend of Israel – concedes this.
Indeed it may not be possible to divide the West Bank’s statistics to separate the value-added  accruing to settlers and that accruing to Palestinians (as Freedman suggests that some members of the OECD are requesting). If an enterprise employs both settlers and Palestinians – as is common – then it is impossible to subdivide that enterprise’s income.
PS Israel is one of five countries, along with Chile, Estonia, the Russian Federation and Slovenia, that were invited in May 2007 to open negotiations for membership of the OECD.