Country overview

(Last updated: 02 Apr 2008)

Current business situation

Australians planning to travel to, or who are in the Middle East, are urged to exercise care and monitor developments that may affect their safety through the Department of Foreign Affairs and Trade's (DFAT) current general travel advice and bulletins.

Specific travel advice on Israel is also available at DFAT. Individuals should take sensible precautions and ensure that travel documentation, including passports and any necessary visas, for themselves and their dependents are valid and up-to-date.

Country facts

Capital city:	Jerusalem (contested)
Surface area:	22,000 sq km
Population:	7 million
Official language(s):	Hebrew, Arabic
Head of State:	President HE Mr Shimon Peres
Head of Government:	Prime Minister Mr Ehud Olmert
Australian exports to Israel:	A$188 million
Australian imports from Israel:	A$640 million
Israel's principal export destinations:	USA, Belgium, Hong Kong
Israel's principal import sources:	USA, Belgium, Germany

(Source: Department of Foreign Affairs and Trade - Country economic fact sheet)

Economic climate

Key economic indicators and statistics for 2007:

• GDP – US$154.3 billion
• GPD per capita – US$22,073
• Real GDP growth – 5.1 per cent
• Inflation – 0.5  per cent

(Source: Department of Foreign Affairs and Trade - Country economic fact sheet)

Political climate

Israel is a parliamentary democracy. It has no written constitution, but does have a strong legal foundation based on English common law, regulations from the Palestine Mandate period (when the region was under British administration), and in some personal cases, religious law. The Israeli Government and its powers are regulated by the 1948 Declaration of Establishment, the Basic Laws of the Parliament, and the Israeli Citizenship Law. The head of state is the president, whose role is largely ceremonial.

Israel claims the disputed city of Jerusalem as its capital; parliament and many government offices are located in West Jerusalem, but most countries’ embassies are in Tel Aviv.

In Israel, voting rights begins at 18 years of age. Elections are held every four years, or earlier if the situation requires. The political system is subject to some mild uncertainty, with elections having been held regularly in recent years. Coalition Governments are common, as it is uncommon for a single party to win an outright majority of seats and, even then, the winning party usually seeks an encompassing, consensual position by inviting minor parties into the government. The political process was changed in the early 1990s to include the direct election of a prime minister by the population; the prime minister, who must be a member of the unicameral 120-member Parliament (Knesset), is elected by the largest single number of votes, and then forms a government by gaining majority support in the Knesset. This system was designed to create greater certainty and stability in the electoral process.

It is important to stress, however, that the political machinations usually have little impact on Israeli business. There is broad support within the mainstream parties for an open, liberal economy, and elections and changes of government rarely have a major impact on business and trade. In fact, the trend in the past decade or so under several different governments has been towards greater economic reform and openness.

Civil unrest is common at present but often localised. Israel’s occupation of the West Bank and Gaza (Israel withdrew from the Gaza Strip in 2006) has led to continual confrontations with the Palestinian populations in these areas and, more recently, with Israeli Arabs as well. Israeli settlers in these areas have also engaged in violence in the past. There are occasional terrorist attacks within Israel proper, which have targeted civilians. Since September 2000, there has been a renewed Palestinian uprising ('the Al-Aqsa Intifadah') that has claimed several hundred lives on all sides, and that has seen a rise in the incidence of violence.

Trade relations and statistics

Israel has strong diplomatic and trade relations with the USA, Europe and Australia, with the former two being its major trading partners. Israel is also developing close relations with the European Union. Israel has more free trade agreements than any other country in the world including agreements with the United States, Canada, Mexico, the European Union, Turkey and others.

Israel’s relations with its neighbours vary greatly. Until the late 1970s, all Arab countries observed a complete boycott of Israel (including a third party boycott), but this changed after an Egypt-Israeli Accord in 1978. In the early 1990s, Israel reached an interim agreement with the Palestine Liberation Organization (PLO – the main recognised representative of the Palestinians) in 1993, and with Jordan in 1994. Several other Arab countries have established dialogue and, in some cases, diplomatic relations with Israel since then. Other Arab countries, most notably Syria and Lebanon, maintain the boycott and are, theoretically at least, still in a state of war with Israel.

Israel has also developed strong relations with other states of the Mediterranean region, including Turkey, Cyprus, and Greece.

The Israeli Ministry of Foreign Affairs can provide further information.

The annual bilateral trade between Australia and Israel totals about A$750 million with a trade deficit favouring Israel. The major Australian exports to Israel include mineral products such as coal, live animals, pearls & gems, metals, food products and more.

The major Israeli exports to Australia include IT/telecommunication equipment, precious stones and metals, plastics and medical/optical equipments.

The two nations traditionally enjoy a close relationship and there is a lot of awareness in Israel regarding Australia.

Major Australian exports to Israel (2006-07):

• Coal – A$53 million
• Live animals – A$41 million
• Pearls and gems – A$12 million
• Flat-rolled products of alloy steel – A$7 million

Major Australian imports from Israel (2006-07):

• Pearls and gems - A$96 million
• Telecommunications equipment - A$89 million
• Fertilisers (excluding crude) - A$40 million
• Measuring and controlling instruments - A$25 million

(Source: Department of Foreign Affairs and Trade - Country economic fact sheet)