Understand

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History

Following World War II, the British withdrew from their mandate of Palestine, and the UN partitioned the area into Arab and Jewish states, an arrangement rejected by the Arabs. Subsequently, Israel's Arab neighbors invaded the nation with the hope of regaining territory previously held by the Ottoman Empire. The Israelis defeated the Arabs in a series of wars without ending the deep tensions between the two sides. On 25 April 1982, Israel withdrew from the Sinai pursuant to the 1979 Israel-Egypt Peace Treaty. Outstanding territorial and other disputes with Jordan were resolved in the 26 October 1994 Israel-Jordan Treaty of Peace. In addition, on 25 May 2000, Israel withdrew unilaterally from southern Lebanon, which it had occupied since 1982. In keeping with the framework established at the Madrid Conference in October 1991, bilateral negotiations were conducted between Israel and Palestinian representatives (from the Israeli-occupied West Bank) and Syria, to achieve a permanent settlement. But progress toward a permanent status agreement has been undermined by the outbreak of Palestinian-Israeli violence since September 2000.

Economy
Israel has a technologically advanced market economy with substantial government participation. It depends on imports of crude oil, grains, raw materials, and military equipment. Despite limited natural resources, Israel has intensively developed its agricultural and industrial sectors over the past 20 years. Israel is largely self-sufficient in food production except for grains. Cut diamonds, high-technology equipment, chemicals and chemical products, machinery and equipment, transport equipment, rubber, plastics, and textiles are the leading exports. For many years Israel posted sizable current account deficits, which were covered by large transfer payments from abroad and by foreign loans. However, the tight fiscal policy of recent years and the high growth rates have led Israel to a budget surplus in 2006. Roughly half of the government's foreign debt is owed to the US, which is its major source of economic and military aid. The influx of Jewish immigrants from the former USSR during the period 1989-99 coupled with the opening of new markets at the end of the Cold War, energized Israel's economy, which grew rapidly in the early 1990s. But growth began moderating in 1996 when the government imposed tighter fiscal and monetary policies and the immigration bonus petered out. Growth was a strong 6.4% in 2000. But the bitter Israeli-Palestinian conflict, increasingly the declines in the high-technology and tourist sectors, and fiscal austerity measures in the face of growing inflation have led to declines in GDP in 2001 and 2002.

People

The most obvious division in Israel's society is between Jews, who make up 80% of the population in Israel proper and 15% in areas currently controlled by Israel (West Bank) and non-Jewish Israeli-Arabs, who make nearly all of the rest. In terms of religion, 77% are Jewish, 16% are Muslim, 4% are Christian and 2% are Druze (a Muslim offshoot considered heretical by mainstream Islam). While equality is theoretically guaranteed, in practice there are many restrictions on the Palestinian population, both legal (eg. military service is not mandatory) and de facto...