Israel wins invitation to join OECD in face of Palestinian opposition

Israel won a rare victory on the international diplomatic stage, gaining acceptance in an exclusive club of prosperous economies after a 16-year effort to join the Organisation for Economic Co-operation and Development - and in the face of stiff Palestinian opposition.

The Paris-based OECD said it had invited Israel, as well as Estonia and Slovenia, to become members after they met specific criteria as developed, open economies.

Once formally invested as members, the three will swell the ranks of the OECD to 34 members, including the United States, a strong backer of Israel's bid.

The new members "will contribute to a more plural and open OECD that is playing an increasingly important role in the global economic architecture," OECD Secretary-General Jose Angel Gurria said.

Just months ago, Gurria expressed concern about high levels of poverty and unemployment, especially among the minority Arab populations, during a visit to Israel.

However, it did not appear to have hampered membership.

Gurria said Israel, Estonia and Slovenia had been "receptive to OECD recommendations".

Membership comes after Prime Minister Benjamin Netanyahu cleared the way for the resumption of peace talks with the Palestinians last week, following a 17-month break. While the OECD is essentially an economic club, membership could give Netanyahu's government a diplomatic boost.

Gurria told a news conference in Paris that Israeli politics and Mideast tensions were "not the main focus of discussion", but acknowledged "the entire process of membership is political".

The OECD's legal director, Nicola Bonucci, said a first of its kind study would be carried out "to quantify the impact" of data included by Israel from the Golan Heights, east Jerusalem and West Bank settlements in its data.

Israel's Uri Gutman, foreign ministry director of the OECD accession process, said acceptance did not mean Israel was "perfect", and noted that all member countries, even the US, had areas to improve.

The head of Israel's central bank, Stanley Fischer, said membership "is an important step towards Israel's integration into the global economy, and is an expression of Israel's commitment to meet the highest international standards".

Israel views membership as a stamp of recognition for the country's economic accomplishments and hopes it bolsters Israel's credit rating and paves the way for additional trade.

However, Avi Simhon, professor of economics at Hebrew University, said entering the OECD club went beyond economic issues.

"If there is a cause for celebration, it's not economic, it's political," he said. "For a country that is often isolated politically, this could be a good sign that it's been accepted into a league of developed countries."

Netanyahu said yesterday's decision was the culmination of contacts dating back to 1994, when Israel sent its first observers to the OECD. Israel formally started the OECD membership process three years ago.

"Today, a new investment avenue has been opened for us," he said, telling reporters that he hoped to make Israel one of the world's top 15 economies over the next decade.

Over the decades, Israel has evolved from a tiny, farming nation into a high-tech powerhouse, known for its numerous start-ups, developments in communications, software and military technology.

Palestinian officials had urged the OECD to reject Israel's application. They said that Israel's occupation of the West Bank, and discriminatory treatment of its own Arab citizens, put the country at odds with the OECD's commitment to human rights.

Mohammed Ishtayah, head of the semiofficial Palestinian development agency PECDAR, called yesterday's decision "unfortunate", and said the OECD had prematurely rewarded Israel.

"I think it is a misjudgment on behalf of the organisation.

"I think this will encourage Israel not to go along with the peace process," he said.

Several dozen pro-Palestinian activists quietly protested against the decision in front of the OECD's Paris headquarters.

The US ambassador to the OECD, Karen Kornbluh, called yesterday "a truly historic day" for the body, whose activities include compiling statistics and monitoring members' actions in areas from fighting corruption to tax havens and fiscal policy.

"The US believes it is crucial for the OECD to engage strategically with the wider world," she said. "We believe that Israel has much to offer the OECD."

The OECD's members must vote unanimously to accept new members. An invitation must be approved by a candidate country's Parliament before formal membership.

Russia is also being considered for OECD membership, but Gurria said it had been slow in submitting data to back its bid and a decision would take at least another year.

- AP