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Analysis: How the War in the Middle East Is Affecting the Economies of that Region
 Middle East Economy and Tourism
NEAL CONAN, host:
This is TALK OF THE NATION. I'm Neal Conan in Washington.
Death is the first statistic in the brutal calculus of war, and for almost two years now, we've become accustomed to incremental increases in the numbers in the Middle East: so many Palestinians killed today, so many Israelis. But the costs of the conflict are hardly contained by those numbers, as stunning as they too often are. More mundane measurements--jobs, income, GDP, investment--those numbers tell stories of their own about what's going on in the region and about the true price of the conflict.
One of the areas we're going to be talking about this hour is tourism, which is important to both the Israeli and the Palestinian economies, and we want to hear from you. You're a big part of it. Have you made plans to visit the Middle East, and have they changed because of the violence? Do you feel that it's more important than ever to go or is the situation just too dangerous? And both sides draw important economic support from the Palestinian and Jewish communities in this country. Have your contributions changed in the past couple of years. If so, why? What groups, what projects do you support, and again, why? Our phone number in Washington is (800) 989-8255. That's (800) 989-TALK. Our e-mail address is totn@npr.org.
And joining us now from New York is Youssef Ibrahim, whom many in our audience will remember from his previous role as a correspondent for The New York Times. He's now a senior fellow at the Council on Foreign Relations, specializing in Middle East economics. And it's nice to have you back on the program.
Mr. YOUSSEF IBRAHIM (Council on Foreign Relations): Thank you, Neal. Nice to be back.
CONAN: Well, why don't we start with some basis--basics, rather? What's the size of the Israeli and Palestinian economies?
Mr. IBRAHIM: There is, of course, no comparison between the two in terms of GDP, but let's just go into the numbers. The size of the Israeli economy has been growing in a remarkable fashion from 1996, when it was $97 billion GDP, Gross Domestic Product, to as much as $110 billion in the year 2000, before the intifada started.
CONAN: September 2000.
Mr. IBRAHIM: Correct. Now it has dropped by 37 percent since the intifada started.
CONAN: That's a tremendous number.
Mr. IBRAHIM: That's a dramatic number, but let's look at the Palestinian numbers. I'm quoting here, by the way, from the report of Senator George Mitchell and Kofi Annan, who presented this publicly, and these numbers are on the Web site of the United Nations. The Palestinian GDP in 1999 was $4 billion, so you can see there's absolutely no comparison here. 1999 was a hundred billion in Israel, 4 billion for the Palestinians. The Israeli population is approximately 5 1/2 million people. The Palestinian population is approximately 4 million people, if you count the Israeli-Palestinians.
Now before the intifada, as we said, it was $4 billion. We do not have a number now, but we do have numbers for the per capita income, in most countries as well. The per capita income in Israel was, before the intifada, in the neighborhood of $16,000 per capita, per person. It has also dropped precipitously by the same approximate 37 percent. That's a big drop.
Palestinian per capita income was doing very well actually in the year 1993 when the Oslo process began and there was a lot of cooperation between the Israelis and the Palestinian, a lot of commerce and a lot of manufacturing. Israeli manufacturers were using the Palestinian labor pool, and per capita income in the West Bank was an astonishing $3,500. Still, no comparison was the almost $17,000 in Israel, but a big number. Before Oslo, in Gaza, per capita income, the amount of money a person would earn a year, was $2,800. Today we are talking about $1,000 in the West Bank, dropped from $3,500 to 1,000. And only $700 in Gaza, a drop from 2,800 to $700. It is a catastrophic change in the situation. Now we haven't even spoken about unemployment in both countries, and these are also big numbers.
CONAN: And are they measurable at this point in the Palestinian areas?
Mr. IBRAHIM: They are measurable at this--let us actually see what--let's start with Israel.
CONAN: OK.
Mr. IBRAHIM: And again, I'm quoting Kofi Annan and...
CONAN: George Mitchell.
Mr. IBRAHIM: ...Senator George Mitchell. More than a year ago, Israeli official said that the conflict was cutting their economy in excess of $150 million a month. Israel's central bank now estimates that the total cost of the conflict to Israel is 110 billion of the Gross Domestic Product is 3 percent. The same percentage of the US Gross Domestic Product would be $300 billion...
CONAN: Wow.
Mr. IBRAHIM: ...if you want to compare.
CONAN: Is that direct expenditures, you know, bullets and bombs and that sort of thing, or is it...
Mr. IBRAHIM: Correct. We haven't gotten into tourism losses yet.
CONAN: OK.
Mr. IBRAHIM: Now you go into tourism losses, tourism in Israel fell 50--5-0--percent last year, a loss of $2 billion in 2001, according to the George Mitchell report. If you go in a resort hotel in Israel, today you will find it nearly empty. Visitors are not showing up. Construction, which constituted one-quarter of Israel Gross Domestic Product has fallen 18 percent last year. Now here's the bottom line. Israel's standard of living and per capita Gross Domestic Product is dropping by 3 to 4 percent each year since the intifada began. And more importantly, foreign investments have declined from $11 billion to $4 billion in just the last two years.
Now for the Palestinians, it's a lot worse, in fact, if it's possible to get worse. For the Palestinians, the reports said with the border closings, with the curfews that keep people at home locked up for months and months and months, not going to work, the economy is roughly, according to the report--the economy of the Palestinians is 1/20th the size of Israel so, you know, we're talking an elephant and a mosquito. However, let's look at the mosquito. It depends entirely on exporting goods and on exporting day workers to Israel. The Palestinians in the past year and a half of the intifada have been able to do, as you know, neither. So 90 percent of the Palestinian exports that go to Israel have stopped, while 10 percent of the Israeli exports that go to Palestinian territories have also stopped. An estimated that 125,000 Palestinians used to cross the border every day to go to work in Israel, nobody crossed today at all.
Bottom line on all of this is that most Pales--of course, just the same situation. Half Palestinian hotels are empty. There is no tourism. In Christmas, they missed out the whole Bethlehem visit, which used to bring as much as 150,000 visitors every year. And that was a big boost to the Palestinian economy. Relief officials of the United Nations estimated that 50 percent of the Palestinians now live below poverty line and that up to 60 percent of the Palestinians are unemployed. In Israel, by the way, unemployment has also gone up by 3 percent to reach 18 percent, and that's one of the highest levels in the industrial economies today.
CONAN: Well, hang with us, Youssef. Joining us now by phone from Jerusalem is Carol Ann Bernheim, an Israeli tour guide.
Welcome to TALK OF THE NATION.
Ms. CAROL ANN BERNHEIM (Israeli Tour Guide): Good afternoon.
CONAN: How long have you been conducting tours in Israel?
Ms. BERNHEIM: I've been working for about 15 years as a tourist guide here.
CONAN: And, you'll forgive me, that accent--is it originally American?
Ms. BERNHEIM: That's right, originally from New Jersey.
CONAN: OK. So what kind of tours do you give?
Ms. BERNHEIM: I used to do a lot of interfaith tours, but more recently, we're doing cross-cultural tours, with Jews and Christians and Muslims often coming together. And quite a lot of pilgrimage--Jewish pilgrimage, Christian pilgrimage and Muslim pilgrimage.
CONAN: So how has at least your part of the tourism industry changed over the past two years?
Ms. BERNHEIM: All right. When I say recently, I must say it's up until two years ago.
CONAN: OK.
Ms. BERNHEIM: The past 10 years, up until two years ago, tourism was growing. The past two years, it's fallen flat on its face, and the past two years, it's just journalists and some political fact-finders.
CONAN: And that's it.
Ms. BERNHEIM: That's just about it. A few small identity groups--Jewish birthright groups are coming. Occasionally, a Christian pilgrim group is determined to come and see the holy spots, despite what they read in the news. And they all have quite quiet successful trips.
CONAN: This doesn't affect just you, obviously, but the hotels, the taxis, the cars you hire to drive these people around--all of that.
Ms. BERNHEIM: I think most everybody I've worked with over the past 10 years is out of work, is sitting at home unemployed. The bus drivers, a lot of hotels have closed down; most tourist-related industries, whether it's souvenir shops, restaurants, and it begins to hit indirectly into bookshops, clothing shops in the Israeli and the Palestinian sector.
CONAN: Now if you walked down a main street in Jerusalem, what do you see?
Ms. BERNHEIM: Well, if you walked down a main street in western Jewish Jerusalem, there are more and more shop fronts closed. The shops have simply gone out of business for lack of customers, and the streets are pretty quiet because people aren't going shopping. If you walk down a street in the Old City, which is still a safe place to tour, it's very, very quiet. The shops are open, as the shopkeepers haven't been closed down for lack of paying taxes, but you walk down a silent street where all you hear are the sounds of the pieces of backgammon games. The shopkeepers sit together, smoke cigarettes and play backgammon, and they hardly look up these days because they know there aren't going to be any tourists walking down the street.
CONAN: Well, our telephone number here in Washington for listeners is (800) 989-8255, (800) 989-TALK. Our e-mail address, totn@npr.org. Steven's now on the line with us from Santa Cruz, California.
STEVEN (Caller): Hello.
CONAN: Hi, Steven.
STEVEN: I'm a professor who socializes in the Middle East and Israel-Palestine, and I was looking forward to returning to Israel this fall as part of a delegation from the Fellowship of Reconciliation, an interfaith pacifist group which supports peace and security for both Israelis and Palestinians, but our last delegation, which went there in early July, was denied entrance when they arrived at the airport and were labeled a security risk to the state of Israel and ordered to return. So it doesn't look like I will be able to visit Israel, as much as I would like to.
CONAN: So this is an example of because of the tensions, some groups are not being permitted to go.
STEVEN: Very much so. And again, it's particularly ironic, given we are a peace group that in no way would threaten anybody's security, as far as we know.
CONAN: Well, Steven, thanks very much for the call.
Carol Ann Bernheim, as you look ahead right now with so many people out of work, what do you foresee for the tourism business there?
Ms. BERNHEIM: Well, as a tourist guide, I spend a lot of time reading history, so I have a long view that eventually, we have to stop being foolish; that is to say the political leaderships are going to have to wake up at some point. Things have historically always gotten better eventually.
CONAN: Well...
Ms. BERNHEIM: So I'm working, planning with other colleagues, Israeli and Palestinian, for when we're going to be able to rebuild our industry and our communities.
CONAN: Carol Ann Bernheim, thanks very much for joining us and good luck.
Ms. BERNHEIM: Thank you very much and hope to see you all here soon.
CONAN: An Israeli tour guide, Carol Ann Bernheim. We'll have more with Youssef Ibrahim as we continue to consider the effects of the war in the Middle East on the economies there.
It's TALK OF THE NATION from NPR News.
SOUNDBITE OF MUSIC
CONAN: This is TALK OF THE NATION. I'm Neal Conan in Washington.
We're talking about the war in the Middle East and how it is affecting economics in the region. Our guest is Youssef Ibrahim, senior fellow for the Middle East at the Council on Foreign Relations, and he's speaking with us from his office there in New York. Of course, we welcome your phone calls, (800) 989-8255, (800) 989-TALK. Our e-mail address is totn@npr.org.
And, Youssef Ibrahim, we're talking at the moment about the tourism sector. How big is the tourism industry in Israel? How important is it to Israel and to the Palestinian community?
Mr. IBRAHIM: It is very important. It plays a very big role. I really sympathize with Carol Ann. I have been there in that golden period she was referring to when the Oslo agreement took off, 1993 to 1997, when tourism was thriving on both sides. You couldn't find rooms in hotels. It is such a dramatic and sad change, and I also agree with her that peace does a lot better for the economies of both countries. And, Neal, I need to correct one number I give you. I told you that unemployment in Israel is rising. According to the director general of the Israeli Treasury, he announced this week that unemployment is projected to rise by 3 percent to exceed 300,000 in a couple of years, and that's 12 percent.
CONAN: I see.
Mr. IBRAHIM: I had told you 18 percent.
CONAN: OK.
Mr. IBRAHIM: It's still one of the highest rates in a developed country. Now tourism for the Palestinians was absolutely almost 50 percent of their revenues, because the Palestinians have two things that they do. They work in Israel or they allow Israeli investors to have factories in places like Gaza. I used to laugh when I went to Gaza when I saw factories making skullcaps--Do you believe that?--skullcaps that were going back to Israel and being exported to the whole world as made in Israel. But it brought money to the Palestinians. It offered the Israeli investor very cheap labor. Shirts, blue jeans--all kinds of products like this were made, funded by Palestinians.
There were also the hotels. Essentially a lot of Palestinians have a lot of the tiny hotels that the tourists that go to Israel like to stay in. The tourists that go to Israel are either religious tourists or Arabs returning to visit their families. I mean, few people stay in the fancy hotels like the King David or the American Colony. Most of the hotels are three stars, and most of these are completely shattered.
CONAN: Well, let's get a view on the Palestinian tourism industry now from Sammy Abu Dayah(ph). He's a Palestinian who owns hotels, taxis and tour buses, and he joins us now on the phone.
Thanks for joining us.
Mr. SAMMY ABU DAYAH (Businessman): Thank you. Thank you for inviting me on this show. I mean, our business have been for the last 40 years of incoming tourism, and it's the worst period that we ever had because of the political situation. We are denied actually from expressing--you know, giving the chance for people to visit us because of the political situation. We don't expect people to visit when security is high priority for those who are paying for their trip of a lifetime.
We have three hotels in Jerusalem. Two of them are closed, and one is functioning, which is the Ambassador Hotel. The Ritz and the Azzahra are closed because of the situation. We don't have enough clients to keep them busy. At the transport company, we had a total of 41 motor coaches. Then we reduce them down to 18. And if we have a chance to sell more of the motor coaches, we would, because no tourists are coming to the country.
CONAN: Well, you've said you've closed two of your three hotels. Clearly, you're trying to contain your losses. If money is going out rather than coming in, how long can you sustain it?
Mr. ABU DAYAH: Oh, it's very difficult. I mean, we are--What do you call it?--going day by day just only to try to survive. And it's not--What do you call it?--a pleasant situation to be under.
CONAN: Can you see any hope down the road, any future?
Mr. ABU DAYAH: It all depends on the political situation. Unfortunately, you know, our business depends on the political issues of the Middle East. And for the time being, we don't see it. You know, every day, you know, it's worse than the day before.
CONAN: Two years ago, August 2000, how many people did you employ?
Mr. ABU DAYAH: We had a total of 270 people working in our company. By the time of November 2000, we had to release 230 people from our company.
CONAN: That quickly.
Mr. ABU DAYAH: Two hundred and thirty, and I'm glad that I've done it very fast. Otherwise, I would not be really--I'm in second gear, to say the least.
CONAN: Oi. Right now, is there any reliable source of income at all?
Mr. ABU DAYAH: Only based on the local market actually. You know, I mean, the hotel that I'm keeping now open, it's 122 rooms that I'm occupying now. We have an average of 10 to 15 percent occupancy right now. But what we are surviving on is the local market with the restaurant outlets.
CONAN: Sammy Abu Dayah, thank you very much for joining us and you, too, good luck.
Mr. ABU DAYAH: Thank you. Thank you.
CONAN: Sammy Abu Dayah, a Palestinian hotel owner. He also owns taxis and tour buses, and he was with us from Jerusalem.
And, Youssef Ibrahim, again, his story can't be all that unusual.
Mr. IBRAHIM: Neal, you wanted to ask about Israeli tourists.
CONAN: Yes.
Mr. IBRAHIM: Now the numbers there are just as bad, according to the Israeli minister of tourism, Rami Levy. In a recent statement, he said that in the first seven months of this year, only 108,000 Americans visited the country, and that's 37 percent drop from the same period in the year 2001. Tourism is only part of the Israeli economy which has other components. But it is an important part. And I think a lot of it is only going to get worse because, as you know, tourism deploys itself in advance reservations. And I'm pretty sure as we are speaking, many hotels are getting cancellations.
CONAN: Let's go back to the phones. Our next caller is Ahmri(ph), who's on the line with us from Rochester, New York.
AHMRI (Caller): Yes. Hi, Neal.
CONAN: Hi.
AHMRI: Thanks for taking my call.
CONAN: Sure.
AHMRI: I'm Israeli, but I have dual citizenship, American and Israeli. And I'm going to Israel exactly a week from now on Monday, and you guys are talking about tourism. I go about every year to Israel to visit my family and my parents and my sister. And for the first time ever, I'm going to rent a car when I go. And maybe the rental car agencies are perhaps the only people who are benefiting from this situation, because I think people are reluctant to use public transportation these days.
CONAN: Buses have a damaged reputation, let's say.
AHMRI: Yeah, they certainly do. I mean, I went a year and a half ago, and I still took buses from one city to city to visit my friends. And this time around I'm going to stay in my rental car and drive around. It just feels kind of very different. I'm not a typical tourist. I mean, I go there to see relatives. But that'll definitely be different this time around. I'm kind of reluctant about this trip more than I ever was before for on any of my previous trips.
CONAN: For the obvious reasons?
AHMRI: Yes.
CONAN: Yeah. But what is motivating you to continue to go anyway?
AHMRI: Well, I mean, I have family. I'm not really driven by any nationalistic or patriotic fervor at all. I just want to see my parents and just kind of reconnect with a place I used to live in, in the past, when I was growing up. That's really the reason; it's more personal.
CONAN: Mm-hmm. Well, thanks very much for the call.
AHMRI: Sure.
CONAN: And have a good trip.
AHMRI: Thank you.
CONAN: OK. Youssef Ibrahim, the Palestinian area, you mentioned light manufacturing, things like clothing and even skullcaps. The majority of their exports are, in fact, to Israel?
Mr. IBRAHIM: The totality; it's not the majority. There is no possibility of--since the borders with Egypt are closed and the borders with Jordan are closed, the Palestinians--and the Mediterranean Sea, fishing, in other words, is also limited to 10 kilometers--the Palestinians have only one market, the domestic market--in other words, themselves, their own people--and the Israelis. Now before, under the Oslo agreement, they could export to the European Union. All this has now, of course, been shut down.
And another thing that has deeply affected the Palestinian economy, in all fairness, is in the--what I call the golden period, Oslo agreement, 1993 to 1997, a lot of American Palestinians were returning with loads of money and projects. I mean, somebody came and put together a beer factory that became a big success. You remember the famous casino that was built. People were coming to do projects in telecommunications. I think it would be unfair to say that the war alone has bankrupted these projects. I think there was a fair deal of mismanagement and corruption by the Palestinian Authority that has discouraged many Palestinian capitalists from trying to do this, even before the intifada. And this kind of corruption has really basically stopped that infusion of money coming in. Now nobody in his right mind would go there and invest anyway, and the destruction of the infrastructure that was constructed by the European Union money has made the situation worse during the latest confrontation, which we all saw on television, the Jenin camp, the incursion, the reoccupation of the West Bank.
But there is a considerable part of the responsibility that had to do with the mismanagement of Yasser Arafat and the clique that's around him that runs the Palestinian territories.
CONAN: Our next caller is Stanley, who's with us from Newton, Massachusetts.
STANLEY (Caller): Yes, good afternoon. My question has to do with the effect of the current crisis on the high-technology industries in Israel. Israel has some very noted centers of technology research, including the Weizmann Institute, and it developed some industries around those technologies and, as a matter of fact, has some bonafide Silicon Valley type of billionaires, or perhaps at one time were billionaires. I would like to know what the effect has been on those businesses and that economy.
CONAN: Youssef Ibrahim.
Mr. IBRAHIM: The caller is absolutely right. In fact, that is one of the pillars of the Israeli economy. Israel has been very good in developing software, particularly software related to arms. And, in fact, it does have a contract with the Pentagon that is worth almost an income of $3 billion a year. We import, our Pentagon, our armed forces import from Israel a lot of software programming for our defense systems and attack systems. And, of course, there is a vast strategic military cooperation with the state of Israel. And lately Israel has branched out to sell this technology to other countries. You recall the famous dispute during the Clinton administration when the Clinton people objected strongly to the sale of an advanced AWACS...
CONAN: Airborne Warning And Control System.
Mr. IBRAHIM: ...to China.
CONAN: Yes.
Mr. IBRAHIM: And finally Israel backed down, but it just resold that plane to India.
CONAN: Ah.
Mr. IBRAHIM: And the...
CONAN: Well, Youssef, the high-tech industry in this country has not been having too great a time. What about in Israel?
Mr. IBRAHIM: I think it is doing well, and it is continuing to do well. It wouldn't be affected by the war except to the extent that new money and new investors would not want to come in and pump money in it. And people who are working in it are probably migrating right now to go to Silicon Valley or somewhere else where they can work without the threat of war. But this is one of the pillars of the Israeli economy and has done very well.
CONAN: Stanley, thanks very much.
STANLEY: Thank you.
CONAN: You're listening to TALK OF THE NATION from NPR News.
And joining us now is Sam Bahour. He is a Palestinian American from Youngstown, Ohio. He moved to Ramallah in 1995 to work for Palestine Telecommunications Company. He now manages a $10 million shopping mall project which is under construction near Ramallah. And he's with us from his home in Ramallah.
And welcome to TALK OF THE NATION.
Mr. SAM BAHOUR (Managing Developer): Thank you.
CONAN: So after 14 months of trying to get financing, you were able to secure a loan. Does this mean that maybe things are looking up a little bit there?
Mr. BAHOUR: Well, for us, it's been an issue of remaining committed to the Palestinian economy and looking to a more positive future than we've seen for the last two years. So, yes, we would hope that the days to come would start to find better economic times and an ending of the occupation. We remain committed because we believe that's what will happen sooner or later.
CONAN: And what is this mall going to look like, and when will it be finished?
Mr. BAHOUR: Well, it's not really a mall; it's a shopping plaza. It's a 10,000-square-meter plaza which is the largest in Palestine. This is the first of five centers that we would like to create, or five plazas that we would like to create. It's going to look like probably any strip plaza in any US city, very modern, very spacey, which is something different than what they're used to here. And it will hopefully be one of the pioneers in the retail sector to upgrade the entire way Palestine does business domestically. That all can happen only if the occupation ends and we're able to work in a normal environment.
CONAN: Well, we've just been hearing from Youssef Ibrahim about the drastic drop in Palestinians', you know, per-capita income. Who's got money to buy anything at the mall?
Mr. BAHOUR: Well, this is what's making my job and my team's job very difficult right now. We've already scaled back how we're going to open this plaza. And it also means that we, after being delayed for now over two years, we're going to face even further delay before we're able to come up 100 percent and open the center as we wished.
CONAN: You said...
Mr. BAHOUR: Yes, we're facing a--we're on the brink of a humanitarian disaster in Palestine, and we just continue work, hoping that the US specifically will wake up to what is happening here and start putting things back on the right track, given they have the power to do so.
CONAN: You said that t...
Mr. BAHOUR: If that doesn't happen, we're going to face some very hard times, and my project will as well.
CONAN: You said two years of delays. What's been the biggest problem?
Mr. BAHOUR: The biggest problem is curfews, such as what we're having today. Today, we've been locked down in our homes with tanks rolling around town, refusing to allow anyone to come in or out of the city, as well as go in or out of our own homes. These continuous closures--some of them have been for 25 and 26 days straight--is devastating our lives and our economy as well. So if the closures would end and we were able to get up and go to work in the morning like the rest of the world, we would be able to finish our project. And we'll deal with the business challenges of making this project work in difficult times. But if the closures continue, as they're doing now and as they seem to be going to become more intense in the future, then the entire country is at threat, not only our project.
CONAN: Sam Bahour, thanks very much for speaking with us today.
Mr. BAHOUR: Sure thing.
CONAN: Sam Bahour, general manager of the Arab Palestinian Shopping Center in Ramallah, in the West Bank. He was speaking with us from his home in Ramallah. More on the economic impact of the conflict in the Middle East when we come back from a short break.
I'm Neal Conan. It's TALK OF THE NATION from NPR News.
ANNOUNCEMENTS
CONAN: This is TALK OF THE NATION. I'm Neal Conan in Washington.
Tomorrow, join us for the second part of our women's health series. We'll talk about the number one killer of women, cardiovascular disease. There are emerging treatments. Plus, tips for prevention. That's tomorrow on TALK OF THE NATION.
Today, we're talking about the conflict in the Middle East and how it's affecting the economies in the region. With us from New York City is Youssef Ibrahim, a senior fellow for the Middle East at the Council on Foreign Relations; a former correspondent for The New York Times and The Wall Street Journal.
Joining us now is James Snyder, director of the Israel Museum. And he joins us now from a restaurant in Tel Aviv.
And we appreciate your willingness to interrupt your dinner to speak with us.
Mr. JAMES SNYDER (Director, Israel Museum): Thank you, Neal. It's a pleasure to talk to you.
CONAN: We're talking about the economy in Israel and the Middle East in general this hour, the decline in tourism. You've been director of the Israel Museum for six years. What's going on now?
Mr. SNYDER: Well, let me tell you that six years ago when I arrived, the attendance to the Israel Museum was about 600,000 visitors a year, and we trended upward from that point. In 1999, we had 820,000 visitors, and in the millennial year, 2000, we were surpassing 900,000 and hoping to reach a million visitors. The intifada began in the last quarter of that year, and we ended the year with us over 700,000. This past year, we had 425,000 visitors, which is down roughly 50 percent from our high.
CONAN: Well, that would square with the figures we heard earlier from Youssef Ibrahim. Have you seen a difference in the types of visitors to your museum?
Mr. SNYDER: We have in two ways. In '99, our peak year, I would say that a third of our attendance was international tourism, a third was visiting from outside of Jerusalem, and a third was comprised of Jerusalemites. And the mix was Israeli Jews, Christians, Arabs--really a cross-section of the populations of the country. I would say that at this point it's--more than 90 percent of our visitation is from Jerusalemites alone and most of that is from the Jewish population of West Jerusalem.
CONAN: Why is that?
Mr. SNYDER: Well, I think people feel less comfortable moving around in the country. We understood at the outset of the intifada that we would lose international tourism. We felt that we could hold on to travel within the country. But people feel very much as if they want to stay put. And it's interesting in a way actually if you consider that Jerusalem is a city of just over 600,000 visitors. On the one hand, it's quite impressive that we are able to generate over 400,000 visits annually to the museum.
CONAN: You come to the United States often to fund-raise. How much money do you get from this country?
Mr. SNYDER: The Israel Museum is the national museum of the country, but, in fact, we function as a private museum and we fund-raise very substantially. More than 60 percent of our annual $20 million budget comes from outside of Israel. And most of that 60 percent comes from the US.
CONAN: And has...
Mr. SNYDER: So I would say we raise in excess of $10 million a year in America.
CONAN: And has that number been changing?
Mr. SNYDER: That number has not changed in the last two years. We feel fortunate. And certainly the world, as we all know, has become a very complex place. And yet I think outside of Israel there's a very strong recognition of a role that we play here, which is to be a place which is about beauty and tranquility and to be a place where people can come and feel uplifted at all times by the beauty, not just of the culture of Israel but of the cultures of the world. And in that respect, I think people see us as a place where all of Jerusalem's populations come and continue to come, even if the balance has changed. And I think that we perhaps represent a kind of investment in a hopefulness for a future that might be different from the situation that we are all struggling with now.
CONAN: Well, thanks very much for speaking with us.
Mr. SNYDER: Thank you. It's a pleasure to talk.
CONAN: And I hope you can get back for dessert.
Mr. SNYDER: Thank you. I plan to.
CONAN: James Snyder is director of the Israel Museum, and he was with us from a restaurant in Tel Aviv.
Youssef Ibrahim is still with us on the line, and we'll get to more of your calls in just a second.
Youssef, one other economic factor that's been playing out, at least over the past few months anyway, has been an effort by at least some in the Arab world to boycott some American products, American fast-food businesses, Coca-Cola, that sort of thing. Has that been having any impact?
Mr. IBRAHIM: Yes and no. You've got to remember that if you boycott your local McDonald's shop in Riyadh, Saudi Arabia, for example, it is true you are boycotting an American product. But the people who are working in that shop are Saudis. And the meat that is consumed in the shop is probably coming from Saudi Arabia. But I must tell you that sentiment has been very strong, and it's across the board. And it travels all the way from Algeria, all the way to the gulf. Whether it has an economic impact that matters is debatable.
But there is something much more important and much more serious than this, Neal, which is, since we are in a sort of economic meltdown of our own here in the United States, the amount of Arab money that has been moving out of the United States, and that is a far more serious question. The boycott of American products is a sentimental reaction. But in the end of the day, it represents a tiny bit of American commerce in that part of the world. The movement of money at this point is much more serious. Why? Because you have an estimated 600 to $700 billion of Saudi Arabian private funds alone here. It is true they are moving for a number of reasons. Only one of them is political. But the other is that the euro has now emerged as a very important challenger to the dollar.
CONAN: Let's get...
Mr. IBRAHIM: And the interest rates that people get in Europe are much better than the interest rates they can get here. And although even that amount of money is not that much, in the process of dissolution of the American economy in which we are, its leverage effect is a big one.
CONAN: Let's get back to the phones. Our next caller is Mike, who's with us from Tulsa, Oklahoma.
MIKE (Caller): Hi, Neal.
CONAN: Hi.
MIKE: Listen, I'm kind of a simple person, but I'm thinking that the way to peace might be through further economic pressure. I mean, these stories are very, very sad, but it may have to be sadder before it gets better. And my suggestion is that we just shut down all kinds of business, economic aid, military aid to both sides. The world does that. You know, our buddies in France can shut down their aid to the Palestinians. We can shut down our aid to the Israelis. And we just shut them down completely--everybody. And we will have to suffer for that, and they will have to suffer for that. But maybe that's the way to peace.
CONAN: Well, Youssef Ibrahim, a lot of people had said that, you know, maybe in the long run, prosperity is the way to peace. Is, at this point, economic pressure likely to bring either side to the table?
Mr. IBRAHIM: I'm afraid this has become such a politicized struggle with two parties that are actually--have not put peace as their priority on the table. I think the conservative government of Israel, particularly Mr. Sharon, has made it very clear that he rejects the notion of the Palestinian state, which is the only goal of the Palestinian movement. And on the other hand, you have Yasser Arafat, who has been reduced to a completely helpless prisoner in a room. And I firmly believe Yasser Arafat is no longer in control of anything. I know the Israelis keep blaming him every time there is a bombing. The Palestinian infrastructure has collapsed. The infrastructure of security is virtually non-existent. And as you heard, when people are locked up in their homes for 26 days, it is very difficult to really run anything.
So the momentum, I'm afraid, is going in only one direction, which is more violence. Eventually, yes, you could argue reasonable people can--like you and me and many, many, many people in Israel and many, many people in the Arab world would argue that enough is enough, stop the fighting; peace is the only way to prosperity. There cannot be prosperity before peace. And I think our administration, our government's insistence on democratic reform, etc., etc., is becoming to some a bit silly. Arafat cannot even move out of his room. That's the last thing on Earth...
CONAN: I'm afraid we're going to have to leave him there because we're running out of time.
Mr. IBRAHIM: OK.
CONAN: Mike, I appreciate your phone call.
MIKE: OK, thanks.
CONAN: And, Youssef Ibrahim, thanks so much for being with us today.
Mr. IBRAHIM: Thank you, Neal. It's nice to have been there.
CONAN: Youssef Ibrahim, a senior fellow for the Middle East at the Council on Foreign Relations.
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