To attract immigrants over the next decade, Israel will need to expand its infrastructure, argues Gideon Patt, the new president of the State of Israel Bonds.
The capital provided by Israel Bonds will be vital to that endeavor, argues Patt, especially after U.S. loan guarantees come to an end.
U.S. loan guarantees of $10 billion have paid for the absorption of a huge wave of immigrants from the former Soviet Union and have left Israel with “a more or less easy situation,” says Patt.
Such a “no-strings-attached” source of credit meant Israel got a better deal when it came to borrowing money it needed from banks.
But that flow is slated to end in two years, he points out.
At the same time, in order to maintain its current economic pace and standard of living, Israel will have to mobilize more than $2.5 billion a year for the foreseeable future, says Patt.
Bonds will prove indispensable, says Patt. After the loan guarantees, they are seen as “the next most reliable source” of capital, he says.
They provide $1 billion a year for infrastructure development and help secure countless more investment dollars, and investment is the key to Israel’s future.
Only by “doubling its infrastructure in the next 10 to 15 years” will Israel “be a place Jews will be attracted to,” Patt says.
Only then will it be in a position to take in the 1 million Jews who remain in the former Soviet Union who could be enticed to come “if they look and see their brothers and sisters are doing well.”
Patt, an economist who served in the Knesset for 26 years and has held a Cabinet post in the Begin, Shamir and Peres governments, speaks with authority and ease about the importance of bonds, more than $17 billion of which has been sold over the years, he notes.
It is a subject he knows well, having been a staple on the Bonds speaking circuit over the years.
A graduate of New York University, his Manhattan office is also familiar turf.
In a recent interview there, Patt draws on his pipe and digresses with evident relish to talk about the changes he has witnessed over the years in the relations between American Jews and Israelis.
He makes it clear that he will exert his influence not to let the politics of the Israeli religious pluralism debate rear its head at Bonds, as it has in other Diaspora organizations.
Besides, “politics,” he quips, matter far less in bonds sales “than interest rates.”
He boasts of the cooperation in Bonds’ rabbinic Cabinet, which represents the multiple Jewish streams, and says, “If you’re mad at Shas, you can’t take it out on immigrants or ports or roads.”
Shas is the Orthodox party sponsoring conversion legislation in the Knesset, which has sparked the ire among non-Orthodox Diaspora Jewry.
Bonds, he adds, are “very positive cement” in the relationship between the American Jewish community and Israel.
“To detach from Israel is to detach from something which is the center of Judaism.”
Patt also talks about the changes he aims to implement in the organization during his stewardship, whose length “depends on me,” he says.
In choosing the focus of Israeli speakers for Bonds events, “I’m moving away from just politics and security problems,” he says. “It’s very important to have military and political figures to come and explain Israel’s problems, but I’m branching out. It’s not enough. It’s not the fiber of Israel.”
“I want this organization to be the best informed on a variety of issues.”
Patt notes the transformation of Israel Bonds over the years and that its appeal, formerly limited to a Jewish market, now reaches far beyond it.
“Twenty or 30 years ago, most buyers were Jews who felt they had to do it because they wanted Israel to be better off.”
“Non-Jewish buyers were reluctant to buy bonds because they were not sure Israel would be in existence to pay them back.”
“In the last 20 years, since the establishment of peace with Egypt, that question is off the table.”
Israel, he says, is now a better risk and bonds enjoy a good standing in the financial world because they furnish a reasonable rate of return, and because of Israel’s strong economy.
Indeed, 55 percent of bonds sales in the United States are institutional, to banks and investment funds.
Bonds pay an interest rate of seven tenths of 1 percent above five-year U.S. Treasury notes, but unlike the notes they are not liquid. The investment is committed for the full term of the bond.
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