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Israel
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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, the Israelis defeated the Arabs in a series
of wars without ending the deep tensions between the two
sides. The territories Israel occupied since the 1967
war are not included in the Israel country profile, unless
otherwise noted. On 25 April 1982, Israel withdrew from
the Sinai pursuant to the 1979 Israel-Egypt Peace Treaty.
In keeping with the framework established at the Madrid
Conference in October 1991, bilateral negotiations were
conducted between Israel and Palestinian representatives
and Syria to achieve a permanent settlement. Israel and
Palestinian officials signed on 13 September 1993 a Declaration
of Principles (also known as the "Oslo Accords")
guiding an interim period of Palestinian self-rule. 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 April 2003, US President BUSH, working in conjunction
with the EU, UN, and Russia - the "Quartet"
- took the lead in laying out a roadmap to a final settlement
of the conflict by 2005, based on reciprocal steps by
the two parties leading to two states, Israel and a democratic
Palestine. However, progress toward a permanent status
agreement was undermined by Israeli-Palestinian violence
between September 2003 and February 2005. An Israeli-Palestinian
agreement reached at Sharm al-Sheikh in February 2005,
along with an internally-brokered Palestinian ceasefire,
significantly reduced the violence. In the summer of 2005,
Israel unilaterally disengaged from the Gaza Strip, evacuating
settlers and its military while retaining control over
most points of entry into the Gaza Strip. The election
of HAMAS in January 2006 to head the Palestinian Legislative
Council froze relations between Israel and the Palestinian
Authority (PA). Ehud OLMERT became prime minister in March
2006; he shelved plans to unilaterally evacuate from most
of the West Bank following an Israeli military operation
in Gaza in June-July 2006 and a 34-day conflict with Hizballah
in Lebanon in June-August 2006. OLMERT in June 2007 resumed
talks with the PA after HAMAS seized control of the Gaza
Strip and PA President Mahmoud ABBAS formed a new government
without HAMAS. OLMERT in September 2008 resigned in the
wake of several corruption allegations, but remained prime
minister until the new coalition government under former
Prime Minister Binyamin NETANYAHU was completed in late
March 2009, following the February general election.
Israel has a technologically advanced market economy with
substantial, though diminishing, 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 imports
substantial quantities of grain but is largely self-sufficient
in other agricultural products. Cut diamonds, high-technology
equipment, and agricultural products (fruits and vegetables)
are the leading exports. Israel usually posts sizable
trade deficits, which are covered by large transfer payments
from abroad and by foreign loans. Roughly half of the
government's external debt is owed to the US, its major
source of economic and military aid. Israel's GDP, after
contracting slightly in 2001 and 2002 due to the Palestinian
conflict and troubles in the high-technology sector, has
grown by about 5% per year since 2003. The economy grew
an estimated 4.2% in 2008, slowed by the global financial
crisis. The government's prudent fiscal policy and structural
reforms over the past few years have helped to induce
strong foreign investment, tax revenues, and private consumption,
setting the economy on a solid growth path.
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