ABSTRACT
'It's the economy, stupid', is a common refrain in relation to elections in the United States and one could be forgiven for thinking that the 2006 election in Israel would also be decided by economics. Between the last quarter of 2000 and the virtual defeat of the terror war waged by the Palestinians against Israel in 2004, the country went through an economically quite difficult period. Figure 1 depicts the annual percentage change in Israel's GDP from 1989 to 2005. As the graph clearly shows, growth rates in 2001 and 2002 were negative, and growth in 2003 was meagre. It is therefore not an exaggeration to say that Israelis experienced three bad years in terms of the economy.
