into the twentieth century was accompanied by their growing military might, increasing assertiveness, and, eventually, terrible wars. the rise of the soviet union and of international communism was also associated with major wars and political instability, in this case around the world. are we more sophisticated now than the world was a hundred years ago? how long can the pax americana continue to maintain stability in asia? how wise will the sole superpower be in its future dealings in asia? how in the long run will the relationship between russia, with its underdeveloped and underpopulated east, and china, with its massive population directly to the south, develop? can china and india take their rightful places in the world and in their regions without further major military confrontations? does the fact that china and india are nuclear powers, and so is pakistan, make the situation more stable as well as more dangerous, or just more dangerous? how will a potentially nuclear iran influence the equilibrium? how important is the north korean nuclear threat, and how long will japan be willing to remain non - nuclear in the face of that and other threats? these questions are too complicated for economists to answer. probably, somewhere in a parallel universe, political scientists are discussing them. perhaps – but not very likely – the parallelism will extend to their concluding that the political issues are likely to be resolved peacefully, and that the economic issues appear intractable. but whatever they conclude, the answers to these political questions, more even than the economic issues we have been discussing, will be key to the future of the world.

stanley fischer : brief review of economic and financial developments in israel in 2006 address by professor stanley fischer, governor of the bank of israel, at the press conference on the publication of the bank of israel 2006 annual report, jerusalem, 11 april 2007. * * * i would like to start by congratulating the team that prepared the report, headed by karnit flug, director of the research department, and michel strawczynski, deputy director of the research department. the team consisted of staff from the research, monetary, and foreign exchange activity departments and the financial stability area. this morning i presented the report to the acting president of israel and speaker of the knesset, ms dahlia itzik ; the prime minister, mr ehud olmert ; and the minister of finance, mr. abraham hirchson. in economic terms 2006 was one of israel's most successful years. this was reflected in the high rate of growth, the decline in unemployment, the improvement in employment, the impressive surplus in the current account, the amount of foreign investment in israel, and price and financial stability. all this took place against the background of rapid global economic growth, but also in a year in which israel was engaged in a war. despite the successes, there are three areas in which, although some progress was made, much work still needs to be done : the relatively high unemployment rate, the large share of public debt in gdp, and the high incidence of poverty. helped by the high rate of growth, however, especially in the last three years, some improvement was evident in all these areas. this drives home the importance of focusing on the main objective of macroeconomic policy – the maintenance of a high rate of growth and converting it into a long - term one. the continued success of israel's economy depends this year too on three main factors : developments in the global economy, over which we have no influence ; ( 2 ) the geopolitical situation, on which we have some effect ; and ( 3 ) the continuation of the government's economic strategy as followed in the last few years, over which we in israel do have control : • current fiscal strategy should persist, mainly the preservation of a low budget deficit, leading to further lowering of the debt / gdp ratio, which despite its reduction is still too high. it is important to avail ourselves of the good years we are currently enjoying to persist in reducing it. reducing the share of debt in gdp would make the economy