Wall Street braced for the possible spread of economic fallout as Israel’s Prime Minister Ariel Sharon fought for his life after a stroke.
Jittery investors in the world’s capitals were concerned about instabilities in the Middle East due to Sharon’s inability to serve.
He was regarded as the economic glue of the region; he led his nation to economic prosperity and launched reforms that helped put out political fires spreading across parts of the oil-producing world.
Israel’s financial markets were slammed over Sharon’s health problems and oil traders in London and New York kept a nervous eye on their markets yesterday for signs of uncertainty.
Oil prices actually slipped here in New York due to an oversupply of crude oil.
“I don’t think that Mr. Sharon’s health, or lack of it, will have that much impact on the oil markets,” said energy analyst Seth Kleinman of PFC Energy. “Whether his absence means more instability isn’t at question. There’s certainly no shortage of instability in the Mideast as it is,” he added.
Israel’s blue chip stock index in Tel Aviv plunged 6.2 percent before recovering for a loss on the day of 3.9 percent.
“I think the political uncertainty will dominate [the markets] in the next few days,” said economist Koby Akai at Meretz Investments Ltd. “But in the end, regrettable as it may be, every person has a replacement, and the state of Israel and its economy are strong.”
Acting Prime Minister and Finance Minister Ehud Olmert, and Bank of Israel Governor Stanley Fischer, agreed that the country’s fiscal and interest policies would remain unaffected by Sharon’s illness, the prime minister’s office said.
Sharon suffered a major stroke late Wednesday and was recovering last night under intensive care following a surgery to stop cerebral bleeding.
Under Sharon, Israel’s economy had grown at 5.2 percent in 2005, the fastest in five years due to the government’s withdrawal from the contested Gaza Strip.
Economists have said the Sharon government’s policies of deregulation and the sale of state-owned companies have helped boost the economy, together with growing demand for Israeli technology companies’ products.
The growing economy helped boost foreign investment by about 40 percent to $9.2 billion in the first 11 months of last year.