1. Population Forecast for Israel and West Bank 2025 Presentation at the Sixth Herzliya Conference January 23, 2006 by Bennett Zimmerman, Roberta Seid, PhD & Michael L. Wise PhD Bennett Zimmerman, Roberta Seid, Ph.D. & Michael L. Wise, Ph.D. Copyright 2005 All Rights Reserved

2. Forecasting Requirements Current Population Accuracy The original Study, ‘Arab Population in the West Bank and Gaza: The Million Person Gap’ found the population in the Territories was 2.5 million instead of the 3.8 million published by Palestine Bureau of Statistics. Given the magnitude of the errors in the PCBS Model -- its 2004 population was inflated by over 50% -- demographers and state agencies should first correct current figures before issuing forecasts. Constant Updating with Recent Trends and Changes in Trend The future demographic balance in the region will also be driven by trends in Jewish majority which in recent years has shown rising birth rates and immigration, while the Arab population has experienced high but declining birth rates and emigration. Consideration of All Possible Scenarios On top of an exaggerated current population size, many demographers only assumed that Arab and Jewish growth rates would move in tandem, or that Jewish growth rates would decline and Arab rates would remain stable. There are clearly other realistic possibilities. Arab Growth High Med Low Jewish Growth High Med Low

3. 10 Total Fertility Rate Births/Woman 8 6 4 2 0 Egypt Total Fertility Rates (TFR) Middle Eastern Comparisons 1970/75 – 2000/05 Source: UN Population Division Fertility rates have dropped in every Middle Eastern country without exception. 5.7 3.3 7.5 3.3 4.9 2.2 SyriaLebanon 7.8 3.6 Jordan 2.3 Iran 6.4 1970/ 1975 2000/ 2005 7.3 4.5 7.6 3.0 Libya Saudi Arabia

4. 10 Total Fertility Rate Births/Woman 8 6 4 2 0 Total Fertility Rates (TFR) Israel Jews and Israel Moslems 1960 – 2004 Source: Israel Central Bureau of Statistics Forecasts for Israel have been consistently wrong because they apply yesterday’s high fertility rates to tomorrow’s forecast despite long-term decline in Israel Arab fertility. 9.23 1960/ 1964 3.39 8.47 1965/ 1969 3.36 1970/ 1974 3.28 1975/ 1979 3.00 5.54 1980/ 1984 2.80 4.70 1985/ 1989 2.79 4.67 1990/ 1994 2.62 4.67 1995/ 1999 2.62 4.36 2004 2.71 Jews Moslems 7.25 9.22

5. 5 Total Fertility Rate Births/Woman 4 3 2 1 0 Total Fertility Rates (TFR) Israel Jews and Israel Arabs 2000 - 2004 Israeli Jewish Fertility rates, the highest in the Western world, have stabilized and even started to rise across the board in all sectors (Orthodox, secular, and new immigrant). After plateauing from 1985 – 2000, Israeli Arab fertility rates have been steadily falling. 20002002 2003 Jews Arabs 2004 2.71 4.40 4.22 4. 00 4.17 2.73 2.64 2.66

6. 5 Total Fertility Rate Births/Woman 4 3 2 1 0 Total Fertility Rates (TFR) Israel Jews and Israel Arabs 2000 - 2004 4.74 2000 4.58 2002 4.50 2003 2.71 4.36 4.40 4.22 4. 00 4.17 3.07 2.77 2.85 2.66 2.55 2.29 2.31 2.13 2.73 2.64 2.66 Moslems Druze Christian Arabs Christian Arab and Druze rates have fallen below Jewish fertility. Israeli Moslem fertility, especially among Bedouin (highest fertility in the country), fell markedly with recent reductions in government subsidies for large families. Jews Arabs

7. 100 Thousands of Births 80 60 40 20 0 Demographic Momentum in Israel Jewish Births vs. Arab Births 1995 - 2005 Source: Israel Central Bureau of Statistics Since 1995, Israel Jewish births have increased rapidly while Israel Arab births have begun to drop 80.4 1995 Jews Arabs 1996 36.5 85.6 35.8 1997 88.3 36.2 1998 91.3 38.8 1999 92.6 39.4 2000 95.6 40.8 2001 95.2 41.4 2002 98.6 40.9 2003 103.6 41.3 2004 104.4 40.9 105.2 38.8 2005

8. Children per Family 8 6 4 2 0 Gallup Survey on Ideal Family Size Convergence in Fertility Intentions Source: Gallup News Service, “Attitudes Toward Family Size Among Palestinians and Israelis”, Lydia Saad, March 17 2006 Desired family size is now the same for Israeli Jews and Israeli Arabs Young West Bank Arabs desire a family size only one-half a child higher than young Israelis Israel Jews What is the ideal number of children in a family? 3.06 3.73 Israel Arabs 4.52 West Bank Arabs 3.68 3.88 5.26 3.593.68 3.85 3.52 4.55 4.40 4.17 5.07 OrthodoxTraditional Secular 50+ 30-49 20-2915-19 50+ 30-49 20-2915-19

9. Gallup Survey on Ideal Family Size Convergence in Fertility Intentions “There is not a large difference [in fertility intentions] in a region where fertility could be a potent political tool... The possibility that the once burgeoning Palestinian Arab population in Israel, the West Bank, and the Gaza Strip will eventually be the majority in that region has been widely accepted as a looming threat to Israel... However the assumption that Palestinians will eventually out-number the Jewish population in the region has come under recent criticism. “The recent Gallup data is instructive because there is clearly an element of personal choice in having children, and thus Gallup finds strong evidence that people’s preferred family size has a strong bearing on actual fertility rates. Gallup has been measuring American’s notion of ideal number of children since 1936, the trend lines for preferred number of children and the U.S. are quite parallel. “Gallup finds no difference in preferred number of children by age in Israel, but does among [younger] Palestinians. Gallup Comments -- Lydia Saad, “Attitudes Toward Family Size Among Palestinians and Israelis”, Gallup News Service, March 17 2006

10. Forecast for Israel and West Bank 2025 Sources and Assumptions Israel Jews Updates Israel Central Bureau Statistics (ICBS) Forecast 2000 – 2025 Jewish fertility since 2000 above highest scenarios considered by ICBS. Current level: 2.7 births/woman New Forecast includes slightly higher fertility scenarios for Israel Jewish population Considers net immigration (aliyah + returning Israelis – Israeli emigrants) at various levels, including average from 2001 – 2004 of 20,000 per year. Israel Arabs Updates ICBS Forecast 2000 – 2025 Arab fertility since 2000 near lowest levels considered by ICBS. Current level: 4.0 births/woman New Forecast develops slightly lower fertility scenarios for Israel Arab population Assesses the impact of different migration levels West Bank Arabs Starts with 2004 West Bank Arab population figure of 1.4 million as measured in ‘Arab Population in the West Bank and Gaza: The Million Person Gap’ New Forecast applies UN Population Division fertility assumptions (supplied by PCBS) (Also develops higher fertility scenario than UN and PCBS. Current level: 5.0 births/woman) Considers migration at different levels with Israeli controlled borders. ‘Forecast for Israel and West Bank 2025’ builds on updated population, fertility and migration data. Develops fully independent scenarios (High-Medium-Low) for each population group. Forecast does not include the aggressive convergence in fertility intentions as reported by Gallup

11. ICBS Forecast for Israel Israel’s Official Forecast (2000 - 2025) Jewish Portion of Population Different Scenarios 20252000 81%

12. 8.0 6.0 4.0 2.0 2000 2005 2010 2015 2020 2025 Millions of People ICBS Forecast for Israel: Mid-Case Scenario Israel’s Official Forecast (2000 - 2025) Source: ICBS, Demographic Trends in Israel, by Ahmad Hleihal, Director, Demography Sector 10.0 12.0 0.0 Jews Israeli Arabs 75% Jewish Jewish Affiliated/ Recent Immigrants Israel Jews4.96 77.8% 6.51 70.3% + Recent Immig.0.23 3.5% 0.43 4.7% Jews & Others 5.18 81.4% 6.94 75.0% Israel Arabs1.19 18.6% 2.32 25.0% 2000 2025

13. ICBS Forecast for Israel Israel’s Official Forecast (2000 - 2025) Others are comprised of mostly immigrants from the Former Soviet Union who have moved to Israel under the Law of Return but who are not halachically Jewish. Beginning in 1995, the ICBS began to report on Jews & Others together due to the Jewish affiliation of these immigrants. + Israeli Arabs are comprised of Moslem, Christian Arabs, and Druze citizens of Israel. Source: ICBS, Demographic Trends in Israel, by Ahmad Hleihal, Director, Demography Sector

14. Fertility Assumptions in ICBS Forecast for Israel: Jews Israel’s Official Forecast (2000 - 2025) 2.00 2.50 3.00 3.50 4.00 2000 - 05 2021 - 25 2.6 2.4 2.1 Total Fertility Rates The ICBS assumed Jewish fertility rates (births expected per woman) would remain Stable at 2.6 in the high case scenario and drop to 2.1 in the low case scenario Net Immigration was expected to drop from 10,000/year to 7,000/year in the high case and 4,000/year to -2,000 emigration in the low case High Scenario Medium Scenario Low Scenario

15. Actual Fertility vs. Assumptions in ICBS Forecast for Israel: Jews (2000 - 2004) 2.00 2.50 3.00 3.50 4.00 2000 - 05 2021 - 25 2.6 2.4 2.1 Actuals 2000 2002 2003 2004 2.66 2.64 2.73 2.71 Actual fertility rates for the Jewish sector were higher than the highest rates considered by the ICBS in its forecast Total Fertility Rates

16. ‘Forecast for Israel and West Bank 2025’: Jews Fertility Assumptions in New Forecast (2004 - 2025) 2.00 2.50 3.00 3.50 4.00 2000 - 05 2021 - 25 2.6 2.4 2.1 ICBS Assumptions 2.00 2.50 3.00 3.50 4.00 2004 2025 2.7 3.0 2.4 2.7 New Forecast Assumptions ‘Forecast for Israel 2025’ considers three modestly higher fertility scenarios and also assesses the impact of different immigration levels, including a scenario with 20,000 immigrants, the net aliyah average from 2001 - 2004 Total Fertility Rates

17. Fertility Assumptions in ICBS Forecast for Israel: Israel Moslems Israel’s Official Forecast (2000 - 2025) 3.8 2.1 The ICBS assumed Moslem fertility rates (births expected per woman) would remain stable at 4.7 in the high case scenario and gradually drop to 2.6 in the low case scenario No immigration or emigration scenarios were considered for the sector 2.00 2.50 3.00 3.50 4.00 2000 - 05 2021 - 25 2.6 4.50 4.7 Total Fertility Rates High Case Scenario Medium Case Scenario Low Case Scenario

18. Actuals vs. Assumptions in ICBS Forecast for Israel: Israel Moslems (2000 - 2004) 3.8 2.00 2.50 3.00 3.50 4.00 2000 - 05 2021 - 25 2.6 4.50 4.7 Total Fertility Rates Actuals 2000 2002 2003 2004 Moslems 1,090 83% 4.74 4.58 4.50 4.36 Christians 116 9% 2.55 2.29 2.31 2.13 Druze 112 8% 3.07 2.77 2.85 2.66 Total Arab 1,318 4.40 4.22 4.17 4.02 Moslem Total Arab Actual fertility rates for Moslems were decreasing to the lowest level considered by the ICBS in its forecast Similar reductions occurred in all communities of the Arab sector

19. 3.8 2.1 2.00 2.50 3.00 3.50 4.00 2000 - 05 2021 - 25 2.6 4.50 4.7 Total Fertility Rates Moslem Total Arab 3.0 2.00 2.50 3.00 3.50 4.00 2004 2025 2.4 4.50 4.0 Total Fertility Rates ‘Forecast for Israel 2025’ considers three modestly lower fertility scenarios for the total Israel Arab sector and also assesses the impact of different migration levels Note: ‘Forecast for Israel and West Bank 2025’ applies TFR rates to total Arab sector, which has a lower rate than Moslem-only sector ‘Forecast for Israel and West Bank 2025’: Israel Arab Fertility Assumptions in New Forecast (2004 - 2025)

20. 3.2 3.00 3.50 4.00 4.50 5.00 20042025 2.4 5.50 4.0 5.4 Total Fertility Rates ‘Forecast for Israel and West Bank 2025’: West Bank Arabs Fertility Assumptions in New Forecast (2004 - 2025) 2.50 Highest Scenario drops from most recent W.Bank Level (5.0) to current Israel Arab rate (4.0) Middle Scenario uses UN Population Estimates (sourced from PCBS) Lowest Scenario drops from most recent W.Bank level to current lowest Israel Arab rate ‘Forecast for Israel 2025’ takes the population figures found in ‘Arab Population in the West Bank and Gaza’ and applies three fertility scenarios 5.0

21. Forecast for Israel and West Bank (2004 - 2025) Jewish Portion of Population Different Scenarios 20252004 81% 67% Israel Israel & West Bank

22. 8.0 6.0 4.0 2.0 2004 2010 2015 2020 2025 Millions of People ‘Forecast for Israel and West Bank 2025’: Mid-Case Scenario (2004 - 2025) Source: Forecast for Israel 2025, Copyright 2005 Zimmerman, Seid, Wise 10.0 12.0 0.0 Jews Israeli Arabs West Bank Arabs 63% Jewish Israel Jews5.49 67% 7.51 63% Israel Arabs1.32 16% 2.20 18% West Bank Arabs1.40 17% 2.24 19% 2004 2025

23. ‘Forecast for Israel and West Bank 2025’ (2004 - 2025) Forecast calculations use Spectrum Policy Modeling System Software, from the Policy Center The 2004 population base, and the fertility and migration assumptions behind a full range of forecast scenarios are specified for each population group. They are based on recent actual data. Readers can independently assess the impact of different assumptions on forecast outcomes by using these tables. Scenarios marked in GREEN would support the Best Case outcome for Jews. Scenarios marked in YELLOW are considered by the authors to be the most likely Mid-Case outcome. Scenarios marked in RED would support the Best Case outcome for Arabs.

24. ‘Forecast for Israel and West Bank 2025’ Contact Information In USA Mr. Bennett Zimmerman Ph: 310-617-4180 E-mail: ben@pademographics.com Arab Population in the West Bank and Gaza: The Million Person Gap debuted at the American Enterprise Institute in Washington, D.C. on January 10, 2005 The Begin-Sadat Center for Strategic Studies recently published a complete version of the Study in February 2006. This study can be accessed at www.biu.ac.il/Besa/mideast.html as Report #65www.biu.ac.il/Besa/mideast.html The authors of this study have completed a companion piece, “Forecast for Israel and West Bank 2025,” which was introduced in Israel at the 6th Herzliya Conference on January 23 2006 and in the USA at the American Enterprise Institute on February 23, 2006. Further information on both studies can be found at www.pademographics.comwww.pademographics.com