How Lack of Competition Stifles the Israeli Economy

Since the 1990s, the Jewish state has done much to break free from the economic fetters of its socialist past, leading to unprecedented growth and prosperity. But many restraints remain, as Sue Surkes explains:

Few [Israelis] know that when they clean the kitchen, the price of their Palmolive liquid soap and Ajax window spray is set countrywide by a single . . . importer and distributor, who also provides them with their Colgate and Elmex toothpaste, Revlon, and Neutrogena beauty products, Speed Stick deodorant, Band-Aid bandages, and more. All of these brands are exclusively franchised to a company few have heard of, called Schestowitz, [which, together with a corporation called] Diplomat, has exclusive rights both to import and to distribute a staggering array of name-brand products that can be found in most Israeli homes.

This kind of centralized control can be found throughout the Israeli economy. It stifles competition, ensures that prices remain high, and helps to explain why the Jewish state was ranked earlier this month as having the eighth-highest cost of living in the world. Nine years after massive social protests against that cost of living, Israel still has more monopolies than the U.S. or any European country.

After mass demonstrations in 2011 that brought hundreds of thousands of Israelis onto the streets countrywide—it was estimated at the time that the ten biggest business groups controlled 41 percent of the market value of public companies—the Knesset passed the Law for Promotion of Competition and Reduction of Concentration in 2013. . . . While there is a little less concentration than there was before 2013, the Israeli economy [nevertheless remains] highly concentrated.

Worse still, a proposed new tax law could make things worse:

The Finance Ministry’s chief economist, Shira Greenberg, has been talking over recent months about [applying] the 17-percent value-added tax (VAT) on all items ordered from overseas online retailers, such as Amazon, . . . to help raise cash to pay off the country’s deficit. To date, purchases totaling less than $75 have been VAT-exempt, offering Israelis a way to sidestep inflated prices at home and bringing pressure to bear on Israeli retailers to lower their prices, too.

Read more at Times of Israel

More about: Free market, Israeli economy

As Hamas’s Power Collapses, Old Feuds Are Resurfacing

In May, Mahmoud Nashabat, a high-ranking military figure in the Fatah party (which controls the West Bank-based Palestinian Authority), was gunned down in central Gaza. Nashabat was an officer in the Gaza wing of the Aqsa Martyrs’ Brigade, a terrorist outfit that served as Fatah’s vanguard during the second intifada, and now sometimes collaborates with Hamas. But his killers were Hamas members, and he was one of at least 35 Palestinians murdered in Gaza in the past two months as various terrorist and criminal groups go about settling old scores, some of which date back to the 1980s. Einav Halabi writes:

Security sources familiar with the situation told the London-based newspaper Asharq Al-Awsat that Gaza is now also beleaguered by the resurgence of old conflicts. “Many people have been killed in incidents related to the first intifada in 1987, while others have died in family disputes,” they said.

The “first-intifada portfolio” in Gaza is considered complex and convoluted, as it is filled with hatred among residents who accuse others of killing relatives for various reasons, including collaboration with Israel. . . . According to reports from Gaza, there are vigorous efforts on the ground to contain these developments, but the chances of success remain unclear. Hamas, for its part, is trying to project governance and control, recently releasing several videos showcasing how its operatives brutally beat residents accused of looting.

These incidents, gruesome as they are, suggest that Hamas’s control over the territory is slipping, and it no longer holds a monopoly on violence or commands the fear necessary to keep the population in line. The murders and beatings also dimension the grim reality that would ensue if the war ends precipitously: a re-empowered Hamas setting about getting vengeance on its enemies and reimposing its reign of terror.

Read more at Ynet

More about: Fatah, Gaza War 2023, Hamas