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.

On Tuesday, a Hizballah drone attack injured three people in northern Israel. The next day, another attack, targeting an IDF base, injured eighteen people, six of them seriously, in Arab al-Amshe, also in the north. This second attack involved the simultaneous use of drones carrying explosives and guided antitank missiles. In both cases, the defensive systems that performed so successfully last weekend failed to stop the drones and missiles. Ron Ben-Yishai has a straightforward explanation as to why: the Lebanon-backed terrorist group is getting better at evading Israel defenses. He explains the three basis systems used to pilot these unmanned aircraft, and their practical effects:

These systems allow drones to act similarly to fighter jets, using “dead zones”—areas not visible to radar or other optical detection—to approach targets. They fly low initially, then ascend just before crashing and detonating on the target. The terrain of southern Lebanon is particularly conducive to such attacks.

But this requires skills that the terror group has honed over months of fighting against Israel. The latest attacks involved a large drone capable of carrying over 50 kg (110 lbs.) of explosives. The terrorists have likely analyzed Israel’s alert and interception systems, recognizing that shooting down their drones requires early detection to allow sufficient time for launching interceptors.

The IDF tries to detect any incoming drones on its radar, as it had done prior to the war. Despite Hizballah’s learning curve, the IDF’s technological edge offers an advantage. However, the military must recognize that any measure it takes is quickly observed and analyzed, and even the most effective defenses can be incomplete. The terrain near the Lebanon-Israel border continues to pose a challenge, necessitating technological solutions and significant financial investment.