The Knesset is considering an ambitious budget bill that promises sweeping reform. As Haviv Rettig Gur explains:

This bill . . . upends the old ways of thinking about the Israeli state’s responsibility for its Arab citizens; takes a sledgehammer to structural obstructions that have long plagued the Israeli economy, from protectionist import policies to state price-setting on basic staples; reimagines Israel’s public-transportation network and environmental commitments; . . . opens the banking system to more competition, especially online and via mobile apps; dramatically increases spending on health and defense while cutting expenditures on most other things; and promises a major overhaul and streamlining of governmental red tape.

To Gur, there are only two precedents in Israeli history for such radical change, each of which followed a major economic crisis, perhaps parallel to that caused by the coronavirus: the first was in 1985, when a unity government similar to the current one ended crippling inflation by wresting the country away from the socialism of its founders. The second was in 2003, when then-finance minister Benjamin Netanyahu enacted a further program of economic liberalization, paving the way for Israel’s high-tech revolution. At that time, the crisis was of a different kind:

[T]he Palestinian economy before 2000 was deeply integrated into, and dependent on, the Israeli economy—and was flourishing because of it. Israelis could safely travel in Palestinian cities in those days and had developed a habit of buying cheaper Palestinian goods and services, from car parts to dentistry, valued at hundreds of millions of dollars annually. Together with overseas tourists, they dropped half a billion dollars annually, equal to over 10 percent of the Palestinian GDP, at Jericho’s casino.

But Israel’s economy needed the Palestinians, too, at least in those days. As they grew wealthier from trade with Israel, Palestinians became eager consumers of Israeli products, with some $1.7 billion in Israeli exports to the PA annually, or 7 percent of total Israeli exports excluding diamonds. Palestinian labor drove the Israeli agriculture and construction industries.

The onset of the second intifada reversed those trends, hurting both sides deeply and in interconnected ways.

In June Tehran and Caracas concluded a major twenty-year cooperation treaty. One of its many provisions—kept secret until recently—was the transfer of 4,000 square miles of Venezuelan land to Iranian control. Although the territory is ostensibly for agricultural use, Lawrence Franklin suspects the Islamic Republic might have other plans:

Hizballah already runs paramilitary training centers in restricted sections of Venezuela’s Margarita Island, a tourist area northeast of the country’s mainland. The terrorist group has considerable support from some of Venezuela’s prominent Lebanese clans such as the Nasr al-Din family, who reportedly facilitated Iran’s penetration of Margarita Island. . . . The Maduro regime has apparently been so welcoming to Iranian intelligence agents that some of Hizballah’s long-established Latin American network at the tri-border nexus of Brazil, Argentina, and Paraguay has been overtaken by Hizballah activities on Venezuela’s Margarita Island.

Iran’s alliance with Venezuela most importantly provides Tehran with opportunities to target U.S. interests in Latin America and potentially the southern United States. Iran, along with the Chinese Communist Party, is in the process of strengthening Venezuela’s military against the U.S., for instance by deliveries of military drones, which are also considered a threat by Colombia.

While air and seaborne arms deliveries are high-profile evidence of Iran’s ties with Venezuela, Tehran’s cooperation with Venezuelan intelligence agencies, although less visible, is also intense. The Islamic Republic’s support for Hizballah terrorist operations is pervasive throughout Latin America. Hizballah recruits from Venezuela’s ten-million-strong Lebanese diaspora. Iran and Hizballah cooperate in training of intelligence agents and in developing sources who reside in Venezuela and Colombia, as well as in the tri-border region of Brazil, Paraguay, and Argentina.