Israel’s Current Government Aims to Imitate Benjamin Netanyahu’s Great Economic Transformation

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.

Read more at Times of Israel

More about: Benjamin Netanyahu, Israeli economy, Israeli politics, Second Intifada

Why the White House’s Plan to Prevent an Israel-Hizballah War Won’t Work

On Monday, Hizballah downed an Israeli drone, leading the IDF to retaliate with airstrikes that killed one of the terrorist group’s commanders in southern Lebanon, and two more of its members in the northeast. The latter strike marks an escalation by the IDF, which normally confines its activities to the southern part of the country. Hizballah responded by firing two barrages of rockets into northern Israel on Tuesday, while Hamas operatives in Lebanon fired another barrage yesterday.

According to the Iran-backed militia, 219 of its fighters have been killed since October; six Israeli civilians and ten soldiers have lost their lives in the north. The Biden administration has meanwhile been involved in ongoing negotiations to prevent these skirmishes from turning into an all-out war. The administration’s plan, however, requires carrots for Hizballah in exchange for unenforceable guarantees, as Richard Goldberg explains:

Israel and Hizballah last went to war in 2006. That summer, Hizballah crossed the border, killed three Israeli soldiers, and kidnapped two others. Israel responded with furious airstrikes, a naval blockade, and eventually a ground operation that met stiff resistance and mixed results. A UN-endorsed ceasefire went into effect after 34 days of war, accompanied by a Security Council Resolution that ordered the UN Interim Forces in Lebanon (UNIFIL) to assist the Lebanese Armed Forces (LAF) in disarming Hizballah in southern Lebanon—from the Israeli border up to the Litani River, some 30 kilometers away.

Despite billions of dollars in U.S. taxpayer support over the last seventeen years, the LAF made no requests to UNIFIL, which then never disarmed Hizballah. Instead, Iran accelerated delivering weapons to the terrorist group—building up its forces to a threat level that dwarfs the one Israel faced in 2006. The politics of Lebanon shifted over time as well, with Hizballah taking effective control of the Lebanese government and exerting its influence (and sometimes even control) over the LAF and its U.S.-funded systems.

Now the U.S. is offering Lebanon an economic bailout in exchange for a promise to keep Hizballah forces from coming within a mere ten kilometers of the border, essentially abrogating the Security Council resolution. Goldberg continues:

Who would be responsible for keeping the peace? The LAF and UNIFIL—the same pair that has spent seventeen years helping Hizballah become the threat it is today. That would guarantee that Hizballah’s commitments will never be verified or enforced.

It’s a win-win for [Hizballah’s chief Hassan] Nasrallah. Many of his fighters live and keep their missiles hidden within ten kilometers of Israel’s border. They will blend into the civilian population without any mechanism to force their departure. And even if the U.S. or France could verify a movement of weapons to the north, Nasrallah’s arsenal is more than capable of terrorizing Israeli cities from ten kilometers away. Meanwhile, a bailout of Lebanon will increase Hizballah’s popularity—demonstrating its tactics against Israel work.

Read more at The Dispatch

More about: Hizballah, Israeli Security, Joseph Biden