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

Aug. 10 2021

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

American Middle East Policy Should Focus Less on Stability and More on Weakening Enemies

Feb. 10 2025

To Elliott Abrams, Donald Trump’s plan to remove the entire population of Gaza while the Strip is rebuilt is “unworkable,” at least “as a concrete proposal.” But it is welcome insofar as “its sheer iconoclasm might lead to a healthy rethinking of U.S. strategy and perhaps of Arab and Israeli policies as well.” The U.S., writes Abrams, must not only move beyond the failed approach to Gaza, but also must reject other assumptions that have failed time and again. One is the commitment to an illusory stability:

For two decades, what American policymakers have called “stability” has meant the preservation of the situation in which Gaza was entirely under Hamas control, Hizballah dominated Lebanon, and Iran’s nuclear program advanced. A better term for that situation would have been “erosion,” as U.S. influence steadily slipped away and Washington’s allies became less secure. Now, the United States has a chance to stop that process and aim instead for “reinforcement”: bolstering its interests and allies and actively weakening its adversaries. The result would be a region where threats diminish and U.S. alliances grow stronger.

Such an approach must be applied above all to the greatest threat in today’s Middle East, that of a nuclear Iran:

Trump clearly remains open to the possibility (however small) that an aging [Iranian supreme leader Ali] Khamenei, after witnessing the collapse of [his regional proxies], mulling the possibility of brutal economic sanctions, and being fully aware of the restiveness of his own population, would accept an agreement that stops the nuclear-weapons program and halts payments and arms shipments to Iran’s proxies. But Trump should be equally aware of the trap Khamenei might be setting for him: a phony new negotiation meant to ensnare Washington in talks for years, with Tehran’s negotiators leading Trump on with the mirage of a successful deal and a Nobel Peace Prize at the end of the road while the Iranian nuclear-weapons program grows in the shadows.

Read more at Foreign Affairs

More about: Iran, Middle East, U.S. Foreign policy