The Rise of the Shekel

In the mid-1980s, the Israeli government, facing runaway inflation and a general economic crisis, implemented a series of fiscal reforms, which included the introduction of the New Israel Shekel. Not only has it proved far stabler than its predecessor, its recent increase in purchasing power has helped make Tel Aviv the world’s most expensive city. Matti Friedman writes:

It wasn’t too long ago that a dollar could easily buy four shekels—in fact, there was a time when a dollar could buy 1,630 shekels [old shekels, that is]—but as I write these lines the dollar is struggling, incredibly, to buy a measly three. The dollars in my bank account are worth a fifth less in shekels than they were last March, and the same trend affects my parents’ pensions and what I’ll get from Tablet for writing this column.

American currency has always played an important role in the emotional life of Israelis, who used to hoard dollars under floor tiles. Serious business was done in dollars, which were like that stable guy who’d always be there for you. Our own colorful shekel notes, by contrast, were like the high-strung friend you hung out with but wouldn’t trust with your car.

But important as the reforms of the 1980s were, governments do the most to help economic growth by staying out of the way:

Those watching Israel from the outside are condemned to mistake political news for the life of the country. Insiders understand that over the past two decades something deep has come together here in culture and economics, and that modern Israeli society is only tenuously connected to the government. That’s the answer to a perplexing question—namely, how on earth the economy managed to boom through the past two years of political deadlock and infighting, with no national budget.

“It’s a reflection of the fact that to some extent our economy isn’t dependent on the government,” [the Tel Aviv University economist] Paul Rivlin said. “The politicians can muck it up, and I wouldn’t put it past them, but even having four elections one after the other didn’t do it.” Just in the first half of this year the sum of foreign investments in Israel, mainly in tech, reached $37 billion—close to the sum for all of the previous year, and greater than the sum for the year before that.

Read more at Tablet

More about: Economic freedom, Israeli economy


An American Withdrawal from Iraq Would Hand Another Victory to Iran

Since October 7, the powerful network of Iran-backed militias in Iraq have carried out 120 attacks on U.S. forces stationed in the country. In the previous year, there were dozens of such attacks. The recent escalation has led some in the U.S. to press for the withdrawal of these forces, whose stated purpose in the country is to stamp out the remnants of Islamic State and to prevent the group’s resurgence. William Roberts explains why doing so would be a mistake:

American withdrawal from Iraq would cement Iran’s influence and jeopardize our substantial investment into the stabilization of Iraq and the wider region, threatening U.S. national security. Critics of the U.S. military presence argue that [it] risks a regional escalation in the ongoing conflict between Israel and Iran. However, in the long term, the U.S. military has provided critical assistance to Iraq’s security forces while preventing the escalation of other regional conflicts, such as clashes between Turkey and Kurdish groups in northern Iraq and Syria.

Ultimately, the only path forward to preserve a democratic, pluralistic, and sovereign Iraq is through engagement with the international community, especially the United States. Resisting Iran’s takeover will require the U.S. to draw international attention to the democratic backsliding in the country and to be present and engage continuously with Iraqi civil society in military and non-military matters. Surrendering Iraq to Iran’s agents would not only squander our substantial investment in Iraq’s stability; it would greatly increase Iran’s capability to threaten American interests in the Levant through its influence in Iraq, Syria, and Lebanon.

Read more at Providence

More about: Iran, Iraq, U.S. Foreign policy