Israel's summer of discontent -- the political and economic stakes

Leo Rennert
Protest demonstrations have been mushrooming in Israel this summer.  Over the weekend, some150,000 people took to the streets in Tel Aviv, Jerusalem and other major cities with a wide variety of demands -- a halt to spiraling consumer prices for food, housing and other basic needs, a change in government priorities to spend more on social programs, all wrapped under the slogan of "social justice."

The protests began a couple of weeks ago when young people in Tel Aviv set up tents in the median of one of the most fashionable boulevards.  The initial focus was on lack of affordable housing, but the agendas of some of the protesters have expanded considerably since then.

Prime Minister Netanyahu moved quickly to express full sympathy with the protesters and to advance a host of government initiatives to tackle economic problems.  Netanyahu made it clear that the financial problems highlighted by the demonstrations are real and deserve a corresponding response from the government.

But Netanyahu is also a fervent advocate of free-market economics -- he proved his mettle in a previous incarnation as finance minister --  and this is where the encounter between protesters and the government becomes interesting and worth a closer look.

Throughout his career, Bibi has worked to wean Israel away from its statist beginnings.  He opened the economy to domestic and foreign entrepreneurs.  In the present crisis, he has been firm that his solutions will not spell a return to government control of the economy.  Yuval Steinitz, his finance minister, has been even more emphatic in defending millionaire investors as critically needed players to move the economy forward.  And both Bbi and Steinitz can point to major Israeli achievements under free-market incentives -- a humming and fast expanding economy with an unemployment rate below 6 percent.    

Still, the high cost of living is hurting Israelis and the rich-poor gap is widening.  The Bibi-Steinitz response has been free-marked solutions, including tax incentives and a breakup of state monopolies.   

Even before this crisis, Netanyahu already was moving to break up the state's monopoly of vast land holdings so as to graetly expand the availability of land at cheaper prices for housing development.  Over the weekend, Netanyahu mobilized his cabinet to engage the protesters and to  come up with short- and medium-terrm solutions to ease the pocketbook woes of Israel's middle class.  Israel's democracy is working as it should.

But this doesn't satisfy the Israeli Left, which thinks it sees an opening to topple Netanyahu and return to power  And this is where the economic protest movement has taken on a political coloration.  Israel's left-wing media commentariat has launched strident appeals for Bibi to step down. Yet, the protest movement shows insufficient discipline to heed such calls.

In fact, the movement is really an inchoate admixture of different strains, with different agendas, and even different political ideologies.  Some protesters are students on summer vacation enjoying their idealistic quest for "social justice."  Some have made it clear that they're not interested in changing the government, only its priorities.   Some come with heavier political and ideological baggage that the Left seeks to exploit.   And some want direct confrontations with Netanyahu and a return to Socialist nostrums.  

At this point the movement still is an anarchic amalgam in search of a common voice and unified agenda.  Which makes it easier for Netanyahu to prevail.  Opposition demands for the Knesset to cancel its summer vacation -- so as to keep the political heat on Bibi -- have failed.  The Knesset will be absent in the next several weeks, leaving Bibi entirely in charge, which suits the prime minister just fine.

Thus, for the immediate future,  Bibi faces no serious political challenge.  All members of his coalition remain rock-solid behind him.

But the new protest phenomenon, which elevates domestic issues at the expanse of security and foreign-policy concerns, is still very much a work in progress.

The stakes are high.  Can Israel afford to cut its defense budget to finance pro-consumer initiatives?   Will the protests remain peaceful?   And, most importantly, will the demonstrators coalesce into an important, coherent political force, or will the protests just peter out?

Stay tuned. 

Protest demonstrations have been mushrooming in Israel this summer.  Over the weekend, some150,000 people took to the streets in Tel Aviv, Jerusalem and other major cities with a wide variety of demands -- a halt to spiraling consumer prices for food, housing and other basic needs, a change in government priorities to spend more on social programs, all wrapped under the slogan of "social justice."

The protests began a couple of weeks ago when young people in Tel Aviv set up tents in the median of one of the most fashionable boulevards.  The initial focus was on lack of affordable housing, but the agendas of some of the protesters have expanded considerably since then.

Prime Minister Netanyahu moved quickly to express full sympathy with the protesters and to advance a host of government initiatives to tackle economic problems.  Netanyahu made it clear that the financial problems highlighted by the demonstrations are real and deserve a corresponding response from the government.

But Netanyahu is also a fervent advocate of free-market economics -- he proved his mettle in a previous incarnation as finance minister --  and this is where the encounter between protesters and the government becomes interesting and worth a closer look.

Throughout his career, Bibi has worked to wean Israel away from its statist beginnings.  He opened the economy to domestic and foreign entrepreneurs.  In the present crisis, he has been firm that his solutions will not spell a return to government control of the economy.  Yuval Steinitz, his finance minister, has been even more emphatic in defending millionaire investors as critically needed players to move the economy forward.  And both Bbi and Steinitz can point to major Israeli achievements under free-market incentives -- a humming and fast expanding economy with an unemployment rate below 6 percent.    

Still, the high cost of living is hurting Israelis and the rich-poor gap is widening.  The Bibi-Steinitz response has been free-marked solutions, including tax incentives and a breakup of state monopolies.   

Even before this crisis, Netanyahu already was moving to break up the state's monopoly of vast land holdings so as to graetly expand the availability of land at cheaper prices for housing development.  Over the weekend, Netanyahu mobilized his cabinet to engage the protesters and to  come up with short- and medium-terrm solutions to ease the pocketbook woes of Israel's middle class.  Israel's democracy is working as it should.

But this doesn't satisfy the Israeli Left, which thinks it sees an opening to topple Netanyahu and return to power  And this is where the economic protest movement has taken on a political coloration.  Israel's left-wing media commentariat has launched strident appeals for Bibi to step down. Yet, the protest movement shows insufficient discipline to heed such calls.

In fact, the movement is really an inchoate admixture of different strains, with different agendas, and even different political ideologies.  Some protesters are students on summer vacation enjoying their idealistic quest for "social justice."  Some have made it clear that they're not interested in changing the government, only its priorities.   Some come with heavier political and ideological baggage that the Left seeks to exploit.   And some want direct confrontations with Netanyahu and a return to Socialist nostrums.  

At this point the movement still is an anarchic amalgam in search of a common voice and unified agenda.  Which makes it easier for Netanyahu to prevail.  Opposition demands for the Knesset to cancel its summer vacation -- so as to keep the political heat on Bibi -- have failed.  The Knesset will be absent in the next several weeks, leaving Bibi entirely in charge, which suits the prime minister just fine.

Thus, for the immediate future,  Bibi faces no serious political challenge.  All members of his coalition remain rock-solid behind him.

But the new protest phenomenon, which elevates domestic issues at the expanse of security and foreign-policy concerns, is still very much a work in progress.

The stakes are high.  Can Israel afford to cut its defense budget to finance pro-consumer initiatives?   Will the protests remain peaceful?   And, most importantly, will the demonstrators coalesce into an important, coherent political force, or will the protests just peter out?

Stay tuned.