G is for Governance

Blog 17 C) Policies and Practices

In the second week of March, Prime Minister Netanyahu went to Italy to commune with his fellow rightest and leader of Italy; Bibi needed  a morale boost. He also met with the Union of Italy’s Jewish Communities, the umbrella organization that represents all major Orthodox communities in Italy. Noemi Di Segni, the president, gave an unprecedented speech criticizing the Netanyahu government’s attempted judicial overhaul.  She also condemned the “political and ministerial legitimation” of mob violence against Palestinians (a subtle reference to the events in Hawara). As someone born in Jerusalem who served in the IDF, her strong critique was even more biting.

Di Segni focused her criticism, not on the substance of the changes, but on the government’s unilateral approach and absence of a wide process of consultation. This was in spite of mass protests and the “divisions that are growing within Israel.” While “the elected majority can legitimately promote, support and approve its own political design,” being politically responsible “means understanding how important and central these institutions are in the long term for a complex country like Israel. It means looking beyond the majority.”[i]

In other words, the problem addressed was simply about the political mishandling of the proposed judicial reforms. Instead of stealth and a focused attack on the Supreme Court, the government launched a broad assault on the whole rule of law system. It was as if the Netanyahu government had adopted the terrible strategies employed by Putin’s Russia when it attacked Ukraine, but, in this case, the bad management targeted the domestic situation rather than foreign policy.

If this had been the only area of ineptitude of the Israeli government, the problem would be serious. But the 2023 coalition, as manager of the body politic, has demonstrated a wide swath of mismanaged issues involving virtually every area of government responsibility.

Netanyahu’s 2023 coalition has proven to be catastrophic in only its first four months. Take the economic sector. The Likud party ran on a platform of fiscal rectitude and responsibility and promised as its first priority to tackle the issue of inflation (“the first thing we are dealing with is the cost of living”) and the housing shortage. What has actually happened? While the rate of inflation has dropped significantly in both Canada and the United States, the inflation rate in the first third of 2023 in Israel has declined, but only by a mere 0.1% to 4.38% from the previous year’s 4.39%. And it is anticipated that the annual rate in 2023 will exceed the 2022 rate.

The government may claim that it has not had time to realize the outcomes of its policies. But look at how the government has managed one specific area of the economy – the control of the price of dairy products. The Likud had promised not only to stop the continuing rise in prices, but to set the price of dairy products on a downward trajectory. What actually happened? One might have expected a right-wing government to kill the supply management system, akin in many ways to Canada’s, and allow the free market to determine the price. That might lower the price of dairy products, as the system in the US has, but at a cost of security and stability in the dairy agricultural sector. Instead, Israel has continued to intervene in dairy pricing even more than in Canada by assuming the responsibility of setting those prices.

What is worse, the government introduced a dairy pricing policy guaranteed to raise the consumer price index in spite of its promise to lower the cost of living, “Israel’s Finance Ministry agreed to a 9.28 percent increase in the price of milk,”[ii] and, hence, increased prices for all dairy products. If that were not bad enough, prices will increase by a further 3.1% spread evenly over the next three years. Clearly, this sphere has not been about ideology. For the government believes in reducing its intervention in the economy and increasing competitiveness. Yet Finance Minister Bezalel Smotrich insisted that this was a win for consumers: “we stopped the increase in price which was supposed to be double.” In other words, the government may not have decreased the cost of living significantly at all, but claimed that it had prevented an even greater increase. This is unequivocally doublespeak.

What about the cost and supply of housing? The government has said that it expects housing starts to be even greater in 2023 than in 2022. But that was because there had been a record volume of state land released for housing in 2021 and 2022. “For the first time in a number of years, the last government  dramatically increased the sale of land for development and worked to increase the number of homes for sale.”[iii] Unfortunately, the unavailability of housing and apartment lots is not the only problem. As in many other political jurisdictions, buyers are faced with:

  • The lack of infrastructure in municipalities which lack the resources (or the will) to improve and expand roads, sewers, and fresh water supplies;
  • Rising interest rates that freeze the movement in the existing supply since most Israelis have variable rate mortgages and their interest rates have increased quarterly;
  • New buyers face even greater obstacles in obtaining financing
  • not only increased interest rates, but more arduous income-to-repayment requirements
  • price increases in 2022 which averaged 20.3% year-on-year while salaries only rose 4%
  • as a result, larger equity and downpayments were required;
  • The bureaucratic obstacle to issuing new building permits;
  • A rising cost of building materials along with a shortage of skilled trades; (Currently the building sector relies on 80,000 Palestinians entering Israel from the West Bank and Gaza as well as 15,000 foreign workers.

As a result, while the rising bubble in housing prices has mostly burst not only in Canada and the US, but around the world, in Israel prices have continued to rise. Even more than all these problems that both prospective buyers and renters face, Israel is led by a government that has done virtually nothing to address any of these problems. The government is preoccupied with the issue of judicial “reform”.

The impotence of the government is expressed in many other sectors as well. The prospects of expanding the reach of the Abraham Accords (say to Saudi Arabia) have decreased while Sudan, an early signatory, collapsed into civil war. The relations with Egypt and Jordan have rapidly deteriorated. Like its predecessors, the current Israeli government has not developed a coherent policy in dealing with Iran. At the same time, Netanyahu’s relations with both President Biden and American Jews have also been shattered; Bibi has fallen back on partnering only with Republicans.

The coalition had been preoccupied with protecting the Prime Minister. In March, it passed legislation requiring a three-quarter majority either in the cabinet or the Knesset to remove a prime minister.  What happened to the parliamentary principle that a government had to have a simple majority of parliamentary support to remain in office – and in many democracies even that has shown to be insufficient? What happened to the principle that a government had to win a vote of confidence in the parliament by 50%, not a 75% vote to remove a Prime Minister.

Then, in the attempt to fulfill the coalition agreement with Shas, there was the futile attempt to appoint Aryeh Deri, its leader, to head both the health and interior ministries. Ten of eleven judges on the Supreme Court had ruled that Deri was ineligible, not only because he had been convicted of tax fraud, but because, as part of his plea deal, his prison sentence had been suspended in return for his commitment not to assume any government responsibilities. Shas agreed to appoint Moshe Arbel in Deri’s place, but insisted that this was only a temporary move.

There are many more problems in the failure to provide competent management of the polis. The most dramatic and theatrical has first been the failure to deliver on the announced appointment May Golan to the Office of the Consul General in New York (the Lishka) which serves as the liaison between the State of Israel and promoting a positive image of Israel. The American government and the American Jewish community responded loudly and negatively to Golan becoming Consul General. In any case, she did not really want that job. Instead, a new ministerial portfolio was created for her – minister for the advancement of women.

However, no sooner had her appointment been approved by the Knesset than she had to be removed from the Knesset floor by four security guards. The speaker ordered such an unprecedented removal because Golan, a died-in-the-wool extreme right-wing rabble rouser, had yelled at and cursed Merav Ben Ari from Yair Lapid’s Yesh Atid party. Ben Ari had criticized Golan for not serving in the military; Golan had claimed (falsely) that she was religious and entitled to an exemption. Ben Ari had worked for years with young Israelis from disadvantaged backgrounds engaged in meaningful military service, so Golan’s excuse that she lied because she had to support a single mother did not cut it.

But this brouhaha in the Knesset was just a culmination demonstrating that the Prime Minister seemed incapable of appointing an effective executive to run the country. In a parliamentary democracy, incompetence, not ideology, is the greatest curse.

[i] The Jerusalem Post, March 23, 2023.[ii] Haaretz, “Netanyahu Promised to Bring Down Cost of Living, but Israel Is Becoming More Expensive,” May 1, 2023.

[iii] Shai Posner, deputy director general, Israel Builders Association (ACB), Danielle Nagler, The Times of Israel, January 6, 2023.


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