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Netanyahu: The Next Year and a Half, a Socio-Economic Look

10 June 2012

By Yisrael Ne'eman.

Last month Shaul Mofaz brought his Kadima party into a national unity government coalition with PM Benyamin Netanyahu's Likud. Speculation was rife as to why the two made the agreement. Everyone was preparing for the last vote in the Knesset to legislate early elections for September 4. Mofaz and Kadima were far behind in the public opinion polls and Netanyahu appeared to have the up coming elections wrapped up with some 31 seats. He would form another right wing/religious government while the Kadima centrists and the left would continue sinking further into the opposition quick sand.

But something did not add up. Let's call it multiple contradictions. Did Netanyahu want to remain in a right/religious coalition where the settlement movement in Judea and Samaria (West Bank) calls the shots on foreign policy as far as Palestinian issues are concerned? Did the PM and his party want to be beholden to the Sephardi ultra-orthodox party Shas (11 seats) and their Ashkenazi counterparts in United Torah Judaism – UTJ (6 seats) where rabbinical determinations trump policy decisions by elected officials especially when confronting the Supreme Court decision demanding equality between all sectors in light of the military draft? The "social justice" movement was brewing for another summer of protests not only by the middle class but by the lower classes who see themselves as constant losers especially in the wake of the illegal immigrant surge from Africa. And of course there is the Iranian problem. Should one take action and if so, when? Netanyahu preferred Kadima and Mofaz who having recently replaced the more liberal Tzipi Livne, decided that fateful decisions were not made in the opposition. Is this a marriage of convenience or a confluence of interests? There is a bit of both.

First a word about Mofaz. He is the son of Iranian immigrants who worked his way up to becoming army chief of staff at the end of the 1990s when he defeated Matan Vilnai who was considered a shoe in for the position. He later became defense minister under PM Ariel Sharon until the 2006 elections. Mofaz followed Sharon and former PM Ehud Olmert into Kadima (even though he first announced he would remain in the Likud), made his way to #2 and now leads the faltering party. Kadima retains the same neo-liberal economic ideals as Netanyahu and the Likud but is centrist-left on foreign policy. Under Livne Kadima wallowed in the opposition. Before the next elections Mofaz wants to prove his party will make a difference in overall policy implementation.

The picture at the moment is getting quite a bit dimmer:

The middle class "social justice" movement demos of last summer will return with the housing issue in the forefront. The government promise of free schooling from the age of three is expected to be implemented this September and there is the continual discussion of a tax reform of sorts. Such expectations may prove major disappointments. But a much larger question is in the offering – Will the explosive lower classes take to the streets demanding decent low income (and government subsidized) housing, schools where children actually get an education, a drastic lowering of food prices (which are 20% higher than the average OECD nation), jobs and physical security on their streets? As is known the revolt against the illegal African immigrants, especially from Sudan and Eritrea is here with the accompanying violence. The Knesset right wing, including certain Likud members, is fanning the flames for political reasons but it may blow up in everyone's face since no real solutions are being offered. Putting illegal immigrants into detention is one thing, solving all the other issues is far more difficult. We may be in for a very volatile summer with Israel's under classes in the starring role pushing aside the polite, fairly well connected genteel middle class professionals whose idea of a demonstration includes a trek with baby carriages and some good music.

Let's recall that most of Israel's working class population votes for the Likud and right wing parties. Despite their situation they are loathe to take on the government. If pushed to the wall they may, but first they will take out their anger on the African migrants, tens of thousands of whom are in Israel illegally but obviously must enjoy basic human rights and police protection against bodily harm. We may have a situation of displaced aggression being meted out against this unfortunate group when the real anger is against the government. One would think that their disappearance will greatly improve the socio-economic status of Israel's lower classes. If well organized, lower class anger will pour into the streets and make a difference and if not we may be in for the soccer fan variety of hooliganism, but on a fairly large scale.

The government is constantly stressing its great economic success. The expectation is for a "trickle down" capitalist economy. Unfortunately for Netanyahu the economy is extremely centralized around twenty families or so. Israel's GDP grows by more than 4% yearly since the mid-2000s but the average person feels he is being left out. The overall cry for an economic decentralization and more taxes on the rich will be heard. Officials from the World Bank and the governor of the Bank of Israel Stanley Fischer (similar to the US federal reserve chairman) have voiced similar criticisms.

So this brings us to the 2013 election year state budget. There is an immediate need for a 7-10 billion shekel cut but this apparently will not be enough. Overall, there is a cumulative 32 billion shekel deficit over the past year or so, much the result of the slowing world economic picture and export decline. There are options of raising taxes on wealthy individuals and corporations while slashing the defense budget. Or one can cut social services to the lower classes. And any combination of the above comes to mind. The tax burden as usual will fall on the middle class bringing about the exact opposite result of the Trachtenberg Report recommendations for partial budget restructuring following last summer's protests. Expectations were raised while the economic picture worsened.

While economic disparities in Israeli society annoy many, the state legislated inequality in favor of the ultra-orthodox (haredi) communities is infuriating. As is well known most haredi youth continue studying in yeshivas (or pretend to) while Israeli high school graduates go to the army. The haredi population is growing much faster than any other in the Jewish sector, yet they are barely present when asked to serve the country. The Supreme Court ruled recently that the haredim must be treated equally and not be given special privileges. The last government initiative on this matter known as the Tal Law was recently struck down by the Court and is due to expire on July 31. The government is scrambling to find an alternative without violating the Court decision and it is quite probable the Shas and UTJ ultra-orthodox parties will leave the coalition taking 17 seats with them. Augmented by 28 Kadima seats there will be no government crisis. However how will the army draft yeshiva students who refuse military service while enjoying the full support of their rabbis to defy the Court and the State? Will they do the acceptable national service instead or will there be a form of deferment and/or job arrangement which in itself may entail legal difficulties? Here is one more social-political crisis for the summer.

Netanyahu and Mofaz have their work cut out for them on the socio-economic front but this is only half the story. The government must deal with the settler movement and the Givat Ulpana neighborhood in Beit El which pits the hard line right wing and religious against Netanyahu, the center and the left in a battle not only over the future of a neighborhood but in an ideological confrontation over the fate of the State of Israel, the West Bank (Judea and Samaria) and Israel's relationship with the Palestinians. Add to this the greater picture of the continuing political Islamization of the Arab World and the Iranian nuclear threat and the picture begins to sharpen. Netanyahu prefers decision making with Kadima at his side and does not want to rely on the ultra-orthodox and/or pro-settlement Jewish Home party (3 seats) for support as he seeks out a more centrist position. Mofaz and Kadima must prove they are players in the game and that only they can move the government towards a more secular and middle position, if they fail they the 2013 elections may be their undoing.

More about these broader Middle Eastern topics in the next article.