International issues of security and terrorism have traditionally represented Israel in the world headlines. However, voters in the upcoming parliamentary elections face questions other than just those of Palestinian settlements and the ongoing threat of Iran. They are looking at wildly volatile prices and an economy that has arguably become more inequitable under Netanyahu’s stewardship, as the income gap continues to widen. Despite weathering the worldwide financial recession well and being named the Start-Up Nation, Israeli voters will go to the polls with much more than just security on their minds.
Bibi’s Policy
Since his first stint as prime minister in 1999, Netanyahu has largely focused his economic platform on liberalization policies. From humble beginnings as a collection of farming communes, the Israeli economy has rapidly transformed into a high tech machine, an example of successful implementation of the neoclassical Washington Consensus in one of the most difficult regions of the world. This growth has come at a cost though, both in terms of ideals and the Israeli public’s money.
Since 2006, Israel’s property prices have bubbled higher than that of any other OECD country. Although the recent opening of the market to foreign investors has contributed to the spike in demand, many are wondering if these price levels are sustainable. In addition to the asset bubble, the Consumer Price Index in Israel quadrupled between 2007 and 2011, signaling massive inflation. While the Israeli central bank has worked hard to stem it in recent years, the cost of living has risen at a rate of up to 25 percent per year in some of the country’s largest cities. Wage growth is lagging, and the gentrification process has taken root in popular neighborhoods from Tel Aviv to Jerusalem. Moreover, socialist Zionist ideals of a strong central state are being challenged by a weakening social safety net and a health policy crisis, with debt and poor coverage riddling the nation’s once-strong social benefits system.
The majority of Israelis blame Netanyahu for all these grievances. While he has been quick to recognize the problems that have come with Israel’s growth, many Israelis are satisfied with his response. Over 400,000 Israelis protested in Tel Aviv alone in the summer of 2011, with thousands more joining in across the country. In a country of only about seven million, the relative number of people that took to the streets was nothing short of unprecedented, and illustrated the complications that come with rapid adoption of free markets. Netanyahu recognized the problem, but came up with few concrete solutions, leading opposition leaders to attack him in domestic economic policy relating to housing prices just this past week.
While security has and unfortunately will likely long define Israel on an international scale, domestic voters face a plethora of other questions as they head to the polls. Israel’s current economic situation will be key to determining whether the Netanyahu regime can remain in power.