Israel is experiencing a new and unexpected mass upheaval: its lower and middle-classes are in revolt against a massive decline in its standard of living, due to neoliberal policies of market liberalization over the last decades. But this also stems from the huge indirect costs to the taxpayer who supports the occupation
By Eyal Clyne
About a month ago an Israeli, outraged at the cost of cottage-cheese, started a Facebook group calling for a consumer boycott. Within days, thirty-four thousand members had joined, and the group made it onto the evening news. Netanyahu quickly promised to ease the import of dairy-products to increase competition and decrease costs, but he failed to see that cottage-cheese was merely a symptom. Cottage cheese is perceived an elementary must-have Israeli product, and the boycott symbolised to many something much bigger than just cheese: the growing inability of the middle class to sustain itself financially. Indeed, while shop prices in Israel are usually similar to (or even higher than) those in the UK, the average Israeli salary is 60% lower. This small and successful consumer boycott was a sign of what was to come. About a week later, a group of young Tel-Aviv residents decided to start living in tents pitched on Rothschild Boulevard in Tel Aviv, in protest of the exaggerated and disproportionally high cost of housing and rent. Within days hundreds, then thousands, had joined, as dozens of tent camps quickly appeared in many Israeli towns across the country.
At the same time, other protests have been taking place: doctors and specialist registrars escalated their months-old strike (protesting their incredibly low pay); thousands of parents joined several pram-marches in protest of overall costs of raising childcren; privatised teachers declared their support; more consumer-boycott groups formed on Facebook; student unions joined in, and later the main settler organisations; the entire country flared up in protests. What had started as a protest about housing, quickly moved to the cost of living, the lost benefits of the good old welfare state, and the government’s general unwillingness to protect the public. Last Saturday saw over 300,ooo Israelis marching in towns all over the country, appropriating Tahrir Square’s famous slogan and shouting: “The People Want Social Justice!”
Economic and political background
There are several reasons for the current crisis of costs and of housing. The first is the radical liberalization of the market. Many outside Israel imagine it as relatively socially equitable, remembering the socialist ethos of Labour Zionism. The reality is that since the Likud took power in 1977 all Israeli governments have adopted neoliberalism to varying degrees. The most radical amongst them have been Kadima and Likud (which have governed Israel for almost 15 of the past 16 years). They along with Lieberman’s party, Yisrael Beiteinu, explicitly support and impose a very extreme version of capitalism. Among other things, they have simultaneously reduced taxation on the most wealthy and the benefits of the very poor, and have shrunk any regulation to protect the public. As a result, Israel’s GDP and the strength of the shekel have grown massively – as has the gap between rich and poor, which is now among the widest of OECD countries . The only OECD country with higher poverty rates is Mexico.
Most importantly, salaries have grown significantly slower than prices. People now work harder for much less. The younger generation of the Israeli-Jewish middle class, who usually live in the Greater Tel Aviv metropolitan and coastal area, are generally well educated. But despite having several jobs , they are sinking into debt, and see no real hope for improvement. They no longer enjoy the generous support and responsible supervision of the state as their parents had done, and they are left to survive under the brutal forces of “nature”, exploitation and greed, while financial tycoons may do with them as they please.
The sharp increase in the cost of housing is one of the most important results. In two decades (from 1990 to 2011) housing costs have risen six-fold as the result of government policies: selling the government construction-company, which had helped to regulate prices of land and housing; selling of land strictly to the highest bidders; waiving taxation on owners of several houses; and leaving “the market” to regulate itself, even in times of massive purchase of real estate as a safer investment. While in Montreal, Sydney, Amsterdam, Berlin, and Paris, regulation is at 100%, in New York about 50%, and in London about 25% through public housing; the comparable figure for Tel Aviv is about 2%. (1)
Nevertheless, Israeli governments have sometimes invested in development, where they have perceived a threat to Jewish demographic dominance and presence in the periphery. Given the ongoing internal immigration towards the coastal region, (mostly to cities and Greater Tel Aviv), Israeli geographers predict gloomily that the presence of Jews in most other parts of the country will reach an all-time low within decades, and bring about a de-facto two-nation geographical divide, with Jews voluntarily confining themselves to the coastal area.
The reason for this slow internal immigration is, in general terms, that Israel’s peripheral areas suffer from neglect, lack of resources, and poor infrastructure and transportation. As a result, for decades, Israelis have slowly moved towards the center, accelerating the price-rise there even more. Several Israeli governments have tried to challenge this trend, but unsuccessfully, as they have not been willing to invest enough in the unpopular northern and southern regions of the country.
Over the green line
There is another area which is a popular destination for internal migration, but more importantly – where governments have consistently invested much more, and succeeded to encourage migration to it. As Prof. Shlomo Svirsky puts it: “the free market ends when you cross the Green Line”. When it comes to efforts to populate the West Bank with Israeli-Jews, the government does invest – big time. Between 1994-2009 close to 50% of the construction in the settlements was government-initiated and funded, while in the entire country (including the settlements) it was less than 21%, and in the Tel Aviv District 3% (Between 2006-2009 – not a single government housing-unit was built in that district.)
Clearly, government investment in the settlements comes at the expense of poor Israelis. The settlement of Efrat, for example, where the average income is almost NIS 8,800 a month, was defined as a Priority Zone and was given precious benefits, while places like Ramle, with an average income of NIS 4,400, were not. The “settlers first” policy affects not only the lower class, but also the middle class. The government spends about 40 thousand shekels a year on the average Israeli, but 93 thousand a year on a settler. After all, it was not for no reason that Rabin’s successful election campaign in 1992 (after other popular protests) chose the slogan “Money for Education, Not Settlements.”
The middle class awakens
The current wave of protest is an authentic popular movement. It is not led by organisations and political parties, but by street parliaments (and attempts by main opposition parties to join the protests have failed). The protests vary from place to place, and are often arranged through Facebook groups. Tzvika Besor, a 34-year old middle class Israeli, started a group where he announced that he intends to strike on August 1. “I’ve had it!” he started his text, describing how he and his wife work hard, but still can’t afford to plan a second child. Within four days tens of thousands had joined his campaign, and between hundreds and thousands of them actually went on a one-day strike.
The unbearable financial distress of the growing lower Israeli classes is not new (especially among the ultra-orthodox, residents of the ‘periphery’, and Arab citizens). What is new is the fact that the middle class has also reached rock bottom. In fact, for more than a decade we have seen a growing apathy among secular middle-class Israelis, who chose to avoid politics (and in particular the existence of the occupation). Once, their protest vote was big enough to grant an unknown pensioners’ party 6% of the parliament’s seat; now many no longer bother to vote. As long as their condition allowed it, they focused on their immediate, individual wellbeing. Now, all of a sudden an eruption occurs.
On one hand, this seems just like Marx’s recipe for a revolution: when the middle class joins the lower classes’ struggle, he believed, a potential revolutionary moment is created. On the other hand, given the erosion of the status, influence and resources of the previously dominant class of secular and pluralist Israelis, protests are also an expression of their frustration, of their attempt to restore some of the lost old order, rather than fighting for a new one.
It is still too early to predict the results of this protest. On the one hand it is larger, more comprehensive, unified and long-lasting than any previous popular socio-economic protest in recent decades. The media is also very supportive of it, and the distress is real. However, the platform of all the big political parties (Kadima, Likud, Yisrael Beiteinu and Shas) is in direct contradiction to the protestors’ demands. Moreover, there are no signs of escalating the protest into causing any serious disobedience, so it is possible that it will fizzle out with a few small reforms, as protestors tire and have to return to work (similar to the way the anti-cuts movement in the UK eventually lost its momentum). Others suggest it will dissolve with the next wave of violence in the Israeli-Palestinian conflict.
Skeleton in the closet
The last word must be reserved for the unspoken skeleton in the Israeli closet: the cost of the occupation. For decades Israel used to profit from the occupation, but this is no longer the case. Since 2001, due to the combination of the sharp increase in the security cost of controlling the West Bank , and radical neoliberal policies, the balance had changed drastically. Massive privatisation has led most of the profits to go to private companies and individuals, while the Israeli public has been left to foot the bill. Now the cost is already estimated to be about $9b p.a., three times the size of US aid. In 2007, the Israeli government spent almost ten percent of its budget on settlements in the West Bank. Expenditures include the price of settlement security, construction of expensive infrastructure (such as tunnels, bridges and walls), and incentives and benefits for settlers – let alone lawsuits, divestments, Hasbarah and diplomacy).
This cost keeps growing, because settlers and their benefits keep growing. Considering that the Israeli budget grows at 2.3% p.a., and the settlement population at 8% p.a., (compared to a 2.2% p.a growth rate in the general population including settlements), it is clear that the settlements, which are already more than Israelis can afford, are an increasing threat to the Israeli economy. The growing gap in the figures above suggest a silent killer-disease at work beneath the surface of Israel’s fiscal economy. Are we now witnessing the middle class cracking under the financial burden of the growing problem its members strive so hard to ignore? If so, then the Israeli economy, which presents itself as stable and prosperous, is nothing but a bubble about to burst.
(Another reason, some say, is empty flats in Jerusalem and Tel Aviv, bought by European and North American Jews, whom use them for holidays, but keep them empty most of the year. As a result, demand grows, supply decreases, and costs rise. Moreover most Israelis cannot compete with the financial ability of Jews from abroad, who end up offering higher prices for the houses, and thus also affect the market’s prices. However, I have no figures on this phenomenon, but my guess is that it is true at least to specific luxurious neighborhoods).
Dror Etkes, “If only Rothschild were a settlement”, Ha’aretz (2011, Hebrew)
Prof. Amnon Frenkel, “It’s not the real-estate, stupid”, ynet (2011, Hebrew)
Tamar Godzansky, Socio-Academic College, ynet (2011, Hebrew)
Shir Hever, The political economy of Israel’s Occupation (2010) & an interview to Ha’aretz (2011, Hebrew).
Prof. Shlomo Svirski, (CEO of Adva Centre). The Cost of Arrogance (2008, Hebrew) & “Double Faced Country”, ynet (2011, Hebrew).
Tani Goldstein, “It’s not the prices, it’s the salaries”, ynet (2011, Hebrew)
Eyal Clyne is an Israeli researcher of society in Israel-Palestine. He focuses on the conflict and other Israeli political issues. This post originally appeared on Jnews, and is reposted here with the author’s permission.