Under fire, Netanyahu may shift economic policy

AFP , Tuesday 9 Aug 2011

Protests force Israeli PM Benjamin Netanyahu to reassess his previously defended neoliberal economic policies while demonstrators remain skeptical

Israel's Prime Minister Benjamin Netanyahu attends a session of the Knesset, the Israeli parliament, in Jerusalem August 3, (Reuters).

Facing a growing protest movement angry about the high cost of living in the Jewish state, Israeli Prime Minister Benjamin Netanyahu has suggested he may be willing to shift his economic policy.

The premier has long espoused a neo-liberal economic outlook, prioritising privatisation and tax cuts for the wealthy, and pointing to Israel's successful weathering of the global economic crisis as proof of his policy approach.

But the effective uprising that has swept Israel since activists set up a tent city in Tel Aviv in mid-July to protest at housing prices has shaken Netanyahu's government and forced him to concede that a change in priorities may be required.

On Sunday, he announced the creation of a new committee charged with examining protesters' demands, headed by widely respected professor Manuel Trajtenberg.

Formerly the head of Israel's National Council on Economics and Society, Trajtenberg reportedly left the post when Netanyahu come to power because he disagreed with the new premier on issues including taxation and social spending.

He made clear that he was taking on the role as panel chair with some level of trepidation, and has reportedly impressed upon Netanyahu the need for a fundamental shift in both his own economic ideology and Israel's priorities.

The daily Haaretz reported on Tuesday that Netanyahu had pledged to change his "fundamental positions."

Trajtenberg reportedly warned the premier he "would have to change a considerable part of his ideology, and Netanyahu agreed," the newspaper said, citing an unnamed senior cabinet source.

"I understand my views need to change," the paper quoted Netanyahu as saying.

But both Trajtenberg and Netanyahu reportedly agree that whatever reforms the 14-member panel proposes will not involve spending outside the existing budget, raising the question of just how they will be funded.

And among the protesters, more than 250,000 of whom flooded Israel's streets in demonstrations on Saturday night, there is scepticism that a panel of experts is the way to address their demands.

"Words are not going to be enough," said Eyal Basson, a spokesman for what is becoming known as the "Rothschild Forum" for the trendy boulevard where many of the protesters have set up camp.

"Netanyahu can make more and more promises, but we want to know how they will become reality and we want assurances that there will be financing for the reforms, to see laws to protect them," Basson told AFP.

Hadas Kushlevitch, another representative of the protest movement, said she was "sceptical" about Netanyahu's sincerity, telling AFP that "the huge number of experts involved in the Trajtenberg team casts doubt on its ability to achieve concrete measures."

Netanyahu and his supporters have already made it clear that the government "cannot meet all the demands" being raised by demonstrators.

And he has said that major spending on the sort of broad measures favoured by protesters would risk pushing Israel into an economic crisis.

On Tuesday, national infrastructure minister Uzi Landau also made reference to tumbling global stock markets in a bid to temper the demands and expectations of activists, warning that "the global economic tsunami risks sweeping over Israel."

The caution does not seem to have struck a chord so far with the demonstrators, who have drawn up a list of demands that are both broad and costly.

According to reports in the Israeli media, they are seeking a reduction of "social inequalities" and greater "social cohesion," "altering the main principles of the economic system" and lower living costs, full employment and price controls on staple goods.

They are also calling on the government to give priority to those on the outskirts of cities "both geographically and socially," to help society's most vulnerable and to find a comprehensive solution to the housing crisis.

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