DAY 268 OF THE WAR: Rafah Assault Nears End, Labor and Meretz Merge, Ultra Orthodox Protest Violently, Hi-Tech Rebounds

Tel Aviv Diary, June 30, 2024

There was heavy combat in Gaza yesterday and today, with especially fierce clashes in Shuja’iyya, where tunnels and large stockpiles of armaments were found. Hamas has mounted a strong resistance in this area, cleared previously earlier in the war. In Rafah, the fighting is nearing its last stages. There are reports tonight that Prime Minister Netanyahu is going to announce in the coming days that the operation in Rafah has been concluded and that the stage of heavy fighting is over

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In the North, the IDF struck a building housing three Hezbollah members and killed them.  There were three attacks from Lebanon on Northern Israel, one of which involved a suicide drone that injured 18 soldiers, one very seriously in the Northern Golan Heights.

Today, the IDF deployed a drone to strike a house in Tulkarem, which was occupied by the commander of the Islamic Jihad in the town, as well as four other terrorists. Preliminary reports indicate that the strike successfully eliminated the commander, while the other four terrorists were only wounded.

Tikvah Chadash (New Hope—The National Right) MK Zeev Elkin tweeted this today:

Today, while sitting with the heads of municipalities on the confrontation line in the North (as part of a joint tour of the Foreign Affairs and Defense Committee and the State Audit Committee), it became apparent during the discussion that a recent government decision on aid to the North allocated a budget of less than one billion shekels over four years for the protection of residents' homes. In the previous government decision from 2018, the budget was 500 million shekels per year, meaning it was supposed to be 2 billion shekels over four years.

During the war, the government allocated less than half of what was supposed to be allocated and presented this cut as an achievement! Meanwhile, it was announced that the government is now discussing renaming the “Ministry of Agriculture” to “the Ministry of Agriculture and Food Security.” They have money for that. This government is absurd! And congratulations to the new Minister of Defense (for Food), MK Avi Dichter, who joins the esteemed club of Defense Minister Gallant and National Security Minister Ben Gvir.

Elkin highlights one of the things that drives me crazy! Almost none of the towns in the North have apartments equipped with safe rooms, and the majority have not been evacuated. In the event of a full-scale war, we can expect thousands of projectiles targeting those towns. The fact that after nearly nine months of the war, no emergency action has been taken to build safe rooms for these towns and villages is utterly incomprehensible.

LABOR AND MERETZ FINALLY OFFICIALLY MERGE

The Labor Party and the Meretz Party have officially agreed to merge, forming a new party called “The Democrats.” The new party's MKs will be selected through open primaries. However, according to the agreement, the system will be set up to ensure that one former Meretz member is included among the first four candidates in the list and another Meretz member in the subsequent four. Yair Golan will lead the new, unified party.

ATTORNEY GENERAL VS. THE COALITION

The Attorney General is opposing several bills being proposed by the government and its representatives. The AG's office stated that the legislation mandating universities to dismiss faculty members deemed to have “incited terror” disproportionally infringes on free speech and is therefore unconstitutional. Additionally, a bill introduced by MK Rothman, head of the Judiciary Committee, which aims to eliminate administrative detention for Jewish suspects while maintaining administrative detention for Arab suspects, has met with strong opposition from both the General Security Services, as well as by the Attorney General

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FOOD IN GAZA

A tweet by Jake Wallis Simons: Editor, Jewish Chronicle

This morning, I spoke to a friend in Gaza whom I had made during my time as a foreign correspondent. He telephoned me from his stifling tent in Deir al Balah, which had been donated by the Saudis.

Food is available, everything is available,” he told me. “Meat, chicken, vegetables. It is not aid. It is coming from Israel, brought in by private people through the Keren Shalom crossing and sold to us as a business. The prices are much better, just a little bit higher than before the war.

This was a relief, he added, as for seven months, Hamas had been stealing humanitarian aid and selling it to the population at exorbitant rates. Now, goods are being bought and sold as normal. Everybody he knows hates the jihadists with a passion, he remarked, scoffing at polls showing widespread support for the group in Gaza…

Sometimes it seems that western progressives have more sympathy for Hamas and a greater alignment with its goals than those who have actually experienced jihadism in Gaza.

From my Telegraph column today. Read here: No Israel Is Not Starving the People of Gaza.

TURKISH OPPOSITION

The Leader of the Turkish opposition party Ozgur Ozel, called Hamas a terrorist organization.  Ozel said: “Hamas rains bombs on innocent people in the middle of the night, with balloon drones, I don’t know what”.  He went on to say “ You must see that this issue started there with Hamas.  What Hamas did was an act of terror.  Hamas fired bombs at sleeping Jews in the middle of the night.”

Unrelated, this afternoon, an El Al flight from Warsaw to Tel Aviv was forced to land in Anatolia, Turkey, due to a sick passenger.  After it landed the Turkish ground crews refused to refuel the plane. The plane left without refueling and flew to Rhodes to take on additional fuel.

ULTRA ORTHODOX DEMONSTRATE VIOLENTLY

Tonight in Jerusalem, thousands of Ultra-Orthodox Yeshiva students demonstrated, with some resorting to violence against the planned draft of their peers. They burned cars, including that of former Ultra-Orthodox MK Yaacov Litzman, who had to be rescued.

A SOBERING READ

My Year at Harvard, by Rabbi David Wolpe (recommended one of my favorite readers)

ECONOMY

Government Expenditure for Evacuees in the North

The Finance Ministry has reported that expenditures for hotel stays amounted to 4.4 billion shekels and that an additional 2.4 billion shekels were granted to other evacuees within the community. The number of evacuees in hotels peaked at 80,000 people and decreased to 24,200 people in June 2024, with 18,500 of them being residents of the North

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Israeli Hi-Tech Rebounds

By the end of Q2/2024, Israeli high-tech seemed to have adjusted to the extreme conditions and thrived. This quarter marked the first since the beginning of 2022 where there was no decrease in investment, compared to the corresponding quarter of the previous year. As IVC Data & Insights and LeumiTech prepare the Israeli Tech Review Q2/2024, they were excited to share these key findings: Israeli tech companies raised $1.94 billion, a 19% increase compared to the previous quarter (excluding Wiz’s $965 million round).

The number of first-time and new foreign investors in Israeli tech increased in the second quarter. Six large deals, each over 100 million dollars, captured 62% of Q2/2024's total, with most mega deals occurring in cyber companies like Wiz, Semperis, Island, and Cyera. The number of deals in Q2/2024 was similar to the first quarter of 2024. The IVC and Lumitech Israeli Tech Review Q2/2024 is due to be published by mid-July

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Illumex

The startup company Illumex raised $13 million in a seed round. The round was led by Cardumen Capital, Amdocs Ventures, and Samsung Ventures, with participation from ICI, Jibe, Iron Nation, Ginosar Ventures, ICON, Today Ventures, and private investors. Illumex's platform automatically maps and reflects all structured organizational data, adding semantic meaning to it. The platform analyzes metadata without any contact with sensitive data and constructs a semantic knowledge graph that serves as a single source of truth, unifying all data according to consistent business terminology and context. Illumex claims reduces the time it takes to find the data you need, recommends how data should be used, enables live collaboration and brings trust to every analytics iteration. Illumex asserts that their platform solve the problem of traditional tedious data analysis, which is slow, inefficient, and a barrier to innovation.

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A PIECE OF HISTORY
Economic Stabilization Plan

In the mid-1980s, Israel was gripped a severe economic crisis marked by hyperinflation exceeding 400% annually, substantial fiscal deficits, high unemployment, and dwindling foreign exchange reserves. The dire situation necessitated drastic measures, leading to the implementation of the Economic Stabilization Plan (ESP) in 1986. The plan emerged from a wide-reaching political consensus and involved prominent leaders, including Prime Minister Shimon Peres, Finance Minister Yitzhak Modai, and economic advisors like Michael Bruno.

The Economic Stabilization Plan (ESP) encompassed a comprehensive range of fiscal, monetary, and structural reforms. Fiscal measures included significant cuts in government spending, particularly in subsidies and defense expenditures, alongside tax reforms to broaden the tax base. Monetary policy was tightened, with the Bank of Israel raising interest rates to control the money supply. The plan also introduced wage and price controls, negotiating wage freezes with labor unions and imposing temporary price controls on key goods and services. Structural reforms initiated under the plan included the privatization of state-owned enterprises and deregulation efforts to stimulate private sector growth.

Implementation of the ESP required extensive negotiations and consensus-building among various stakeholders, including the government, labor unions (notably the Histadrut), employers, and international bodies like the IMF (International Monetary Fund). The labor unions’ willingness to accept wage freezes was crucial for the plan's success. The reforms had an immediate impact on reducing inflation, which dropped to around 20% by the end of 1986. Although the plan successfully stabilized the economy, it also resulted in short-term hardships for many Israelis, particularly those reliant on government support.

Over the long term, the ESP laid the foundation for sustained economic growth in the following decades. Israel transformed from a crisis-ridden economy to one of the more dynamic and innovative economies globally. The structural changes contributed to a more robust and competitive private sector while facilitating Israel's integration into the global economy. The ESP is often cited as a testament to effective crisis management and the importance of political leadership and cooperation in navigating economic challenges, setting a precedent for future economic policies and reforms in Israel.

Today’s Zoom Briefing