Israel Week Ending March 19th

Covid finally under control? Four days until elections. Record month for investments in Israel

COVID–19

I hope this is the last time I open the newsletter with an update on Covid–19. But, this time the news is good. The Coronavirus numbers keep dropping, with the number of daily new infections dropping to 1,225 on Thursday — and the percent of positive cases now just 1.9%. At this point, the economy has fully reopened for those who are vaccinated; while the unvaccinated still have some limitations. The hotels are fully booked for Passover, despite their exorbitant prices, as Israelis are desperate for a scene change. 

While few Coronavirus restrictions are still in place, (even wedding halls and concerts are now permitted to open up at 75% capacity), the biggest fear remains the entrance of a mutation from abroad. The government had limited entry from Ben Gurion to 2,000 people per day. On Wednesday, the Israeli Supreme Court ruled that the limitation violated Israelis' fundamental rights, and ordered the skies open to all Israeli citizens. 

The challenge is that, as a group, Israelis do not follow the rules. Over 60% of those who return do not maintain the required quarantine. Last night, the Knesset passed a law requiring those returning who are not vaccinated to wear a location bracelet (similar to felons on parole, or those out on bond awaiting trial who are under house arrest), in lieu of quarantine.

However, there are not enough devices manufactured by Supercom to meet the demand — especially if the skies are fully open to all Israelis.

Many decry the Supreme Court order since it might endanger the public. In their decision, the court stated it was unconscionable that the government, which failed to develop a plan to ensure quarantine for returning citizens — over the course of an entire year — would as a result, strand its citizen’s abroad, due to that government’s own failure.

This week, Israel did pass a grim Coronavirus milestone of 6,000 dead, and despite the drop in new infections, there are still 558  patients in serious or critical condition.

ELECTION — TAKE 4

Israel’s next election is now four days away. Never has there been an election like this one, in which nearly all of the campaigning is taking place online, or in television studios. I doubt anyone will be going to the polls on Tuesday with much enthusiasm. Tuesday's election is the fourth election in two years, and there are no actual agenda items — just who will be willing to form a government with Netanyahu, and who will not. 

Neither war and peace, nor differing economic approaches are on the ballot. Netanyahu has pulled out all stops in his bid to reach the “magic 61” majority needed to form a coalition (something Netanyahu failed to achieve the last three times). Some of Netanyahu’s efforts seemed to have boomeranged. 

Netanyahu’s first misstep appears to have been his outreach to gain Arab Israeli voters. His actions triggered the break up of the Joint Arab List, and now, Mansour Abbas with his Islamic front will run separately. However, as a result, the number of seats the Arab parties are projected to receive has risen. After courting Abbas for some time, Netanyahu recently unequivocally stated he would not create a coalition dependent on Abbas; a statement which seems to have lost Netanyahu the limited support he had garnered from the Arab sector.

In addition, Netanyahu seems to have seriously hurt Israel’s relations with the UAE. Netanyahu was desperate to fly there for an election photo op. While UAE's leaders were not thrilled to be the backdrop of his campaign, they were willing to go along. That was the case, however, until Netanyahu lied and told a campaign rally that the Emirates would invest $10 billion in Israel —AND that they were going to do so because they said they trusted Netanyahu's economic leadership. The latter statement was a complete fabrication, and the first statement was a rank exaggeration. It is true the UAE has been evaluating the possibility of investments in Israel. However, for now, a summit with UAE leadership planned for after the elections has been called off, and Netanyahu, at least for the moment, has ceased mentioning the peace UAE agreement as part of his stump speech.

This week, most of Netanyahu’s negative PR efforts have been directed at Naftali Bennett and his Yamina party. Netanyahu does not want Bennett to be a significant player in the post-election landscape. Despite Netanyahu’s continued attacks (a pattern from previous elections), betting people assert that after the election, even if he has the power to stop Netanyahu from forming a coalition, Bennett will end up joining a Netanyahu government. If he does so he will confirm his image of being similar to a battered spouse, who continuously returns to their abusive partner. Regardless of how much Bibi attacks him, and despite Bennett’s knowledge of exactly how poor Bibi’s leadership is, Bennett fears leaving Bibi permanently. 

The United States and Israel have had their first joint meeting on Iran. According to esteemed journalist Barak Ravid, the intelligence services of both countries agree on the facts with regard to the current state of Iran’s nuclear program. Still, there is clearly some disagreement determining what actions should be taken. However, at the moment, that seems mostly irrelevant, as Iran appears unwilling to engage America in negotiating a return to the agreement, along with an elimination of US sanctions. That silence might change after the Iranian election.

There is an interesting article in Bloomberg on how the head of the Mossad and Israel’s Ambassador to the US intervened repeatedly with the Trump Administration, for the removal of sanctions levied against Dan Gertler, a Haredi businessman. Gertler is accused of involvement in the corruption in the Democratic Republic of the Congo. Mossad Head and Netanyahu confident Yossi Cohen reportedly visited the Congo several times and claimed Gertler was vital to Israel’s security — and, is by the way, a prominent philanthropist. The Trump organization lifted the economic sanctions against Gertler on its last days.

BUSINESS

Israeli companies continue to raise money without difficulty, which continues to fuel the Israeli high-tech boom. As of March 18th, Israeli firms had already raised $2 billion — a one month record— and there are still two weeks left in the month.  

In disturbing economic news, the price of Israeli apartments continues to go up, with the expectation that they will rise by more than 10% over the course of this year. The reason is simple. To keep up with natural population growth, and aliyah, Israel needs over 70,000 new dwellings each year. This year, a total of approximately 21,000 new units have been built. With demand rising, and supply not nearly keeping pace, there can be only one result.

It should be noted that the number of new constructions are so low, because the government has not been selling land to build on, and the municipalities have not been developing the infrastructure to provide for the potential new residents. The results are not going to be pretty.