Tel Aviv Diary May 25, 2023
Budget Passes,Netanyahu Capitualates Netanyahu Capitulates to Demands,Iran Maybe Closer to Bomb, Banks Make Record Profits, History and a Review
GOVERNMENT PASSES BUDGET
The Knesset approved the budget and accompanying financial “Arrangements law,” during the early hours of Wednesday. Prime Minister Netanyahu praised it as “a splendid budget,” whereas opposition leader Yair Lapid called the new budget “The most destructive in the history of the state”. The truth likely falls somewhere in between. The latest bi-annual budget passed allocates NIS 484 billion ($131 billion) for 2023 and NIS 514 billion ($139.5 billion) for 2024; primarily continuing funding for the government's routine activities, without any significant alterations.
The most substantial changes in the budget were apparent from the inception of the current government and the coalition agreements that Netanyahu endorsed. Netanyahu pledged billions in additional funding for the ultra-Orthodox community, set to support schools that refuse to teach basic general studies, and Yeshiva students who choose study over military service or joining the work force. Upon signing the coalition agreement, critics suggested Netanyahu had consented to these demands for negotiation's sake and would never actually fulfill them— as has long been Netanyahu’s practice. However, this time Netanyahu delivered, and all the funds he promised were indeed allocated.
NETANYAHU CAPITULATES
Beyond the original agreement, Netanyahu intervened when one of the ultra-Orthodox parties, and then Minister of National Security Ben-Gvir requested additional funds for a ministry under his party's control. Netanyahu acquiesced to both the demands. Despite this achievement, passing the budget is unlikely to earn Netanyahu any political favor. According to a poll conducted by Channel 13, sixty-four percent of the public believes Netanyahu capitulated to ultra-Orthodox demands, with only 23% believing Netanyahu handled the situation well. Notably, even 45% of Likud voters feel Netanyahu caved to ultra-Orthodox demands.
The significant benefit Netanyahu received from the budget's passage is a guarantee his coalition can continue for another year and a half, until the next budget must be approved. Failing to pass a budget would cause the government to disband, now the only way for the government to fall is if an alternative government was presented and voted on.
Avi Maoz, the leader of the homophobic Noam party, is set to rejoin the government. He will lead the Jewish National Identity Authority, with a budget of NIS 285 million. Additionally, there is now a Ministry of Jewish Culture and a Minister of Jewish Heritage, each with an approximate budget of NIS 500 million.
PROTESTS
Immediately after the budget was approved, Netanyahu swiftly gave an interview on Channel 14, in which he stated that now the budget had been passed, there was potential for Judicial reform to be revitalized. This sparked a flurry of criticism. Later in the day, Netanyahu released a video to clarify his statement, expressing hope for broad future agreements. While Netanyahu's true intentions remain unclear, his casual comment about reinstatement of Judicial reform will undoubtedly energize Saturday night's demonstrations.
Last week's turnout was slightly lower, but still remarkable, with 200,000 people participating nationwide. The main focus of the most recent protest was focused on dissatisfaction with proposed allocations in the budget. Organizers of the protest movement have been considering whether to more widely expand their agenda beyond opposition to Judicial reform. No clear decision has been reached on this issue to date. What is evident, however, is that this grassroots movement has evolved into a well-funded, highly organized, non-political organization whose key members are deeply invested in the country's future.
IRAN
This week, IDF Chief of Staff Herzi Halevi caused a stir with his speech during the annual Herzliya Conference at Reichman University. He indicated that unfavorable developments in Iran might compel Israel to intervene. Iran counteracted, stating that if Israel targeted Iran's nuclear facilities, Iran would retaliate without any constraints. I have no doubt that Israel has been quietly acting to impede the Iranian program, which seems to consistently suffer setbacks. However, an overt military strike on Iran would only be effective if executed in coordination with the US, a scenario I do not foresee— especially not amidst the ongoing Ukraine war, which is depleting western munitions and resources.
The misstep was in US withdrawal from the JCPOA accord without a concrete plan. This was a thoughtless maneuver contrived by Netanyahu and Trump, neither of whom has suffered political consequences for this error. I worry that we may eventually have to accept a nuclear-armed Iran, amidst ever-increasing efforts to enhance our missile defense systems, to deter Iran from ever contemplating using such weapons, once acquired.
ECONOMY
The Bank of Israel has once again raised interest rates, propelling Israel's prime rate to 4.75%. This marks the tenth consecutive increase in interest rates. The interest rate hike has produced some of the intended outcomes, by curtailing spending and significantly impacting housing prices, as mortgages have become unaffordable for many. Numerous Israelis with existing mortgages have experienced a dramatic surge in their monthly payments, as most Israeli mortgages are hybrid, i.e., partly fixed interest and partly tied to Prime. One aspect that escalating interest rates have not affected is the inflation rate, which exceeded 6% last month. Over the past few weeks, most major food producers announced price increases, often in synchrony, highlighting the lack of competition in the Israeli economy.
However, banks are one group profiting from the rising interest rates. Bank Hapoalim, Israel’s largest bank, announced profits of NIS 2 billion in the first quarter of the year, propelled by a 49% increase in interest income. The moment the prime rate is increased, banks raise the interest on nearly all their outstanding loans. Simultaneously, they refrain from paying interest on the billions Israelis hold in their checking accounts
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EL AL
El Al reported an operating profit of $9 million for the first quarter of the year, typically its weakest quarter. Overall, the airline registered a loss of $36 million in the quarter, a 46% decrease from the first quarter of 2019 (pre-Corona). El Al's income for the quarter was $500 million, up 17% from 2019, despite having 7% fewer passenger miles. The boost in El Al's profits comes from the higher ticket prices it was able to charge
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A PIECE OF HISTORY— Provisional Government formed
The Israeli declaration of independence included the following provision: "We declare that after the termination of the British Mandate, from the 15 May 1948 and until elected authorities of the state would be established in accordance with a constitution accepted by the Elected Constituent Assembly not later than October 1, 1948—the Provisional State Council would act as the temporary State Council, and its executive institution, the Provisional Government of Israel, would constitute the temporary Government of the Jewish state, which would be named Israel."
The first meeting of the government took place on May 16th. The members of the provisional government were:
David Ben Gurion • Aharon Zisling • Eliezer Kaplan • Moshe Sharett • Haim-Moshe Shapira
Yitzhak Gruenbaum • Pinchas Rosen • Mordechai Bentov • Bechor-Shalom Sheetrit
Yehuda Leib Maimon • Peretz Bernstein • David Remez • Yehuda Leib Maimon
• Yitzhak-Meir Levin
Levin and Gruenbaum were both in Jerusalem, which was embattled and were unable to attend the meeting. At the first meeting of the provisional government, Moshe Shertok, who had just returned from the United States, reported how both the State Department and the Defense Department were opposed to US recognition of newly established state of Israel. Still, Truman overrode the recommendations of both governmental departments and announced recognition.
Acting in his capacity of Defense Minister, Ben Gurion then gave a presentation on the state of Israel’s military. Among other things, Ben Gurion said that if the State was able to receive 80% of the weapons it had already ordered, it could hold off the Arab attacks for a long time. However, Israel now needed tanks and planes, and those were more expensive. Ben Gurion recommended sending Golda Meir to the US to raise money. Ben Gurion stated that it was thanks to Golda's earlier money that she had collected for the Yishuv in the United States.
At that first governmental meeting, it was also decided that Dr. Chaim Weizmann would be elected the country’s first President. At the Provisional Government’s second meeting, on May 19th, The Law and Administrative Ordinance No. 1 was adopted. It created a framework for governing in the interim period.
Among its notable sections The Law and Administrative Ordinance No. 1 included:
– A delineation of the interim government.
– A definition of the budget and the power to tax.
– The adoption of the current laws that existed under the mandate.
– A repeal of the White Paper of 1939.
The provisional government continued until an election could be safely held on January 29th, 1949.
A TASTE OF TEL AVIV— LA CITE
RESTAURANT REVIEW, by Tali Schulman
Continuing just a few steps down Hacarmel street, past Tamati, you will find yourself in front of their newest endeavor, La Cite. Spearheaded by Tamati’s newer partner, Avishai, La Cite is a wine bar inspired by Avishai’s mother’s Moroccan cooking, with a Parisian twist. La Cite serves all of your favorite Moroccan flavors in small bites, served alongside a lovely selection of wine and martinis. In the evenings, the menu leans heavy in meat (all kosher without a certification for anyone interested), however, you can join them on Friday afternoon for much more fish focused offerings. Regardless of the time of day, I recommend going with a friend or two, sitting on the bar, and ordering the entire menu. Yes, I mean the whole menu. It’s small and everything is worth tasting
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For more Tel Aviv restaurant recommendations, you can find me on Instagram @talischulman where I save all my food adventures in my highlights!