Netanyahu’s Economic Record Goes Unchallenged

(Bloomberg Opinion) -- It’s not the economy, stupid. With campaigning now fully under way for Israel’s parliamentary election, there’s been remarkably little attention on how the country’s economy has fared in the decade under Prime Minister Benjamin Netanyahu. An outsider might reasonably conclude that Israelis are satisfied with the state of their economy, leaving Netanyahu’s opponents no openings to attack him.

And indeed, the economy gives the appearance of rude health, having grown at an average 3.3 percent since 2000, which is impressive for a developed country. Unemployment (4.1 percent) and inflation (1.2 percent) are low. Speaking in the Knesset in October, Netanyahu patted himself in the back for his economic management, declaring, “This decade has been a marvelous decade — a decade of growth, of strengthening, of stability, of security, of prosperity.”

But polls show that Israelis are, at best, ambivalent about the state of their economy. In a recent Israel Democracy Institute survey, 60 percent of respondents were satisfied or very satisfied about the economy — but the same proportion also said they were worried or very worried that they would not be able to help support their children. An even larger proportion (65 percent) expressed concern about being able to save money for the future. Only 35 percent of Israelis were optimistic that the economy would improve in the next 10 years. (Interestingly, the Institute’s recent annual Democracy Index study found perceptions of corruption, the issue Netanyahu’s rivals hope will bring him down, were actually declining: 47 percent of respondents felt the country’s leadership was corrupt or very corrupt, down from 55 per cent in 2016.)

There is dissatisfaction, too, about low public spending and inadequate investment in infrastructure, the consequences of Netanyahu’s focus on reducing public debt even while lowering taxes. This manifests itself most prominently in overcrowded roads (Israel has the worst congestion among the developed nations, per the IMF), and endless queues in hospitals (Israel has the highest occupancy rate, at 98 percent).

Low unemployment figures mask a deeper problem. Although Israel under Netanyahu has branded itself as a “Startup Nation,” the technology sector, the engine of the economy, accounts for only 9 percent of jobs. Most Israelis work in sectors with lower pay and productivity. As Karnit Flug, the former governor of the Bank of Israel, put it, Israel has a “dual economy,” with income gaps among the highest in the West: Two-thirds of workers get less than the national average wage.

In the hands of an artful politician, this should be ammunition enough to challenge Netanyahu’s economic record. But the men seeking to replace him as prime minister have been unable to articulate an economic vision that addresses the concerns of Israelis. Many of the challengers are, like Netanyahu, center-right politicians — some have served in his cabinet — and don’t have a strikingly different vision from his. Education minister Naftali Bennett of the Jewish Home party seems generally in accord with the Netanyahu’s economic policies. Yair Lapid of the Yesh Atid party served as finance minister between 2013 and 2014, and was badly burned by his failed attempt at solving the housing crisis, weakening his credentials as a manager of the economy. And General Benny Gantz, a former military chief of staff, has said nothing at all about the economy.

Labor leader Avi Gabbay, who would be expected to offer a different economic agenda, has instead been mired in party infighting, which has overshadowed his message. In any case, as a former corporate CEO, he is no populist, and seems to base his case on efficiency, rather than a significant departure from the policies of the past decade.

This means Netanyahu doesn’t have to expend any time or energy defending his economic performance. Instead, the prime minister has been able to make the debate about personalities, portraying himself as a towering, irreplaceable and persecuted leader: It’s me, stupid.

To contact the editor responsible for this story: Bobby Ghosh at aghosh73@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Uri Pasovksy is a senior columnist for Calcalist.

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