Israel Archives - Michael Horesh Business Coach and Mentor

16 April 2023

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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

On Saturday night in Netanya, a city located on the coast plain of Israel between Tel Aviv and Haifa, Tali Gotliv – a minister of Bibi Netanyahu’s government – accused their opponents of being traitors.

Hmmm! It is less than 30 years ago, when Netanyahu was the leader of the Parliamentary opposition. He blamed the Prime Minister of the time, Yitzhak Rabin, for treachery. Weeks later, Rabin was assasinated.

Gotliv’s remarks drew the anger of many.

Who are you calling a traitor? Is it my father, who volunteered to fight in ’48?My grandparents, who financially helped build this country? My father-in-law, who did everything to make Aliyah, including being a stowaway, lying about his age, and enlisting in the army, and fought in wars for over 30 years? My mother-in-law who folded parachutes, her sisters, and her brother who all served? The uncle who proudly wears paratrooper’s wings with a red backing? My husband, who served and fought in both Lebanon wars and every “war” after, and volunteered for miluim until he was 50? My nephew with special needs, who all he wanted to do is join Zahal and is now proudly wearing a uniform? Or my daughter, who serves on the Lebanese border as the “eyes of the country”? We are traitors?
MK Tali Gotlieb, you are an embarrassment to the Knesset and to this country.
Shari Wright Pilo posted on Facebook:

The following day, Sunday, was the first full day back after the Passover holiday break

The Minister of Finance accused Moody’s of not understanding how economies work, after the agency warned that Israel’s credit status may well be downgraded.
It has emerged that Yair Netanyahu, the PM’s son, is on a luxurious holiday in the USA, openly financed by the taxpayer and accompanied by a security entourage.
And yet another opinion poll revealed that the decline in the government’s support continues to gather pace. I assume that means from the perspective of Gotliv that the number of traitors in Israel is growing alarmingly!

There is a central organising committee for these protests. One of its main proponents is a former chief of staff and one-time ally of Netanyahu, Moshe Ayalon. His team clearly has access to money. In parallel, there are many local neighbourhood groups emerging spontaneously. I even heard of one of them being called “Grandmothers for Democracy”.

Not by chance, this group was also active in Netanya . Gotliv was accompanied by other top officials, including the Minister of State Security, Itamar Ben Gvir. They addressed around about 500 people. However, their opponents numbered closer to 35,000.

The opponents of the Israeli governments plans can be found in most sections of society. Evidently, the numbers have yet to peak. Few of them hide their views. Gotliv’s shouting does not seem to create for her significant levels of support. Meanwhile, her boss, the PM himself, does not seem to exude the control of previous years. One news station reported him bringing back a behind-the-scenes advisor, previously disgraced by the submarine corruption scandal.

This is a government, driven by a mission convulsed by controversy, and which sees its opponents as enemies of the state. The problem for those at the top is that those underneath them are for now flocking to the devil of the enemy.

10 April 2023

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It is Tuesday 11th April.

In the Holy Land, the Christians have finished celebrating Easter. For Muslims, the month of fasting over Ramadan is approaching its end. And Jews are in the middle of the festival of Passover, usually a time of happiness.

However, the incessant terror attacks that have led 18 people dead since early January is taking its toll. The latest incident saw the slaughter of three members of a British-Israeli family. They were identified as Jews, driving in the wrong area at the wrong time.

Last night, the Israeli Prime Minister, Bibi Netanyahu, addressed the nation. He had an opportunity to unite. He had a platform to motivate a nation, wounded by discord over his policies and the bullets of terrorists. In a televised address, which I did not watch, the PM attributed these murderous acts to the protest movement against his attempts to reform the judiciary. And he went on to mock the opposition for their achievements when in power last year.

In other words, Netanyahu blamed the deaths on his political opponents.

These opponents include:

Most previous chiefs-of-staff, leaders of the Mossad, and the police force.
Most former judges of the High Court.
Most leading economists
Political leaders in Germany, the UK, France and the USA – to name a few.
And………….. well the list is long. But let us just say that of the hundreds of thousands that have protested on the streets of the country over the past three months, the numbers include members of my family. As far as I know, our only criminal act to date has been a driving fine or two.

So what is Bibi saying to me? Is he really accusing me of plotting and financing the murder of innocents? Obviously not. I assuming he is trying to capture some form of domestic political initiative.

After all, according to all political opinion polls, if an election were held today, the ruling coalition would be left in the gutter. In fact, the numbers are so bad that the Netanyahu’s Likud party would no lose its premier status in the Kenesset, a position that it has held for over a decade.

Netanyahu can blame whoever he wants. I don’t care.

However, by attempting to deflect the blame on to others, Netanyahu is admitting that he cannot and will not take responsibility. Responsibility for what?

The worsening internal security situation
The worsening defense situation on the northern and Gaza borders
Direct investment form overseas that is drying up.
His capitulation to his Minister of Internal Security that has demanded funding for a new police force under his personal control.
And much more.

Bibi – you want me to accept the blame? Who gives a damn, except your inner cabal, who probably does not even know how much a carton of milk costs.

But leadership requires responsibility, and you can’t take that. You don’t have it any more.

Go home to your luxurious villa. Go, now!

1 April 2023

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Israel’s Minister of Finance, Bezalel Smotrich, is convinced that the proposed reforms of the judiciary will strengthen the Israeli economy.

Smotrich has no known significant experience in running finances. His recent trip to America was boycotted by most top financiers and all government officials. He has also called for an Arab town to be destroyed.

The good news is that Smotrich has finally pushed through one policy change. A tax on sugar-rich soft drinks from this coming week will be lowered! And last week, nearly six months after his coalition won the general election, he presented his budget to the Kenesset, presumedly based on revenues that are going to keep flowing in as a result of the proposed reforms.

Well, maybe.

You see, it is not that the concept of Israel’s Start-Up Nation has ground to a halt. However, the reports of overseas investment into the country are simply very thin. Negligible may be an exaggeration, but they are very difficult to pick out and see.

And as most of the big bucks in the past decade has come from the USA, Netanyahu’s spat with the White House is unlikely to help matters.

In fact, the White House shunning of Israel’s PM was the core of what seems to have been a really bad week for Netanyahu. If we go back 8 days, he celebrated last Friday night and the incoming of the Jewish Sabbath in London at a restaurant that can hardly be described as kosher. He and his wife were caught on camera, smiling away. And then: –

On Saturday night, his own Minister of Defense, Yoav Gallant, called for a halt in the reform legislation. This proposal was made publicly and came as Netanyahu was returning from Britain.
Netanyahu then sacked his former close ally. This move brought tens of thousands of demonstrators onto the streets, more or less spontaneously.
Netanyahu has now backed down, at least temporarily. The reform was pulled. Talks aimed at compromise have started, although few have expressed optimism.
There is now a creeping fear in Netanyahu’s Likud party that they do not have the votes to carry the legislation.
On Thursday, it emerged that Netanyahu’s legal team are considering mediation in the several proceedings against their client. What is interesting here is that the man has always denied all the charges against him.
And finally, Yair Netanyahu, the PM’s son, was ordered to pay 40,000 shekel and legal costs to a former opposition politician, who had filed a claim against him.

The Passover holiday season is closing in. The shekel is still showing signs of weakness. The ultraorthodox Haredi parties are showing signs of backing away from full support of Netanyahu. As I write, over 200,000 people throughout the country are protesting – for the 13th week in a row – against the reforms.

And Smotrich has yet to inform the citizens why these reforms will be so wonderful for the shekel in their pockets!

Have a good week. And maybe Smotrich and Netanyahu will do so as well.

28 March 2023

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Israel’s Prime Minister, Bibi Netanyahu had a distinguished military career, ending up with the rank of captain in a crack unit. Two days ago, he fired his Minister of Defense, Yoav Galant, an ex-General and considered until recently a strong loyalist of his boss.

The streets of Jerusalem, Tel Aviv and dozens of other places erupted. The trades unions and the employers and cinema owners and venture capital groups and banks and……….. shut up shop. Last night, the Prime Minister was forced to announce that – at least temporarily – he has halted his attempts to reform (castrate?) Israel’s judicial system.

It is 12 weeks since this latest Netanyahu government was sworn in. In that time, we have seen violent political debates, foreign direct investment collapse, huge funds leave the country, a series of ‘misunderstandings’ with the USA, and an inability to tackle a worsening security situation.

To give some perspective, here are 6 points for your consideration.

The attempts at judicial change have been prioritised and look destined to continue. In these 3 months, little other legislation has been passed. One exception is the law that now allows politicians to accept large donations. I will let my readers consider why the opposition considers this a giant step towards the legitimisation of corruption. I should also mention that a law to restrict the movement of violent husbands was thrown out by the party of the Minister of Police!
Ostensibly, Bibi fired Galant because he did not tackle the issue of senior reserve soldiers and air force teams, who are now refusing to turn up for duty. As my wife recalled, it is barely 20 years ago, when supporters of Bibi refused to take part in the operations to return Gush Katif to the Palestinians for political reasons.
As Bibi made his speech placing the legislation to one side, for the first time a large demonstration took place of those supporting his policies. He acknowledged them and thanked them in his speech. Mr. PM – I urge you to look again. Those protesters were primarily young, orthodox Jews, who do not vote for you but for your coalition allies. Your Likud party’s supporters were not to be seen (by the television cameras). Is it any wonder that your popularity has been decimated in polls in the past month?
Bibi and his colleagues have concentrated on reforms of the High Court of Justice. As one very observant female pointed out, why do they not also mention the need to reform the rabbinical courts? Is that to do with the fact that Bibi’s coalition allies will not allow the subject even to be mentioned?
I referred to a shift in the polls. That shift is probably the most significant movement seen in the country since the mid 1970s. In May 1977, the Likud’s predecessor under Menachem Begin came to power for the first time, as the socialists were seen as tired, corrupt and incompetent. (sic!)
Just before making his speech, Bibi had to shore up his coalition. The last man holding out was Ben Gvir, the Minister of Internal Security. This is a man on the far right of the political spectrum – far right in all the meaning of the term. He has his own extensive police record and was not allowed to serve in the army. Ben Gvir demanded from Bibi and received permission to create a new security force, under his personal command – separate from the police and army! I comment no further.

And where are we today, less than 3 days after Galant made his speech to the country which prompted his sacking?

Galant had demanded that the security cabinet be convened because there is a huge problem on the horizon and the national political debate is threatening the army’s ability to operate. Bibi has refused. Galant spoke out, placing the security of the nation before the needs of his Likud party and before those of his PM. He was told that he was fired.

The country erupted. Bibi’s strategy completely back fired. Bibi backtracked, at least for now. Our military hero had shot himself in the foot!

And yet:

A) Whatever is that security situation, it still exists.

B) Meanwhile, Galant has yet to receive his formal letter of dismissal.

C) Israel – that is surrounded by existential threats – does not know if it has or has not an appointed Minister of Defense!!!!!!!!

Do you get the feeling that this is a PM who has ‘lost it’?

19 March 2023

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Simon Sinek is one of the western world’s most prolific influencers. Still don’t know about him? Choose any social media platform and he is out there.

In a recent podcast with Steven Bartlett, Sinek observed that people put on uniform to serve in armies, whether or not they like or love their leaders at the time. Why? Why will they risk their lives?

Because each soldier on the line TRUSTS in the commanders back home – generals and politicians.

How does this relate back to what is happening in Israel today? Because in response to the proposed changes to Israel’s judicial system, there have been mass protests, involving hundreds of thousands of people.

And now, for the first time in the country’s history – a country that still faces genuine daily threats to its very existence – hundreds of reservists are threatening not to turn up for duty. Most of these people are associated with the top units. For the record, Israel’s standing army is not very large. It relies on those reservists.

The protesters come from most parts of society. In the past week, the Bedouin and Arab communities have also started to hit the streets. Former leaders of the police, the air force and of the judiciary – to name a few – have addressed the protesters. Whatever the age and background of these people, they serve in the army and pay their taxes.

There is no one single reason for this break in confidence in the political system. However, what we have seen in recent weeks is mind-blowing.

With the proposed changes, the Kenesset will have 99% authority over the courts.
The minister in charge of the police – with minimal previous experience, but arrested dozens of times – has tried to introduce his policies for controlling demonstrations.
The Minister of Finance travelled to America last week, where is poor understanding of English led to video mocking him going viral.
The independence of the Bank of Israel has been brought into question by a senior minister, although he retracted his comments after the markets pounced on the shekel.
Even the Central Bureau of Statistics is not immune. The Prime Minister wishes to approve a confidant has the new director-general.
The slow response of the army to preventing teenagers torch a series of houses and other property in the town on Huwara.
The approval of such actions by members of the government coalition, including the Minister of Finance. The latter backtracked once it became clear that American officials and banking chiefs were to boycott his overseas trip.
And,,,,,,,,,,,,,,,,,,,,, so the list goes on.

These are attitudes, statements and positions that would have been repulsive and unacceptable to the Israel’s founding fathers, across the spectrum. As for current society, the number of notable figures that have come out in support of these changes can be counted on one hand.

A government in a democratic society may not be liked by all. But you assume that it will ‘have the back’ of all decent citizens.

It is when you lose that mutual trust, as per Sinek’s observations, then you have a government leading its people towards a veritable abyss.

15 March 2023

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Categories: Afternoon Tea in Jerusalem, Business, Israel

Yesterday, I listened to a feature on the Israeli news, pointing out how social legislation has no place in the current Parliamentary timetable in Israel’s Kenesset, due to the hard rush to push ahead with changes in the judiciary.

Another item that just is not on the current agenda is the budget. In fact the only budget that has been passed in last five years in Israel was that of the previous government. That is the same government led by Naphtali Bennet and Yair Lapid, who have blasted as incompetent by the only other Prime Minister in the rest of this same period, Binyamin Netanayhu.

For all the uproar of the legislation to reform or wreck (depending on your viewpoint) the powers of the judiciary in Israel, the economy has appeared to remain robust so far. Unemployment has remained low. Inflation has far less than in other leading OECD countries. For all the controversy in America, Israeli banks are highly profitable.

Netanyahu likes to present himself as a capable leader, supported by a capable team.

Yes, his Minister of Foreign Affairs did imply that the Bank of Israel should yield some of its independence. The mini-run on the shekel was halted when Netanyahu effectively censured his guy.

And Bezalel Smotrich, the Minister of Finance, has invested several days this week in America. His initial comments on raising a Palestinian village (which he has since partially or maybe fully retracted) ensured that any possible meetings with American Treasury officials were cancelled. And his meeting with influencers in the banking community have evidently been of a muted quality.

What the verbal spin of Smotrich and Netanyahu cannot hide is that there are heavy clouds forming. New home sales are down sharply, as is mortgage taking. Leading institutions are lining up to issue warnings of higher financials risks due to the changes in the financial system. And shopping malls are reporting a sharp downturn in sales on Saturday nights – a usually popular time in the winter months – as hundreds of thousands take to the streets in protests!

Some financial legislation is going through. There is to be a new law to allow senior politicians, such as Netanyahu, to receive money from people of influence. Another law will enable Arie Deri, twice convicted of financial offences, to become a minister in the government. (He has been slated to take over the finance position in a rotation agreement with Smotrich.) And of course, the budget – whenever it is passed – will secure vast extra sums for ultraorthodox communities to study all day but not work.

No help for the middle classes. No help for the self-employed sector. No known plans to investment in industries.

Yesterday, 14th March, many of the big shakers and movers of the Israeli economy met with the President Herzog. The core message: Halt this progress to hell.

Netanyahu is rightly credited with setting up many of the conditions that enabled the Israeli economy to blossom in the first two decades of the 21st century. In his own desire to stay out of the courts of justice, Netanyahu could also receive the credit for destroying that previous achievement in a two year decline.

Beware the Ides of March.

12 March 2023

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The Israeli financial newspaper ‘Globes’ had a look at Poland’s economy since the judiciary had become less independent.

The verdict? High inflation, Less investment. Uncertain future. But the people in power seem happy and content.

Is that what would happen in Israel, if all / most of the propsed legislation goes through in the next month or so?

What follows is a summary of an interview with Former US Federal Reserve chairman Ben Bernanke, who won the Nobel Prize in economics last year. I took the story from the website of ‘Arutz 7′, which itself is highly identified with the present government and its policies. Bernanke warned in a conversation with Israel TV Channel 13 News that the judicial reform being promoted by the government will harm the Israeli economy.

“Israel is a small and open economy that depends on international trade and international investments for economic growth and prosperity. There will be tremendous damage to the security of foreign investors, trading partners, and Israeli entrepreneurs as a result of sudden institutional changes that will increase uncertainty, create new legal and political risks, and jeopardize the rights of minorities,” Bernanke was quoted as having told Channel 13 News, which only provided a Hebrew translation of the comments rather than the original English.

“In order to ensure that Israel’s extraordinary economic success continues, Israel needs to move slowly and build a broad consensus regarding any significant change in its legal system or form of government,” he added.

Former US Treasury Secretary Lawrence Summers, whom Prime Minister Benjamin Netanyahu sought to harness to support the judicial reform, warned in an interview with Channel 12 News this past week of possible economic damages that could be caused by the plan.

“There is a sense that, this judicial reform, not because the idea of judicial reform is being pursued, but because it is being pursued in a so divisive and so rapid and so extreme way, that it will undercut confidence in ordinary commercial relations, and what has been a great accomplishment of Israel building a ‘Start-Up economy’ will be undermined,” he said.

“My sense is that Israel is, in a sense, walking too close to a ledge in the way this is being done, and by the time you’re sure that you’re too close to that ledge, it’s too late to repair the situation,” added Summers.

The Arutz 7 post is noteworthy. After all, an Israeli hedge fund has just witnessed a ‘tidal wave’ of Israeli shekel-denominated assets.

It seems that key investors are starting to bet against the Israeli economy, just as the Finance Minister is starting a course in 101 Economics. There again, like most of the other ministers in the Israeli government, they seem ……….happy and content.

8 March 2023

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For a little over two months, the Likud-led Israeli government under Binyamin Netanyahu (Bibi) has been rapidly forcing through the Kenesset a series of bills designed to reset the powers of the judiciary.

If you are part of the government, you will claim that these are reforms, that are long overdue. Relatively little outside support has been heard for the bulk of the proposals.

The opposition can be seen in the growing weekly demonstrations (around 300,000 participants last week), warnings from international credit agencies, threats of refusing to serve from army and air force reservists, and…………….. well the list is pretty long. Even the Presidents of France and the USA have commented less favourably on the subject.

How worrying is the situation? The Bank of Israel is now demanding the banks report twice a week on shifts in currency to overseas! Anyone worried?

About 3 weeks ago, President Herzog launched a private initiative to find a compromise. By yesterday, it had become apparent that he was making some genuine progress.

Now Herzog has battled Bibi before. They come from opposite sides of the political map. Herzog was born into a family that knows all about politics and diplomacy. His brother is a serving general. And he is a lawyer by training. The day after he won the vote in the Kenesset to be President, he was seen buying veg and milk in his local grocery store. The man has pedigree.

What has convinced Bibi to change?

It is not just because Herzog knows how to ‘get around’ him. For the record, Bibi did not want him as President nor did he want him in his previous high-flying role.

Bibi’s repositioning may have something to do with the fact that support for the Likud and their allies has plummeted in recent opinion polls. It is the kind of shift – a potentially permanent change – that the country may not have seen since 1977. But more of that another time.

However, I think it has more to do with Bibi’s wife, Sara. Last Wednesday, during the most recent demonstrations in Tel Aviv, word got around that Sara was having her hair styled…..barely a kilometer away from the shouting rabble. Maybe around a thousand people rerouted in order to ‘pay her a visit’.

Sara was blocked in for about three hours, before being evacuated by the police. She claims that she felt threatened, and understandably so. Her son, in an interview the following day, said how he had briefly feared for her life. (Disclosure – neither have a good reputation in much of the local media.)

However, it must also be said that most of the protesters stood across the road. Their most dangerous actions involved shouting slogans. Nobody was arrested. In fact, during the turmoil, WOLT turned up with a delivery of fast food. Maybe young Netanyahu wondered if the food had been poisoned.

And the question remains:

On a day when it was known that Tel Aviv would be swamped by demonstrators, why did the wife of Israel’s Prime Minister deliberately exercise her right to have a haircut down the road from her foes, who are referred to as anarchists by her own supporters? Why? What was so important about the scissors and blow dryer of her stylist?

I have no idea.

I would like to think that maybe, finally at long last, the Netanyahu got to see via the reflections in the mirrors of the hairdressing salon what the average person on the street thinks of their policies.

To translate one of the slogans of last week: “As the country is burning, Sara is having a haircut.”

3 February 2023

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Last week was closed off with a horrific terrorist attack in Jerusalem – 7 people slaughtered outside a Synagogue after evening prayers by a terrorist. Less that 24 hours later, a 13 year old Palestinian kid shot at Jews in the Old City. Mayhem.

Within days, the country had moved on – apart from the grieving families and the security services.

The question of the future direction of the country proved more important than the hard emotions of the immediate past. What will happen to Israel’s democracy – assuming that Netanyahu goes ahead with his reforms of the country’s legal system?

The Israeli Prime Minister constantly repeats to his audiences that his changes will strengthen democracy. I have yet to hear him explain how. I have yet to hear experts in law – local or from abroad – backing up his ideas.

What we have seen in the past week are 50 former director generals of economic ministries, most of whom were appointed in previous Netanyahu governments, denounce the plans.

The appreciation and stability that the Israeli economy enjoys is due, among other things, to the independence of the judiciary and the civil service, and harming them and lowering their quality will lead to damage to the Israeli economy, a cut in the credit rating and difficulties in raising capital for the tech industry.

Even before these new laws are approved in the Kenesset, The Economist magazine has already notably downgraded Israel in its annual Democracy Index. And on a visit to Israel, the American Secretary of State, Blinken, hinted that Washington is not thrilled at what is coming.

Then on Thursday, the Attorney-General came out with a much anticipated statement on the Prime Minister himself and his policies. In effect, she described the plans as toxic (my wording). And as for Netanyahu, he should disbar himself from all policy making on the subject, as he is currently the subject of three pending court cases.

What was most damning about the statement from AG, Gali Baharav-Miara, was that she went through the proposed changes line by line. She dismantled their proposed benefits.

Yes: The Likud Party of Netanyahu responded with shouts of she herself was in violation of conflict of interest and a puppet of opposition politicians. However, yet again, no legal person or institution of note denounced her. None came out in favour of the government. Why is that?

Earlier this week, I was talking to a colleague, who represents clients in nearby countries around the Mediterranean. They noted that since the new government’s inauguration in Israel, there has been a significant upsurge in the inquiries from people asking about transferring wealth away from the Holy Land. Mainly just inquiries, at this stage.

Just saying.

26 January 2023

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Yesterday, I argued that the public statements of Bibi Netanyahu, Israel’s Prime Minister, do not add up. https://en.globes.co.il/en/article-netanyahu-legal-reforms-will-bring-more-growth-1001436534He claims on behalf of his judicial reforms – changes that will in all likelihood keep him out of many courtrooms – that they will enhance economic growth.

Maybe.

At a news conference last night, Netanyahu was flanked by his Minister of Finance, Bezalel Smotrich. The latter argued that “A billion lies will not become the truth. Israel’s macro data are fantastic due to consistent and good government policy.”

Good to hear, if true. What Smotrich did not realise – assumedly because of his complete inexperience – is that at least for now the current growth is due to the policies of the former government, but now in opposition!

Anyway, Netanyahu argued that the hundreds of economists who had signed a letter, asking him to reconsider his reforms were all supporters of the opposition. I suggest that is drivel – utter balderdash. Refer to the 9th Commandment, as I mentioned yesterday.

So just who has protested against these reforms to date?

Over 100,000 protesters turned up in Tel Aviv last Saturday, and many thousands more around the country.
Nobel Prize in Economics winner, Prof. Daniel Kahneman, was just one of those economists, who have rejected the reforms as a ‘disaster’ package.
Although Netanyahu suggested that Israel’s high-tech is safe, two local VCs have already transferred their funds overseas “there is no certainty that we can conduct international economic activity from Israel”.
A vast array of senior lawyers and former members of the High Court have made their position clear.
The forum of university chiefs have stated in a public letter that “As those entrusted with the research and education of the future generations of the State of Israel, we warn you that the proposed reform of the legal system could deal a fatal blow to Israeli academy,”.

I guess you could argue that this is all the talk of trendy left-wing intellectuals, struggling to maintain old times. In the words of Likud politicians who criticised the Attorney-General and others, these officials have over-stepped their mark. (That is often seen in some quarters as a soft euphemism for treason.)

But then let’s add one more grouping.

Sayeret MatKal is The Elite of elite groups in the Israeli army. Netanyahu himself served in the unit with distinction. His brother, Yoni, also served, tragically not returning alive from the infamous Entebbe raid in 1976.

Former members of this unit are planning a march from their army base to the Prime Minister’s office in Jerusalem.

Just another band of ungrateful has-beens, who don’t know their place in society?

The shekel has not collapsed. The Israeli stock market has not plunged. For now, Israel’s financial institutions do not represent the picture of London Summer 2022. However, the Bank of Israel has issued a stark warning, which has been publicly thrown in the bin.

What next, Mr. Netanyahu?

25 January 2023

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Categories: Afternoon Tea in Jerusalem, Business, Israel

In the name of greater democracy, Netanyahu and his coalition allies continue to promote a reform of Israel’s judicial system.

Over the past two weeks, more and more groups within local society have voiced their opposition to the plans.

Whether it be the Chief Justice herself, Esther Hayut, or representatives of the legal profession or other former senior judges, none have found a good word for the proposals. It is also significant to note that the government has not brought any justification for its policies from any other legal sources at all, let alone anyone of consequence. All the Minister of Justice, Yariv Levin, has been able to do is bully his critics, verbally.

Then there is the position of the Attorney General, who has been a target of Netanyahu and his allies ever since she took office around a year ago. Gali Baharav-Miara was cited on the TV news channels for considering if Netanyahu is allowed to take part in the reform proposals, as he himself is currently facing three separate charges in the courts.

More bullying and threats immediately followed from the Likud troopers. The lady was forced to issue a hasty denial that any such talks had ever taken place. Why should she be treated this way?

Then came the turn of the Governor of the Bank of Israel. He has just returned from Davos, where apparently many a worried investor warned him that such reforms would severely weaken Israel’s position in the international financial community. Silly silly Professor Yaron. As already reported in the Hebrew press, according to Likud politicians, the man has overstepped his position (for acting responsibly?).

And I could go on.

The message: Attack Bibi or attack the policies of the Likud and you will be personally abused. You follow the party line or get dumped on.

As a sideline, it is interesting to note that the number of violent acts recorded against members of the medical profession, teachers and on the road have risen significantly over the past year or so. Just saying!

Enter the high-tech community. About 15% of the workforce. About 40% of the exports of the country. And bitterly concerned that the overseas community, responsible for financing the ‘Start-Up Nation’ concept for decades, will be frightened away by the reforms and other socially conservative proposals.

One of the core principles of the Israeli high-tech community is diversity – people of different religions, sexes, abilities and political persuasions share opinions to create amazing technologies. Criticism is welcomed, not swotted away. This approach to life – this success – is now under direct threat.

Yes; the owners of many of Israel’s leading tech companies allowed their workers time off to protest on Tuesday.

For the record, Nir Barkat, is currently the Minister of Economics. He is independently wealthy due to an exit some years back. Popular within the party, his voice has been heard through its silence in recent weeks.

But democracy is democracy. And therefore, Netanyahu and his supporters are right, no?

There are 120 members of The Kenesset, the Israeli Parliament. 64 are part of the government.

Of the 64, 32 are aligned to the Likud, ostensibly a liberal-looking right wing grouping. Many of its members are religiously observant, although that is difficult to claim of the Netanyahu family. The remaining 32 come from various religious groupings, which deep-down proclaim that the country should be governed according to the laws of the Bible.

In other words, at least half of Bibi’s government does not care over much about democracy!

So when Bibi says it is all in the name of democracy, does that contradict the 9th Commandment in the Bible, the one about lying?

12 January 2023

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Local taxes have been frozen, and recent price hikes in electricity, water and gasoline have been reduced.
Globes Financial Newspaper, 11. January 2023

Sounds fantastic for the average Israeli – more money in the pocket. But……..

Well, there were no details on who would finance this or how? Just like there have been no details on would finance all the commitments that Bibi has made to his coalition partners, which will keep him in power and assumedly away from the courts of justice.

Now we know that Israel is running an economic budgetary surplus, just, for now. And exports hit a new peak in 2022, despite the threat of a global recession. However, what the financial markets require is both fiscal and monetary stability. The government is not providing all the necessary safeguards for now.

It is only a few months ago that the Liz Truss government in the UK tried a similar policy – reversing the rule book and throwing to the wind financial responsibility. She lasted just over 7 weeks as the PM.

Bibi is more savvy than that. However, the international agencies have already issued a warning. Israel may no longer be able to maintain its high level of worthiness amongst the credit ratings. That will make it more expensive for Jerusalem to raise money in order to cover its debts.

Earlier this week, SKY TV published its independent findings on who funds the MPS beyond their statutory salaries. The lack of transparency was staggering.

If Bibi already seems to be looking at the UK for economic guidance, maybe he should consider releasing details of those who are funding him and his political allies?

6 January 2023

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Categories: Afternoon Tea in Jerusalem, Business, Israel

Great fuss was made in Israel last week, when “The Economist” magazine cited the country as having one of the fastest growing economies throughout 2022.

Michael Humphries cited 6 reasons for this boom. New export markets, continuing immigration and even an uplift from continuing security issues were all part of the chain of events contributing to this Covid-Ukraine era of uplift.

Maybe I could have added the continuing internal political turmoil, which ensures that it is difficult for any government to overspend.

And then enters the new finance minister, Mr. Bezalel Smotrich. He is purportedly about to propose legislation that will remove numerous bureaucratic procedures holding up the progress of crucial infrastructure projects. Good news, hopefully?

Earlier this week, I commented on his other plans to “roll back tax hikes on single-use plasticware and sweetened drinks put in place by his predecessor”. The move is obviously designed to please his supporters, a populace who tends to buy such rubbish food, and in quantity.

The following day, I was listening to a couple of podcasts with a British professor of medicine, Tim Spector. Now an author of five books and hundreds of medical articles, his latest work is a best seller: Food for Life : The New Science of Eating Well

Spector basically debunks the whole soft drinks industry. Regular Sprite or ‘low calorie’ cola are all full of potential poisons. One of his favourite researchers on the subject ironically heralds from Israel: Prof Eran Elinav, an immunologist at the Weizmann Institute of Science, south of Tel Aviv.

Will Smotrich learn to read the details of his briefs before other policies threaten the lives of Israelis?

Meanwhile, he will no doubt press ahead with his battle against bureaucracy. Hopefully, this will enable vital projects to move ahead, such as the light railway in Tel Aviv, urgently required to alleviate the daily traffic jams. There again, his colleague in government, Miri Regev who is the Minister of Transport, continues to oppose the Metro plans in Tel Aviv.

Thus, the final result of Smotrich’s efforts to combat inefficiency may just end up as paper in the rubbish bin………………where it can join all those additional empty plastic bottles.

2 January 2023

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Categories: Afternoon Tea in Jerusalem, Business, Israel

It is generally agreed that both as Finance Minister and later as Prime Minister, Bibi Netanyahu has had a big hand in the significantly improving status of Israel’s economy.

Now entering his 6th term as PM, one of the country’s leading financial services, “Globes” asks outright if ‘Netanyahu has given up on Israel’s economy’.

Awkward.

After all, he has appointed two people to the position of Finance Minister, serving alternatively in a two-year rotation cycle. The second is his long-time political ally, Arye Deri, who has twice been convicted for financial issues. The first incumbent is Bezalel Smotrich, not previously known for any deep acumen in the world of economics nor trade.

It took Smotrich barely 48 hours to come out with his first policy statement. He has “instructed ministry officials Sunday to roll back tax hikes on single-use plasticware and sweetened drinks put in place by his predecessor..”

Issue number one: The incoming government has promised humongous sums to all the coalition partners – unbudgeted because there is no budget – and the first thing the minister does is cut (marginally) his revenue pool. Hmmm. Maybe we can just forgive that.

Issue number two: Israel has one of the highest rate of diabetes in the West, and this move only encourages further drinking of items openly labelled with high suage content. It took the doctors’ association just a few hours to register its disgust. There again, what do they know about people’s health compared to Mr. Smotrich.

Issue number three: Israel has already been cited as failing to push hard enough the agenda of a better global environment. And now we are going to be encouraging the use of even more plastic bottles. Three strikes and you are out.

So, the Treasury will lose a billion or so shekels annually and the country will be more polluted just so that the constituency of Smotrich – primarily large families with young kids can be fed drinks that are simply junk – which I guess is the word that sums up this whole approach.

I just hope Smotrich takes longer to mull over his next statement and its ramifications.

27 December 2022

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Categories: Afternoon Tea in Jerusalem, Business, Israel

If it quacks like a duck, then what is it?
Benjamin (Bibi) Netanyahu at the UN – speaking about Iran

It is now a decade since Bibi Netanyahu spoke at the UN, demanding of the world not to blind to the nuclear aspirations of the Iranian leadership. Everything points to the Islamic leadership seeking a dangerous military edge that would threaten regional, if not world peace.

Wake up, shouted Bibi to 200 countries, and the Israeli position has proved to be the correct one over time.

And today, as we look at the emergence of Israel’s 37th government, what kind of quack do we now hear?

There are deep concerns that of the 64 coalition supporters in the Kenesset (Parliament), at least 32 are hell-bent set towards implementing a conservative agenda. This may include discrimination against the LGBT community, severely undermining the independence of the judicial system, and a witch hunt of journalists.

When talking with the foreign press in English, Netanyahu has denied these and other issues. But there has been little such comment in Hebrew. Kenesset members from his own party can be heard via their defeaning silence.

So who is quacking?

Industry officials nationwide (in the tourism industry) have publicly come out against discriminatory legislative proposals floated by incoming coalition partners, who are promoting a bill that would allow businesses to refuse services to customers if it contradicts their religious beliefs.
Israel’s tourism industry rings alarm over new government (ynetnews.com)

Several Israeli companies have taken a stance against the impending amendment to Israel’s law on discrimination. Israel Discount Bank, cloud security company Wiz, and More Provident Funds and Pensions have announced that they will not deal with businesses that discriminate against customers.
Israeli cos take stand against moves to allow discrimination – Globes

78 former senior judges have written a letter of warning.

Did I mention the private meeting that Netanyahu was asked to have with initially The President and then The Chief of Staff?

And they all said the same thing: NO!

No, no, no quacked all of these educated experts, of different backgrounds and religious beliefs.

So the question remains: Is Netanyahu prepared to be honest and transparent with the country, explaining why he is insisting on revoking his duck policy?

There again, those are qualities or characteristics are usually to be found in courtrooms, a place the Prime Minister designate tries to avoid over the past few years.

26 December 2022

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Categories: Afternoon Tea in Jerusalem, Business, Israel

It is almost two decades since Bibi Netanyahu was appointed as Israel’s Minister of Finance. Friend and foe acknowledge that he set the tone for a period of unparalleled growth in the economy. In 2022, “The Economist” of London credits Israel with ranking fourth amongst the best performing economies.

So what next? What will happen in 2023, as Netanyahu seems very likely to form his 6th government in the next few days?

Officially, the economy is still expected to grow, but at a much lower rate. The likely outcome is under 3%. Given post covid fall out, Ukraine and other international global shocks in the financial markets, this can be considered reasonably positive. However, Netanyahu bears little direct responsibility for the achievement.

What is at his disposal is a very hefty budget surplus. Large parts of these monies had been designated to help the self-employed recover from the covid period. For political reasons, Netanyahu’s party along with its allies blocked the legislation.

Meanwhile, as the Prime Minister Designate crawls towards announcing his cabinet teams, every day seems to come with a new announcement. A new sub-ministry or large department will be created to meet yet another demand from yet another so-called coalition partner.

I have lost track of all the changes. For example, there will be a whole new section if the Ministry of Defense. The religious academies (Yeshivot) will have their budget doubled. Several new justices will be appointed to the Supreme Court.

And so the list goes on.

From what I can tell, none of these handouts will result in an increase in productivity. Nor are they likely to generate any wealth for the country.

I recall a news item from about five years back, A respected economics team had calculated that the financing for each new department with a ministerial staff was around 10 million shekels per month – say about US$2.8 million a months.

If there are 5 such new offices, that is about an extra US$176 million in taxpayers money annually. And that is before any handouts for housing in the ultra-orthodox communities or building religious institutions or…………….

I cannot believe that the international financial markets will remain placid for too long. Israel still needs to raise money to sustain its economic growth. Israel’s credit rating remains high…..for now!

And as for the self-employed? You remember – those people who work for a living and generate wealth.

They were unofficially represented in the previous Parliament by Amichai Shikli. He changed allegiances earlier in 2022, moving over towards Netanyahu’s Likud party. This was one of the primary reasons for the fall of the previous government and the onset of a general election campaign, which Netanyahu won.

As Netanyahu has been handing off his coalition partners, doling out large sums to shut them up, Shikli appears to have lost his voice. There again, his salary is now guaranteed for the next few years!

Can Israel afford these additional and rising non-functioning payments over four years?

Perhaps the more pertinent question is why Netanyahu – who clearly knows better from the point of view of running an effective economy – finds himself forced to be totally imprudent with his fiscal policies?

25 September 2022

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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

November 1st 2022 is sort of approaching. Israel’s 100+ day election campaign is thinking of coming to the boil. Maybe the opposition is a fraction ahead, but it is too close to tell.

One thing is for sure, at a macro level, Israel economy show little sign of slowing down.

This is Israel’s 5th election in less than 3 years. In the same time, the world has faced a pandemic. Russia has invaded The Ukraine and threatened the world with nuclear hell. Israel and Gaza have faced off countless. And Iran feels that it can build a nuclear capability without fear of Western retaliation.

And what do the figures show?

With unemployment a fraction up at 4.1%, the level of total employment has never been higher!

Average wealth per adult is roaring ahead, although the details ignore hardcore pockets of poverty in several sectors.

Israel’s economy is growing, absolutely and relatively to many of its European competitors.

“Israel has over 60 unicorns, but valuation is no longer a future predictor of growth. Meet the Israeli Centaurs, the 32 startups that achieved over $100M in ARR”

I guess that when an Israeli coalition government faces a run up to an election, it has very limited powers to interfere with the economy. In other words, people are left to fend for themselves.

Thus, while the poor or disadvantaged suffer, many others rise to the fore. This is helped by the fact that Israel is less dependent than many on wheat from The Ukraine. As for gas, Italy et all are rushing to Jerusalem to get hold of the country’s extra capacity!

Yes, interest rates and inflation are on the up, but not as in the much of the OECD.

23 August 2022

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Categories: Afternoon Tea in Jerusalem, Business, Israel

Yesterday’s financial news in Israel saw journalists leaping with pain. They had a ton of bad news to throw at their public.

It’s not just that the teachers’ strike is a very large possibility on 1st September (yet again and two months before a general election). It is now very evident that inflation is on the move northwards. It has climbed to over 5%. And to combat this, the Bank of Israel (BoI) raised its base rate to 2% by a massive 0.75 points in one move, a disappointing change not seen for 20 years.

The governor of the BoI appeared on TV last night. With the summer heat raging outside, in his tie and jacket, he calmly explained that things are not as bad as they seemed. Well, he would, wouldn’t he? That’s his job.

But is he correct?

Sure, compared to the UK, where the rate of inflation is double that in the Holy Land, where the food supply chain in trouble due to an oppressive drought and when many are facing the horror of unpaid energy bills, Israelis should stop complaining. (Actually, many believe that to be a biological impossibility!)

Israel has four factors going for it that together are helping to keep their financial miseries under control – at least for now and for most people.

First, the Israeli economy is still growing at an exceptionally healthy rate. The country has seen a 7.4% boost over the past 12 months, much of this led by the return of the tourism sector. Unemployment is still very much a non issue.

Second, an unofficial consumers’ revolt, encouraged by some aggressive TV reporting, has forced many of the local food manufacturers as well as importers to restrain planned price hikes. They have either been reduced or delayed for several months. In fact by then, lower petrol prices may kick in to put off once more some of those planned increases.

Third, if we are talking about the cost of delivery, the government has substantially reduced the tax on petrol by at least 0.5 shekels. To put that in perspective, The price at the pump is now about 6.5 shekels per litre.

And finally, the shekel has remained incredibly resilient against most other currencies. Compared to the dollar, it has recovered its position of the early summer. Against sterling, it is appreciated by about 12% over the past year. This strength is helping to keep down the cost of imported inflation.

As ever in economics, we know what has happened, but it is difficult predict the future. The country has obtained lucrative gas contracts with Europe, as a result of the sanctions imposed on Russia. The battles with Gaza and Lebanon seem to be on hold for now. And with an election scheduled for 1st November, the government has a vested interest to ensure that the voting public remain in their comfort zone of complaining, but not too much.

I could argue that relatively speaking that is not a bad position for an economy to be in these days.

17 July 2022

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Categories: Afternoon Tea in Jerusalem, Business, Israel, Jerusalem

So Joe Biden dodged most of the difficult questions during 46 hours in Israel and 3 hours in the Palestinian territories. His main stopping point was Saudi Arabia.

In return for a public and private humiliation of the American President, the Saudis will pump oil. This should help to lower pump prices in the USA and elsewhere. Thus, Biden’s incumbency will be protected. Yeah.

Meanwhile, the German economy comes under threat, as it is dependent on energy from Russia. Italy is in political crisis. Even Britain – not in the EU – is suffering from high inflation and an economic options that lack potency. The Euro is crumbling and the greenback is seen as a saviour, of sorts.

So where does this leave the economic planners in Jerusalem?

You could argue that none of this matters. With still around 100 days of electioneering, there will be little new policy direction in that time, and probably for weeks afterwards as well. And yet:

According to Bank of Israel data for 2020 and 2021, half of all imports to Israel came from Europe while Israeli exports to the continent were relatively low. The reverse was true for the United States; exports from Israel to the United States were very high and imports were low.
Weak euro could strengthen Israeli economy, experts say (ynetnews.com)

To dummy this down: Israel’s annual inflation rate is around 4.4% and climbing sharply. If the country buys from places where it ‘costs less’ against the shekel, then it will import less inflation! Potentially good news for those in power who are looking to sway electorates.

Israel will not be waiting for the Saudis to commit to ties, officially, with Israel. The desert Kingdom has rarely rushed to do anything, However, neither will the country let itself be governed by Biden’s own pressing internal agenda. Fortunately, Israel’s economic remains healthy and balanced.

10 July 2022

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Categories: Afternoon Tea in Jerusalem, Israel

One of the key elements of the latest Israeli general election scheduled for November 1st is the continuing courtroom dramas surrounding former Prime Minister, Benjamin Netanyahu (Bibi).

To clarify: In order to achieve a 6th term as Prime Minister, Bibi has to overcome the mess of at least 5 on-going legal issues. (BTW, Israel is one of the countries with the most numbers of lawyers per capita!)

Bibi is in the dock on 3 accounts. The files have been named as 1000, 2000 and 4,000.
At least 4 of Bibi’s associates-cum-appointees are accused of corruption, following the purchase of an extra submarine from Germany not approved by the chief of staff.
Bibi is suing former Prime Minister , Ehud Olmert for slander.

The first 3 cases could drag on for years. Item 4,000 is full of juicy slander. 2,00 has yet to start. However, 1,000 exploded onto the front pages last week.

The core is as follows. The State argues that Bibi and his family received nearly 700,000 nis (say US$220,000) in gifts from an Israeli tycoon by the name of Arnon Milchan. Those in Bibi’s camp argue that this is a ‘bogus trial’. There again, as one radio commentator observed last week, Bibi has an amazing ability to distance himself from sticky dirt, while at the same time making you feel bad for even thinking something negative about him.

So far, the public has only heard the case for the prosecution. It is assumed that the defense will argue that the sums are far less and anyway, that is what friends do – they give each other presents. For the record, after the gifts – such as cigars and decent booze – were transferred, Milchan’s work visa to the USA was approved.

I am no legal genius. But I have two questions that have yet to come to light.

First, as my wife put it, how much does Bibi give to his friends, assuming he does kindly hand out gifts?

Second, there is an elephant in the room. In other words, there is an assumption that Milchan did not give this level of gifts to others. Why? Because his team felt that they may be breaking the law? Because most public servants globally appreciate that this level of behaviour can severely harm the rule of government?

The trial is expected to continue this week, but I along with many other voters want some answers, quickly.

Pages

When traitors identify themselves in the Israel of 2023

When Bibi Netanyahu blames me, he doesn’t do what?

Israel’s economy: What you can’t see

Bibi Netanyahu: A lesson in how to shoot yourself in the foot.

Simon Sinek delivers an unexpected blow at Israel’s PM

Netanyahu: Saviour and wrecker of the Israeli economy

Is Israel’s economy resilient enough against judicial reform?

Is Netanyahu for turning? The power of a pair of scissors

A chaotic week in Israel

Are the financial markets trying to warn Netanyahu?

Bibi Netanyahu’s Likud Party doesn’t do Tech

Israel’s “new” economic policy. Liz Truss Take 2?

Israel’s new finance minister: An opportunity to learn to read

Israel’s new Finance Minister cares, about something.

Bibi’s duck comes back to haunt him

Remembering Netanyahu as an excellent Minister of Finance

Why the Israeli economy loves elections!

Israel’s resilient economy making others jealous?

A strong dollar is good news for Israel’s economy?

Questions you don’t ask in Israeli courts

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