Israel’s situation to ruin the Zionist dream, expert fears

To Prof. Zvi Eckstein, Israel’s economy is like a man in a joke who has fallen from the top of a 50-story building.

Freefalling through a series of rapid-fire election cycles, plus a stalemated government budget, the coronavirus pandemic and more, the man tumbles past the 20th floor and smiles: “So far, so good.”

Unlike the doomed optimist in the joke, Eckstein, a former deputy governor at the Bank of Israel, sees the pavement coming up fast. And he is worried.

“We have an 18% poverty rate, and a GDP per capita that is 40% in real price terms lower than that of the US and 30% lower than leading small countries in northern Europe. And we are not closing that gap,” he said recently in an interview with The Times of Israel.

The Israeli government, like many others around the world, is scrambling to find answers to the immediate economic issues caused by the coronavirus pandemic, Eckstein said. But the nation’s leadership, rudderless and budget-less, is failing to set out strategies and reforms that will enable the country to exit the pandemic and put its economy back on track and on pace with other developed nations in the world. The result may be serious damage to the quality of life, which could trigger a flight of highly educated middleclass families to foreign shores, he warned.

“The election is just a symptom of the fact that we don’t have a fully functioning government, and that there is no economic strategy for the medium and the long run,” said Eckstein, who is also an emeritus professor of Economics at Tel Aviv University.

To Eckstein, a lack of long-term planning has been the most evident casualty of the dysfunctional governments Israel has had for the past two years. The nation has struggled through three inconclusive elections and is headed for a fourth, in March, and Prime Minister Benjamin Netanyahu has held up the passing of the 2020 and 2021 budgets for political considerations and is on trial for corruption.

When planning for the next month is a challenge, planning new and necessary projects meant to last a decade or more is impossible. And the lack will be felt far down the road.

At the same time the poverty rate in Israel is going up, according to a recent report by the Taub Center for Social Policy, with the main victims of the crisis being working families who saw their jobs disappear or their salaries cut, single-parent families and young families.

If Israel does not catch up with the US and European countries, young people who can “choose where to live might leave,” Eckstein warned.

According to the Jewish Agency, more than 20,000 new Jewish immigrants from 70 countries, including countries of the former Soviet Union, Western Europe and North America, moved to Israel in 2020. That number is some 40 percent lower than the 33,247 new immigrants who arrived in 2019, according to Central Bureau of Statistics figures, likely due to the pandemic.