A Golden Opportunity for Livni

By Niv Elis

It’s not clear why the Israeli left has shied away from putting economic arguments for peace front and center.  But the recent explosion of economically driven populist angst may change all that.

For nearly two weeks, Israeli citizens have protested en masse in the streets of Tel Aviv, building tent cities along its main drag, Rothschild Boulevard, and across the country.   Though popular disaffection with consumer prices, particularly housing, are at the heart of the the protests, growing economic inequality (persistent through strong general growth) and the neighboring protests of the Arab spring have fueled them.  Because the protests represent a significant challenge for Prime Minister Benjamin Netanyahu and his economic policies, they also provides an opportunity for the opposition leader, Tzipi Livni.

Sitting atop the largest party in the Knesset, which was thrust into the opposition after failing to cobble a coalition, Livni has watched in frustration as Netanyahu presided over the most stable Israeli government in decades, alongside political advocates for West Bank settlement expansion.  By linking the settlements with popular economic woes, Livni could establish her Kadima party with a strong platform, which it has lacked since the Gaza disengagment, its original raison d’etre.  And what a willing audience she would have!

To students demanding cheaper or free education, doctors demanding higher wages and young couples living at home and demanding steps to reduce housing prices, Livni can point out the incredible resources that have been consumed by settlements.  As Bernard Avishai pointed out in a TPM article, settlements cost Israel $20 billion, excluding security. The government has long provided incentives to reduce cost of living in the settlements—lower tax rates, subsidized mortgages, loan guarantees and extra community development funds.  Monies could easily be redirected toward increasing the supply of housing units within the Green Line, which would lower apartment prices dramatically.  (Pro-settlement councils are, of course, propose increased settlement construction to pull Israelis from the cities to their cheaper West Bank counterparts instead).

She could also make the case that such moves would help bolster peace talks, which themselves have economic consequences.  A peace agreement could increase tourism and decrease the defense spending that consumes a sixth of Israel’s budget.  With enough of an electoral boost from the left, Livni could reduce the unsustainable subsidies that keep ultra-Orthodox students in yeshivas instead of the workforce, much to the chagrin of university students who are not offered the same cushy perks.

The economics of the settlements have long been an underutilized rallying call for Israelis in the silent majority.  If Livni hopes to once again take the premiership, she would be wise to channel the public’s newfound economic ire toward a solution.

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