Mourners lay flowers at the funeral of Lili Itamari, 63, and Ram Itamari, 56, a couple from Kibbutz Kfar Aza who were killed in the deadly incursion into Israel by Hamas gunmen from the Gaza Strip, at Kibbutz Ruhama in southern Israel, October 29, 2023.
Ronen Zvulun | Reuters
Hundreds of influential Israeli economists have warned the government that it must make major economic changes quickly, including reopening the country’s budget, as the war with Hamas approaches its fourth week.
The letter released Monday by the Israeli Economists’ Forum calls on Prime Minister Benjamin Netanyahu and Finance Minister Bezalel Smotrich to “wake up and start responding to the difficult challenges facing the Israeli economy.”
More than 200,000 Israelis, mostly from the south, have been forced to move because of the war with Hamas. That’s a big expense that the recent government budget didn’t take into account. In this regard, economists want Israel to take an unprecedented step to reopen the 2024 budget, which was passed in May, after a bitter political battle.
“If there are budget expenditures that are not related to the war, or the necessary reconstruction, it should be reconsidered,” said Itai Ater of Tel Aviv University’s Coller School of Management, who chairs the Israeli Economists’ Forum.
Then there is the cost of the war itself, including the 360,000 reservists called into service, which is more than 10% of Israel’s workforce. Large parts of the country’s economy were shut down due to conflict, labor shortages and national conditions.
The letter also warned “Israel has sustained a severe blow that mandates a fundamental shift in national priorities and a massive reallocation of funds to deal with the extensive damage of the war, the need to support victims, and the rebuilding of Israel’s economy.”
The battle is now in Gaza where Israel is attacking from land, air and sea. It began after the deadliest terrorist attack in Israel’s history on October 7, when Hamas militants tore through Israel’s southern barrier killing 1,400 people and taking more than 200 hostages.
Since then, Israel has also been damaged, although to a lesser degree, on the northern border with Lebanon and Syria, as well.
What is the purpose of the forum?
An aerial view shows the damage caused by the massive incursion of Hamas militants from the Gaza Strip, to Kibbutz Be’eri in southern Israel, on Oct. 11, 2023.
Ilan Rosenberg | Reuters
The forum of 300 economists was established in January of this year, to warn the government about the possible economic consequences of Netanyahu’s push for judicial reform. The devastating political conflict has subsided, taken over by a devastating and costly war that most Israelis never thought possible.
The forum’s letter went on to say: “The cosmetic changes in the current budget do not come close to what is needed to deal with a crisis of this magnitude, the government must address these challenges as soon as possible, and it must restore citizens’ confidence in its ability to do so.”
Although not mentioned in the letter, Ater said a good place to start would be to lower the amount of money given to ultra-Orthodox Jews for what he called “non-core education.”
Funding for ultra-Orthodox or Haredi schools in Israel continues to be debated because of the massive role the population plays in the Israeli government. Ultra-Orthodox parties have often been the swing vote in strengthening or establishing a coalition in the Knesset. To get their support, the politicians, latest Netanyahuwas accused of supplying ultra-Orthodox parties with generous government support for their schools.
The Economists’ Forum is asking for the absolute minimum needed at this stage to prevent the economy from falling into the abyss, Ater said. He fears more will be needed if the war escalates.
The Ministry of Finance has not yet responded to the letter.
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