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Netanyahu campaign leans on Israel's economic woes

Opposition leader Benjamin Netanyahu is focusing his electoral campaign on the failure of the government to lower the cost of living and better working conditions in schools and hospitals.
Israeli former Prime Minister Benjamin Netanyahu attends a meeting at the Knesset in Jerusalem on June 30, 2022.

With just two days until the school year begins, 2 million Israeli children from preschool to high school still don’t know if they’ll really be starting school on Sept. 1.

This is because of a standing threat by teachers’ organizations to shut down the entire educational system as part of their longstanding struggle to improve their salaries and working conditions.

Negotiations between the Finance Ministry and the teachers’ labor unions have been underway for several days now in the hope that the crisis can be resolved. However, even if the two sides sign an agreement, everyone will still have a bitter taste in their mouths at the opening of the school year, and the celebrations surrounding the first day of school will suffer for it. Parents of young children are worried that they won’t be able to go to work. Key figures in the economic sector warn that the damage this could cause to the economy is enormous.

In the background of this struggle in the school system is a fight being waged by hospital interns (hospital residents), which shot up a notch five days ago. Here too, Finance Minister Avigdor Liberman is at the center of the conflict. The interns claim that the agreement signed with them just a few months ago hasn’t been honored. In protest, five days ago, some 200 interns submitted letters of resignation to the Ministry of Health. This was just the first stage of a mass resignation plan. If their demands are not met, another 400 interns are expected to quit.

The interns’ protest revolves around the harsh working conditions they face. As such, they have widespread support. They are calling for shorter shifts, which sometimes exceed 24 hours. This was, in fact, promised to them in an agreement they signed with the Bennett government.

Dr. Rey Biton, the leader of the struggle, attacked the government, saying, “No one is taking responsibility. They are all hiding behind the election in order to hide their disgraceful behavior. The government reached a clear decision to abandon the interns and the health system as a whole.”

She addressed her statement to Prime Minister Yair Lapid and Finance Minister Liberman, as well as the ministers of the Economy and Health. As she puts it, the letters of resignation that were just submitted are an indictment with dozens of charges, including exploitation, subordination, abandonment and negligence leading to death. “You are personally bringing about the most serious health crisis that Israel has ever seen.”

With these crises occurring right in the midst of an election campaign, it is inevitable that they would have immediate political repercussions. They serve the interests of the opposition’s campaign by depicting the government — with an emphasis on Liberman and Education Minister Yifat Shasha-Biton — with serious failures in managing their portfolios.

This is the Achilles’ heel of this government, which became a transition government this past June. Israelis have suffered one economic blow after another in the past few months. Housing costs skyrocketed, for instance, in the months of May and June, reaching a record 18% at the annual rate.

Meanwhile, efforts by the government to reduce demands with a series of steps to shunt these issues aside have failed. Renters ended up paying the price by being forced to sustain a 7% rise in prices.

The climax came on Aug. 22 when the governor of the Bank of Israel Amir Yaron announced that interest rates would be raised by 0.75%. This sent shockwaves through the real estate market. Many borrowers discovered that they would have to pay hundreds more shekels for their mortgages after years in which the interest rate was 0% and mortgage payments remained constant. For many families, housing costs are their biggest expense. With the rise in the interest rate, their available income has been reduced significantly.

Raising the interest rate is an especially aggressive step. It was intended to reduce the rate of inflation, which outpaced the Bank of Israel’s targets, reaching a 14-year record.

Furthermore, the public is expected to pay more for food and electricity too. This affects a large swathe of the population, particularly the poorer groups but also the middle class.

In his 12 years as prime minister, Benjamin Netanyahu was unable to lower housing costs or rein in the cost of living. Nevertheless, he is riding the wave of price hikes, which is unusual no matter how you look at it.

In contrast, the ruling coalition, which has seen two prime ministers in less than a year, is struggling to respond to the situation. Instead, it waves about the positive macro-economic figures, which can also be attributed to Netanyahu, even if they take credit for them.

Netanyahu is well-positioned to attack the government as leader of the opposition. As finance minister from 2003 to 2005, he helped stabilize the Israeli market during a historic economic crisis. As such, it was almost inevitable that he would focus his campaign on these issues. Every few days, he takes to the street to “meet the people,” and he produces videos featuring him speaking with people buckling under the high cost of living or promising to stop the rise in housing costs.

The one person who seems to be paying a steeper price than Lapid is Liberman. It looks as if the position harmed him, at least according to the polls. They predict that his Yisrael Beitenu party will win an average of five seats only.

Liberman is well aware of how this price hike can potentially hurt him, so he launched a campaign of his own, mocking his bitter rival, Netanyahu. In it, he claims that in the 12 years that Netanyahu was in office, he was indifferent to the problems facing the weaker sectors, the elderly, students, the self-employed and the middle class.

Even in dealing with the teacher crisis, Liberman is trying to present himself as taking a firm approach as finance minister, responsible for protecting public funds, even if it harms him politically. “I suggest that we stop with all this politicization and populism on the back of the teachers and parents, and that we keep the debate on topic,” he tweeted a few days ago.

Also taking advantage of the situation is the ultra-Orthodox Shas Party, many of whose supporters are Mizrahi Jews from the weaker sectors of the population. Yesterday, they launched their campaign titled Hungry for Change. The party explains that the name of their campaign comes as a response to the Government of Change campaign, which turned the Israeli middle class into the “new poor,” debating over what products to buy at the supermarket.

Shas’ goal is to increase the number of potential voters in the next election from among the weaker sectors and the Mizrahi community. Since this is an election in which even 1,000 votes will be significant enough to determine whether Netanyahu crosses the 61-seat threshold, this economic campaign can be beneficial to Netanyahu and his right-wing, ultra-Orthodox bloc.

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