Israeli Politicians Silence on Economy Ahead of Elections

As Israeli elections approach, political leaders across the spectrum are conspicuously avoiding discussions about the nation's dire economic situation. Prime Minister Benjamin Netanyahu, Yair Lapid, Gadi Eisenkot, Naftali Bennett, Avigdor Lieberman, Yair Golan, and Aryeh Deri are all participating in an unusual "conspiracy of silence" regarding urgent economic measures needed post-election. While they address security concerns like Iran, Lebanon, and Gaza, the critical state of the national treasury and household finances is ignored.

This silence stems from the political reality: addressing Israel's deep economic deficit requires painful austerity measures, including tax hikes, benefit cuts, and public sector wage freezes, which are electoral liabilities. Politicians adhere to the rule of not volunteering information about difficult steps, as proposing such measures would be political suicide. Instead, they focus on security, unity, and governance, while keeping worrying reports from the Bank of Israel and the Ministry of Finance hidden.

The economic reality, however, is stark. Israel faces a massive structural deficit, largely due to the prolonged war, which has already cost half a trillion shekels. This deficit is expected to grow with increased defense spending for rearmament, force buildup, and reserve duty funding, likely at the expense of the public. Compounding the issue, the war years saw significant budget cuts and low economic growth, reducing tax revenues and widening the fiscal gap.

Furthermore, the threat of inflation looms due to ongoing conflict, supply chain disruptions, and potential global energy price hikes. Inflation would increase the cost of basic goods, erode real wages, and reduce purchasing power. The Bank of Israel may halt interest rate cuts if the next government fails to implement necessary fiscal measures. The looming challenge of AI-driven job displacement also necessitates significant investment in retraining and social support.

The next government will face the unenviable task of conducting "surgery without anesthesia" on the state budget, involving deep cuts to public services and new, painful taxes to prevent financial decline and protect Israel's credit rating. This difficult menu of options explains why politicians are resorting to slogans about victory, hope, or security instead of discussing the harsh economic truths that await them after the elections.