Finance Ministry Advisor Reflects on War, Economy, and AI

Nathan Nahorai, who served as the economic advisor to Finance Minister Bezalel Smotrich, has concluded his eight-year tenure at the Ministry of Finance. He began as an education planner in the wage department and rose through the ranks, eventually becoming a key professional within the political sphere of the Finance Ministry. During his time, Nahorai navigated Israel through a prolonged war, conflicts with Iran, and the creation of six state budgets. He also spent significant periods in reserve duty as a company commander, focusing on connecting various sectors, from farmers to high-tech professionals, with the ministry.

Nahorai described his role as akin to a military secretary, bridging the professional and political worlds. He was instrumental in managing war budgets, developing benefits for reservists, leading the milk reform, and formulating strategies for the high-tech sector, including responses to protests and the AI revolution. He emphasized the importance of firsthand experience, recounting a visit to the Gaza envelope communities shortly after October 7th with former Ministry Director General Shlomi Heisler to witness the devastation and foster understanding for necessary budget allocations.

He detailed his work in establishing a comprehensive benefits package for reservists, including the "Fighter" card, which provided tangible benefits like dining out or family outings, aiming to make reservists feel recognized and valued. Nahorai highlighted the resilience of the Israeli economy during wartime, attributing it partly to the dedication of reservists. He shared an anecdote about a high-tech company manager who reported increased productivity despite 20% of his staff being in reserve duty, leading international headquarters to expand operations in Israel.

Reflecting on the period before the war, Nahorai discussed the significant social rift caused by the judicial reform protests, particularly within the high-tech industry. He initiated roundtables to foster dialogue between industry leaders and the Finance Ministry, focusing on practical solutions for the sector. He recalled an emergency Zoom call he conducted from Syria when the dollar exchange rate dropped sharply, bringing together industry heads, investors, and entrepreneurs to address the economic impact on tech companies.

Looking ahead, Nahorai expressed optimism about the future of the Israeli economy, particularly in the realm of Artificial Intelligence. He noted the rapid adoption of AI in Israel, citing examples from agriculture to education. He believes AI will be a major specialization for Israel, alongside cybersecurity, and highlighted initiatives to attract researchers back to Israel and establish AI-focused academic programs. He also discussed the integration of AI in education to address teacher shortages and enhance learning, advocating for its adoption despite potential concerns.

Nahorai also touched upon the stalled milk reform, acknowledging the complexities of negotiating with industry stakeholders and the eventual partial implementation. He defended the government's decision to subsidize fuel prices, framing it as a necessary measure to prevent wider economic shockwaves, similar to actions taken in previous election periods.