Top Economists Criticize Netanyahu's Crypto Sanctions Evasion Plan

Leading Israeli economists and academic experts have strongly condemned Prime Minister Benjamin Netanyahu's proposal for Israel to utilize the cryptocurrency market to circumvent potential sanctions on the country's banking system. Netanyahu reportedly suggested that Israel should develop a plan for digital currencies to bypass sanctions, a notion that has been met with disbelief and anger from former senior government officials. Many within the economic ministries and even the Prime Minister's office reportedly have no knowledge of any such plan being developed.

Former Supervisor of Banks Yair Avidan clarified that blockchain technology is not a solution for evading sanctions. He explained that blockchain transactions require the cooperation of banks and payment providers, who would likely not participate in sanction-evading deals due to legal and compliance risks. While acknowledging that sanctions pose real risks to banking relationships, trade, and credit, Avidan suggested blockchain could aid in financial resilience and operational continuity if payment infrastructures are disrupted, but it is not a cure for sanctions themselves. He emphasized that preparing for sanctions requires responsible policy, maintaining trade relations, and economic readiness.

Former Director General of the Ministry of Finance Yarom Ariav called Netanyahu's suggestion a "resounding warning signal," equating it to the policies of isolated regimes like Iran and apartheid-era South Africa. Ariav warned that such a move would destabilize the financial system, potentially harm the stock market, lower Israel's credit rating, and lead to a deep crisis. He predicted a flight of foreign investors and a brain drain, severely damaging Israel's economic reputation, growth, and household incomes.

Professor Yair Zimon from Tel Aviv University described the proposal as "extreme, dangerous, and irresponsible," warning it would disconnect Israel from the global financial and banking system, destroying its trade and high-tech infrastructure. Zimon argued that Israel's modern, open economy relies heavily on foreign trade, investment, and access to global clearing systems like SWIFT. He stated that high-tech companies and international investors cannot and will not operate in an unregulated crypto environment, leading to a flight of high-tech firms and capital, a collapse of the shekel's exchange rate, rampant inflation, and severe damage to the import of essential goods, energy, and medicine. Zimon concluded that basing the financial system on volatile, unsupervised currencies is akin to gambling with the nation's fate and expressed hope that Netanyahu would retract his statements.