Top Economists Warn Netanyahu's Blockchain Economy Plan Risks Severe Sanctions

Over 100 prominent Israeli economists, business leaders, and former public officials, including two Nobel laureates, have signed a sharp letter warning that banking sanctions against Israel could cause "immense and irreversible damage." The letter was prompted by recent remarks from Prime Minister Benjamin Netanyahu suggesting Israel should "organize an alternative economy" in anticipation of potential banking sanctions, with blockchain technology being one proposed solution.

The signatories expressed "deep anxiety and concern" over Netanyahu's proposal, describing the idea of preparing for cryptocurrency use as "bizarre and typical of criminal organizations." Among the prominent signatories are Nobel laureate in Economics Professor Yoel Mokyr, Nobel laureate in Chemistry Professor Aaron Ciechanover, former Bank of Israel Governor Professor Yacov Frankel, four former Directors General of the Treasury, three former Deputy Governors of the Bank of Israel, two former Supervisors of Banks, and former Budget Commissioners. They were joined by the President of the National Academy of Sciences, Professor David Harel, and leading figures from the high-tech and venture capital sectors, including Marius Nacht, Alon Cohen, Dov Moran, and Gigi Levy-Weiss.

The letter details the potential consequences of banking sanctions, stating they would paralyze the entire economy. "The Israeli banking system, companies, exporters, investors, and especially the high-tech sector, the engine of the economy's growth, would be unable to function. Unemployment would skyrocket, foreign investment would disappear entirely, and Israel's economic standing in the world would collapse," the signatories warned. They also highlighted the impact on daily life for citizens, predicting Israelis would be unable to use credit cards, international e-commerce sites would be blocked, and foreign workers would leave en masse due to difficulties in transferring funds. The healthcare system would also be unable to procure medical equipment and medications, ultimately "destroying the model that allows Israel to exist as a modern and advanced economy."

The signatories drew parallels to countries like South Africa, Iran, and Russia that have faced similar sanctions, warning that "the standard of living for Israeli citizens would plummet drastically, and the state's ability to fund its defense and protect itself from its enemies would be critically impaired." The letter directly criticizes Netanyahu, stating he is "consciously leading the State of Israel towards international economic boycott and isolation" with a "bizarre solution typical of criminal organizations" that is ineffective. They attribute his remarks to "basic misunderstanding and ignorance" regarding Israel's declining international standing.

The letter acknowledges that a comprehensive banking sanction scenario is not currently being pursued by anyone. Instead, the focus has been on targeted measures, primarily related to settlements. The UK announced an import ban from settlements and sanctions on entities aiding their expansion in September, while the Netherlands implemented a ban on trade with settlements that same month. The UN Human Rights Council's database of companies involved in settlements includes seven Israeli banks. The Institute for the People's Policy identified 121 restrictive measures against Israel in 62 countries, 40 of which are financial. This letter follows a similar warning from a forum of economists last week, with this group now including prominent figures from the high-tech and venture capital industries who would be directly affected by the "alternative economy" proposed by the Prime Minister.