Economists Shocked by Netanyahu's Crypto Sanctions Plan

Economists are reportedly in shock over Prime Minister Benjamin Netanyahu's recent statements regarding the use of cryptocurrency to circumvent potential sanctions, with one prominent economist warning it could cripple Israel's high-tech sector. Professor Manuel Trajtenberg, former chairman of the National Economic Council, criticized Netanyahu's assertion that sanctions are a "fait accompli" and that crypto is a viable solution.

Trajtenberg stated on 103fm that while some countries are considering sanctions, the "most painful" ones are not yet in place. He expressed surprise at Netanyahu's framing of sanctions as a certainty and the cessation of US aid as a given, arguing that the Prime Minister should have focused on preventing such threats rather than presenting them as facts. "I would have expected the Prime Minister to tell me as a citizen, 'Yes, there is such a threat, and I, as Prime Minister, will make every effort to ensure the threat does not materialize,'" Trajtenberg said.

He further elaborated that Netanyahu's claim of a solution via cryptocurrency is misguided, pointing to its widespread use by entities like Iran, Russia, China, North Korea, Hamas, and Hezbollah. Trajtenberg emphasized that Israel's intelligence community is well aware of crypto's use by adversaries. "The Israeli economy cannot function if we go in this direction," he asserted, warning that if European countries and the US impose sanctions, and Israel relies on crypto, the high-tech industry could cease to function even for a single day.

Trajtenberg explained that crypto's advantage lies in its opacity, making it suitable for illicit activities like drug purchases or money laundering, but entirely unfeasible for high-tech transactions. He highlighted the vulnerability of the banking system, which is under intense US supervision, and predicted that adopting crypto would plunge the Israeli economy into "darkness." He also cited El Salvador's unsuccessful attempt to adopt crypto as a currency.

Regarding US aid, Trajtenberg acknowledged Netanyahu's claims of securing it but stressed that such assistance predates Netanyahu's premiership. He noted that while there's a challenge, it's not insurmountable, as the US has an interest in supporting Israel's defense capabilities and its role as a testing ground for advanced weaponry. Trajtenberg cautioned against prematurely declaring the end of US aid, suggesting that such pronouncements could become self-fulfilling prophecies, especially given shifts in the American political landscape.