Netanyahu's Economic Leadership Questioned Amid Multiple Crises

Prime Minister Benjamin Netanyahu, once lauded as "Mr. Economy," is now facing significant criticism regarding his handling of Israel's economic affairs. While his earlier reforms in 2002-2003 were seen as beneficial and required political courage, the current term, beginning in December 2022, suggests a detachment from economic realities, according to Treasury officials and media documentation.

One major area of concern is the compromise made with Haredi parties regarding core curriculum studies. Ahead of the 2022 elections, Netanyahu reportedly intervened to ensure continued budget allocations for the Belz Hasidic sect, even if they did not implement English and math studies, a move seen as sacrificing Israel's human capital for political gain. This commitment was reportedly enshrined in coalition agreements, though legal and economic officials ultimately prevented its full implementation.

Furthermore, the proposed judicial overhaul has drawn sharp warnings from over 270 senior economists, who cautioned about potential risks to social stability and economic strength, including credit rating downgrades and reduced growth. Netanyahu, however, dismissed these concerns at a press conference in January 2023, attributing them to opposition leaders, which led to market instability and a weakening shekel. The overhaul also indirectly hindered the government's ability to pass other crucial economic reforms due to public suspicion.

Financing the ongoing war since October 2023 has also been a point of contention. Netanyahu, who previously understood the importance of a declining debt-to-GDP ratio, is now seen as a barrier to proper war funding. His reluctance to close unnecessary government offices and his signals, through Professor Avi Simhon, about potentially delaying tax increases and expanding the deficit have been met with resistance from Finance Minister Bezalel Smotrich, the professional echelon at the Treasury, and public criticism.

Additionally, the article criticizes Netanyahu for failing to leverage the "Swords of Iron" war as an opportunity for deep societal changes, such as integrating the Haredi population into the workforce and military, or implementing reforms to lower the cost of living, like the dairy reform or a property tax on vacant land. Instead, coalition budgets were reportedly maintained, and opportunities for structural economic improvements were missed.

The government's budgeting process has also been criticized for delays and prioritizing coalition politics over sound fiscal management. The 2024 and 2025 budgets were approved significantly late, with the 2025 budget finally passing on March 25, 2025, due to political disputes with Haredi parties. This prolonged uncertainty impacts government ministries and market confidence.

Finally, Netanyahu's recent remarks about Israel becoming a "super Sparta" and needing to circumvent international sanctions using blockchain technology have been met with widespread criticism. This is interpreted as an admission of diplomatic isolation and a lack of effort to maintain Israel's international standing, focusing instead on mitigating damage rather than preventing it. This stance is seen as a departure from his earlier understanding of the importance of open international economic and academic ties.