Israeli Finance Ministry Warns Basic Law on Torah Study Could Cost Economy Tens of Billions

Dudi Kopel, the legal advisor to Israel's Finance Ministry, has issued a warning that the Basic Law on Torah Study, recently approved in a preliminary Knesset reading, could inflict economic damage amounting to tens of billions of shekels. Kopel's concerns focus on the law's potential negative impact on the reserve military service system and the broader economy, particularly regarding the integration of ultra-Orthodox men into the army and workforce, two critical challenges for Israel's economy.

Kopel's warning was conveyed in a letter to Arbel Estrhan, the Knesset Committee's legal advisor, ahead of the committee's scheduled second and third readings of the law. He highlighted that the law's wording is unclear, making it difficult to precisely estimate its budgetary impact. Notably, a clause equating the rights of yeshiva students with soldiers was removed from the draft, but the explanatory notes were not updated accordingly, potentially leading to interpretations that could prioritize Torah study rights over equality and other constitutional rights.

The legal advisor cautioned that such interpretations might fundamentally alter normative frameworks, affecting government resource allocation and employment policies. This could result in increased funding for yeshivas and Torah study institutions, including those without core curriculum programs, potentially at the expense of higher education budgets. Kopel warned this shift could undermine incentives for military service and workforce participation, especially among ultra-Orthodox men, whose employment rate remains around 50% with no improvement over the past decade despite significant investment.

The letter also emphasized the economic burden of reserve military service, with the IDF currently relying on reservists to fill a shortfall of 12,000 mandatory service personnel. The cumulative cost of reserve service from 2023 to 2026 is estimated at approximately 170 billion shekels, with annual economic costs reaching tens of billions. Kopel warned that increased reserve service demands could strain the Israeli economy and the IDF's operational capabilities.

He further noted that equalizing benefits for Torah students with those for soldiers could lead to expanded subsidies for yeshivas, housing assistance, and tuition support, potentially weakening incentives for army enlistment and labor market integration. The Finance Ministry's legal advisor urged careful consideration of these economic and social consequences before finalizing the law.