National Economic Council Faces Declining Influence Amid Political Shifts and Controversies
The National Economic Council of Israel, once a pivotal advisory body, has seen its influence wane in recent years amid growing politicization and internal controversies. Since Professor Avi Simhon took over as chairman in 2015, critics argue the council has shifted from broad economic strategy to politically charged initiatives, undermining its core mission. Simhon, an economics professor at the Hebrew University and economic advisor to Prime Minister Netanyahu, gained prominence during the COVID-19 crisis as the architect of the controversial universal grant program, costing 6.5 billion shekels.
Originally established in 2006 under Prime Minister Ehud Olmert to provide comprehensive economic advice directly to the Prime Minister, the council was designed to complement the National Security Council by focusing on economic strategy. Founding chairman Professor Manuel Trajtenberg emphasized its role in structural reforms and long-term planning. However, recent reports, including a 2023 State Comptroller audit, highlight structural weaknesses such as lack of legal authority to compel information from ministries and diminished strategic output, with the council’s involvement in key projects dropping from 72% in 2018 to 38% in 2021.
Simhon’s tenure has been marked by contentious proposals, including a mortgage subsidy plan that faced strong opposition from the Bank of Israel, the Finance Ministry, and the academic community, ultimately leading to its withdrawal. He also advocated for a VAT reduction contrary to International Monetary Fund recommendations. Simhon defends these initiatives as macroeconomic measures aligned with international precedents and insists the council’s role is to provide independent economic perspectives, even if they conflict with other government bodies.
Former council leaders and insiders lament the loss of the council’s cross-governmental coordination and strategic vision, citing increased friction with the Finance Ministry and a narrowing of focus to politically motivated projects. Former chairmen Manuel Trajtenberg and Eugene Kandel recall a period when the council was a respected, nonpartisan institution driving major reforms. The council’s politicization is underscored by Simhon’s active participation in Likud primaries and his close ties to Netanyahu.
Despite criticism, Simhon points to achievements such as reforms in disability benefits, the 2050 housing strategy, and efforts to boost high-tech education. The State Comptroller’s reports recommend formalizing the council’s authority in law to restore its effectiveness. Former officials believe the council can regain its stature with legal backing and appropriate leadership, emphasizing the need for a strong, professional economic advisory body amid Israel’s complex fiscal and security challenges.
