Netanyahu Responds to Obama’s Demands; Fights Street Protests Over Housing

Obama’s call for Israel to agree to borders based upon the 1967 lines has been a bitter point of contention with Netanyahu since May, when Obama announced the demand in a speech, without prior consultation, a day before Netanyahu was to meet with him in the Oval Office.

 

In his remarks to the press in the White House that day, Netanyahu rejected Obama’s demand and lectured him on why a return to the pre-1967 borders would endanger Israel’s security.

 

THE BORDER IS ALREADY IN PLACE

 

As a practical matter, an unofficial border with the Palestinians on the West Bank has been in place since 2003. It is the West Bank security fence, begun by Israel during the intifada, which encloses the largest West Bank settlements, and extends as far as 12 miles beyond the Green Line into the West Bank in some places. Overall, the security fence encloses about 7% of West Bank territory. Its precise route has been adjusted over the years in response to lawsuits brought by settlement opponents in Israeli courts, and decisions taken by the army and the Israeli cabinet.

 

The settler movement has always disputed the notion that the security barrier would determine the ultimate border, and Netanyahu has never publicly accepted it. However, virtually no new construction has been approved by Israel in settlements on the far side of the fence since its route was established.

 

Since becoming prime minister, Netanyahu has been careful never to reveal his territorial demands. He has spoken of the need for Israel to retain at least a military presence in the Jordan River Valley to protect Israel’s eastern border from the threat of a ground invasion. Determining Israel’s negotiating position is the right and responsibility of Israel’s prime minister, and not Obama’s. That is why most friends of Israel rallied behind Netanyahu when he rejected Obama’s attempt to dictate to him in May.

 

SENDING A SIGNAL

 

Clearly, somebody in the Israeli government is trying to send a signal through media leaks that Israel is ready to respond to US and Palestinian negotiating demands, as long as the Palestinians are willing to respond in kind.

 

Apparently as well, Israel wants deny the Palestinians the ability to continue using Obama’s border demands as an excuse to put on a statehood show in the UN come September.

 

Netanyahu may now be simply calling the Palestinians’ bluff. By accepting their conditions, he is then challenging them to choose between more UN Israel-bashing theatrics, or serious peace talks.

 

PROTESTS OF ANOTHER KIND

 

While this news sprang up this week, for the past two weeks the attention of the Israeli media and much of its people has been drawn to a grass roots political protest movement sparked by the country’s chronic shortage of affordable housing. The domestic housing issue, with broad bipartisan appeal, has grabbed the headlines, pushing aside all other concerns.

 

The fact that an issue as mundane as Israel’s chronic housing crisis could dominate the headlines is a signal that Israel’s diplomatic and security problems have temporarily receded to the point that the country can now spare the energy to address long-neglected, but important issues of day-to-day concern to many working class Israeli families.

 

For the past week, while the rest of the world watched the unfolding political drama in Washington over the obscure issue of extending the debt ceiling, Israeli politicians resumed a debate which has lain dormant for years over the country’s long-ignored social welfare needs. That debate also touched on a more basic philosophical divide over whether the best way to address Israel’s domestic economic and social welfare needs is with free market or big government solutions.

 

The housing protest was quickly expanded by various Israeli factions with their own political agendas, from politically weakened, labor-oriented leftist groups who saw it as a vehicle for staging a comeback onto the national political scene, to anti-religious secularists, who imagined that they could co-opt the housing protests and use them to regenerate their once powerful political influence which self-destruced through internal divisions several years ago.

 

In recent years, these opposing forces within Israel’s rough and tumble political arena had been restrained by the public’s preoccupation with the constant threat from Israel’s enemies in the region. Their domestic policy concerns seemed secondary to the mortal threat posed to Israel’s survival and the safety of the millions of Jews living there.

 

Ever since the Oslo peace process began almost 20 years ago, Israel’s political establishment has generally been too pre-occupied with external concerns to allow domestic issues to come to the fore of public policy debate. The past two weeks has been one of those rare times when issues of peace and war have been put aside, forcing Israel’s leaders to direct their full attention to the long-neglected, day-to-day needs of Israel’s working class families, which have been hard pressed financial both by the high price of decent, affordable housing, and inflated prices for the bare necessities of life, such as food and education.

 

TIME TO SPREAD THE WEALTH

 

While on paper, Israel’s economy has been booming, thanks largely to the free market reforms and policies instituted several years ago by Binyomin Netanyahu, when he was finance minister, the fruits of that prosperity have been largely limited to a relatively small, elite group of Israeli entrepreneurs. The great bulk of Israel’s working population, while benefitting from Netanyahu’s full employment policies, are nonetheless still struggling to make ends meet. They have grown tired of waiting on the sidelines for their problems to be addressed, while government leaders remain preoccupied with security and diplomatic issues, and the constant struggle for political power between factions on the left and the right.

 

Another factor which has allowed these domestic issues to take over the headlines is that Israel has enjoyed a relatively rare period of political stability. Now that he has freed himself of the his left wing Labor coalition partner, Binyomin Netanyahu is poised to be the first prime minister in many years whose government is stable enough to have a chance to complete its full elected term of office without having to deal with a major internal political crisis.

 

During the tenure of his current government, Netanyahu has managed to keep his opponents on the left and the right largely at bay. He has learned his lessons from past mistakes, and deftly avoided the gaffes and self-inflicted political wounds which shortened his first stint as prime minister more than a decade ago. As a result, his political opponents have had no choice but to bide their time and wait for an opportunity to arise to challenge him on issues other than his national security and diplomatic policies, which enjoy broad support in Israel today.

 

HOW THE PROTESTS GREW

 

That opportunity presented itself two weeks, in the form of a modest Tel Aviv camp of protest tents demonstrating about the lack of affordable housing. Thanks to the spotlight of media attention, those protests rapidly grew into a series of large street demonstration that drew tens of thousands of Israelis into the streets. At the same time, the subject of the protests expanded to encompass a variety of long-neglected domestic and social issues, including the high cost of living and the unchecked economic power of monopolies.

 

On Motzoei Shabbos, crowds of protesters took to the streets in 10 cities across the country demonstrating on behalf of a wide variety of unrelated “social justice” issues which were played up in the leftist media. But the presence of right wing Israeli army reservists, protesting against orders to evict Jews from their “illegal” homes on the West Bank was studiously ignored by most mainstream Israeli news outlets.

 

The protests were well-timed to draw media coverage during a slow news period, and quickly became a catch-all which attracted a broad range of groups with narrow political agendas of their own. The participation in the protests cut across traditional Israeli political party lines, temporarily uniting hawks and doves, those on the left and those on the right. The protests afforded a special opportunity for activists on the political left to bring their favorite social issues back into the national spotlight.

 

The Israeli left has suffered a series of losses in recent Knesset elections. It has been largely marginalized in national politics. That is why it has tried to seize on the housing protest as rare opportunity to challenge the right wing government of Prime Minister Binyamin Netanyahu, even though the original protesters were much more interested in getting relief on the specific issue of housing than trying to oust the right wing governing majority in the Knesset.

 

HIJACKING A POLITICAL CAUSE

 

One sign of the attempts by the left to hijack the popular protests was the endorsement by the socialist-oriented Histadrut labor federation. As a result, the original complaints about the housing shortage soon were joined by protesters against the high prices for household essentials, as well as calls for Netanyahu’s removal as prime minister, and a leftist class warfare cry, “The people want social justice!”

 

Leftist Maariv deputy editor Shai Golden, hailed the popular protests as proof that, “the Israeli left has risen back to life,” suggesting that its new agenda would focus on “social justice.” But even as he wrote those words, Golden could not resist the temptation to raise the old left wing criticisms of Israel’s settlement policies, as well as condemnations of the “occupation” of the West Bank.

 

Thus, while trying to capitalize on a rare perceived opportunity to attack Israel’s right wing government, the leftist ideologues immediately fell into the same positions which alienated the left from mainstream Israeli voters who are now disillusioned with their agenda of pursuing the peace process and negotiations with the Palestinians.

 

PEACE PROCESS OFF THE TABLE FOR NOIW

 

The peace process is off the table right now, because of excessive Palestinian demands for Israeli concessions. Obama’s clumsy attempts to force a revival of the peace talks have backfired, putting the issue on the diplomatic back burner for now. Everyone is now waiting to see what happens in September, when the Palestinians ask the United Nations to admit them as full-fledged members, despite a US veto threat.

 

The Palestinians insist that they will not agree to return to peace talks until Netanyahu agrees to Obama’s insistence that the negotiations begin by setting borders based on the 1967 lines, with mutually agreed adjustments. Earlier this year, in a visit to the White House, Netanyahu publicly rejected that demand. Yet this week, the Associated Press carried an Israeli TV news report claiming that the prime minister has now agreed to Obama’s demand, and that an unnamed “senior Israeli official” had refused to deny the report. However, there has been no public confirmation of that report.

 

NETANYAHU RESPONDS TO THE POLITICAL CHALLENGE

 

Even his critics acknowledge that many of the domestic and economic problems raised by the protesters long predate Netanyahu’s rise to power two years ago as prime minister. Yet, the Israeli people still hold him responsible for them now. Predictably, as the protests have been exploited and dramatized by his powerful enemies in the left-leaning Israeli media, Netanyahu’s popularity has been challenged.

 

As the media attention given to the protests grew, Netanyahu quickly grasped their political significance. He faced the challenge head on, and canceled a planned trip abroad to deal with it personally. He issued orders to his government and cabinet ministers to address the more self-evident concerns of the protesters, agreed to meet with protest leaders, and publicly expressed sympathy with the growing economic plight of working class Israeli consumers. He has proposed new rules to make housing more affordable and has frozen gasoline prices, and has been talking about bringing the power of business monopolies in Israel to set excessively high prices, under government control.

 

Speaking at the start of Sunday’s weekly cabinet meeting, Netanyahu pledged “to change our priorities” and pledged to appoint a team of ministers and experts to formulate a plan “to ease the economic burden on Israeli citizens,” after “inviting representatives of different groups and various sectors” to air their grievances and proposals.

 

DEFENDING SUCCESSFUL FREE MARKET POLICIES

 

At the same time, Netanyahu, who engineered dramatic turnaround in the health of the Israeli economy when he served as Ariel Sharon’s finance minister, warned against “irresponsible and populist steps that could bring the country to the situation of certain countries in Europe, which have reached the brink of bankruptcy and mass unemployment.”

 

Largely as a result of Netanyahu’s free-market based economic reforms, Israel has one of the fastest growing economies in the world. Gross Domestic Product growth for 2011 is projected at 5 percent, more than twice the rate of US growth, while unemployment has declined to a record low of 5.7 percent. But many Israelis complain that this image of prosperity is deceptive, due to the fast rising costs of housing, fuel, utilities and food, and limited opportunities for the poor to improve their economic station.

 

A sign of strains over economic policy within the government was the Sunday resignation of the director general of the Finance Ministry, Chaim Shani. In stepping down, he cited long-standing policy differences that he said were magnified by the street protests.

 

NETANYAHU’S SOLUTION TO THE HOUSING SHORTAGE

 

On Monday, Netanyahu defended the main target of the protesters, his National Housing Committees bill, which was up for passage by the Knesset this week. He said that it is the centerpiece of his housing reform plan, and the culmination of “two years of hard work” in trying to clear the factors “blocking the housing market.” The law will establish a temporary housing committee for each region of the country, which will be empowered to provide all the necessary paperwork and approvals to get housing projects with over 200 units planned for state land into the construction stage within 18 months. The goal is to accelerate the process of building more “accessible housing” within the reach of working families.

 

Netanyahu argued that the current housing crisis is not the result of “a private market cartel,” but rather a government bureaucracy which controls 90 percent of the land in the state.” He said that his National Housing Committee Bill was the only way to speed up the construction process.

 

However, Kadima MK Shaul Mofaz attacked the legislation, saying, “the middle class is paying for your failures and the failures of your government in socioeconomic matters.” Mofaz suggested that the government should change its priorities in 2012, which prompted Netanyahu to warn in response, “we need to watch out for abstract statements about cutting the defense budget,” in favor of the social welfare budget.

 

Netanyahu also defended his financial policies, saying, “Without responsible management of the market, Israel can find itself in a similar situation as other states that have lost control of their economies.”

 

OTHER APPROACHES TO THE PROBLEM

 

In another view of the cause for Israel’s housing crisis, right wing MK Arye Eldad (National Union) said that the problem lies with private housing contractors who are allowed to sit on land for years without starting construction. “Thousands of homes have already been approved and aren’t built,” Eldad explained. “A contractor who buys land and gets approval to build does not have to hammer even one nail for five years. He can hold onto the land and wait for prices to go up without building one new apartment.”

 

“If you really want more homes built now, have the law require that private builders start construction within 12 months, not five years,” Eldad said.

 

Likud coalition chairman Ze’ev Elkin said that by supporting the housing bill, the Likud is “helping to solve the housing crisis, as opposed to the opposition, which only has populist suggestions.”

 

LIMITING THE POWER OF MONOPOLIES

 

Netanyahu told his Likud faction that his government also intends to reduce the power of cartels and monopolies, and change tax policies to address the complaints of the protesters about the growing economic divide between the working class and the wealthy in Israeli society.

 

“It is good that these reforms are happening now, because these are the main issues that make the cost of living expensive, and we will take care of them,” he said.

 

However, Netanyahu insisted that these problems could be adequately addressed within Israel’s free market economy, without the need to turn to leftist welfare state solutions.

 

He argued that, “we’re fixing mistakes and injustices that existed for years. Not only does social justice not contradict the free market, social justice is dependent on the free market.”

 

Netanyahu quoted Revisionist Zionist founder Zeev Jabotinsky, who said that every government must provide to its citizens with five basic needs: a home, food, medicine, education and clothing. “At the same time, Jabotinsky said the economy must be free. The state should stop poverty, but cannot limit success and the pursuit of happiness.”

 

Netanyahu added that, “It is important to define a competitive market. An open economy should not reach a point where there is no more competition because of monopolies and cartels – in that situation the government must encourage competition. At the same time, there is no need to limit the individual. A healthy economy is based on a vibrant private sector.”

 

AVOIDING WELFARE STATE SOLUTIONS

 

Finance Minister Yuval Steinitz also criticized the reforms demands by some of the housing bill protesters, who have called for “a welfare state now.”

 

“I have a responsibility to prevent Israel from reaching a situation of economic anarchy,” Steinitz said. “We see the talk about the debt crisis in Europe. We even hear talk of a possible default in the United States. My supreme duty is to see to it that we do not reach such a situation in Israel.”

 

While echoing Netanyahu’s promise to reduce monopolies and increase competition, Steinitz added, “we will not turn the rich and the businesspeople and the investors and industrialists into the enemies of the people, because they are part of a healthy economy.”

 

Various left wing Israeli politicians tried to claim the housing-inspired protests for their own, including Ruvik Danilovich, the mayor of Be’er Sheva, and veteran Labor MK Binyamin Ben-Eliezer. Danilovich talked about the popular housing protests becoming a springboard for a national left wing political revival, based on a radical change in national priorities, emphasizing education, health care and affordable housing as part of a “social justice” agenda.

 

NETANYAHU STILL ISRAEL’S MOST POPULAR LEADER

 

However, the day after the big protests across Israel last Motzoei Shabbos, an opinion poll showed that Netanyahu’s stature as the nation’s leader had not been damaged

 

One third (33%) of those polled consider Netanyahu to be the “most qualified” person to lead the country, followed by 19% who chose Kadima leader Tzipi Livni, and 11% for Foreign Minister Avigdor Lieberman. Furthermore, Netanyahu was the most popular leader with various population subgroups, including young voters, secular voters and new immigrants.

 

Furthermore, while three quarters of those polls expressed sympathy with the housing protesters, only 37% said that the protests might influence their vote in the next election.

 

A SEROUS POLITICAL CHALLENGE OR SUMMER FUN?

 

Israeli radio commentator Yaron Deckel explained the apparent anomaly of Netanyahu’s high approval ratings despite the large protests by suggesting that the demonstrations had more “form than substance.” He noted that most of the demonstrators were young people. “Its summer, the kids are on vacation, you live in a protest tent, it’s fun. The demonstrations are not very focused. They are for a higher standard of living. Very nice. But they do not pose any political danger to this government.”