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In Israel, Protesters Decry Rising Cost of Living

BY P. J. Tobia  August 19, 2011 at 11:14 AM EST

Protesters near Israeli parliament in Jerusalem. Photo by Menahem Kahana/AFP/Getty Images.

For the first time in decades, Israelis have taken to the streets en masse for reasons that have almost nothing to do with terrorism, Arabs, security, borders or their neighbors.

The thing that has the Israeli public so angry? Inflation.

Over the past year, the price of just about everything has skyrocketed. Between June 2007 and June 2011, the Israeli Consumer Price Index — one indicator used to measure inflation — quadrupled. In the last year alone, housing prices increased 13.7 percent on top of record growth in previous years. In just the first six months of 2011 the price of food increased 4.4 percent and the price of energy increased 6.6 percent.

A one-liter bottle of olive oil costs about US$12.40 in Tel Aviv, twice what it costs in London – a notoriously expensive city not exactly renowned for its olive groves. Meanwhile, a brand new, manual transmission Honda Civic has an eye-popping $38,000 sticker price, twice what the same car costs in the United States.

Wages have not even begun to keep up with rising costs.

The average Israeli takes home $29,800 a year, according to the CIA Factbook, despite the Israeli economy — powered by a tech boom — growing at a healthy clip and the Shekel, Israel’s currency, becoming one of the world’s strongest.

“The cost of living in Israel is horrendous,” said Daniel Levy, a senior fellow and director of the Middle East Policy Initiative at the New America Foundation. “It’s hellishly expensive compared to what people earn and the inequality gap has only gotten wider.”

The wave of protests that have rocked Israel in response to these prices began as one-woman protest against Tel Aviv’s difficult rental market.

In June, Daphne Leef, a 25-year-old video editor, had to leave her apartment of three years because the building was being renovated. She soon learned that rental prices in the city, even on the outskirts of town, had doubled. Her response was to pitch a tent on Rothschild Boulevard, in one of Tel Aviv’s priciest neighborhoods. On July 14, she started a Facebook group to spread the word, and within hours dozens more tents sprang up like mushrooms.

A week later, tens of thousands of protestors were marching through Tel Aviv demanding economic reforms. By that time the protests had spread to Jerusalem, and by end of the month, people in every major city in Israel had hit the street for the protests, with as many as 350,000 Israelis taking part on the first Saturday in August, according to local newspaper reports.

In mid-August, protesters came out again, not in Tel Aviv, but in “periphery” cities. “Around 80,000 people took to the streets around Israel” last weekend, said Noga Tarnopolsky, a GlobalPost contributing reporter in Jerusalem.

“What lies behind the protests more and more is an iron will,” with activists seeking housing rights for tenants and building regulations, and other demands including free day care, said Tarnopolsky. Demonstrations are concentrated on the weekends, but even during the week, people will wear protest T-shirts to push their message, she said. And on Sept. 3, a million-man march is planned. “The total population of Israel is 7 million people, so [if the march succeeds] you’re talking about half the adult functional population.”

The protesters seem to come from both the left and right side of the Israeli political spectrum. Newspaper polls put support for the protest movement at nearly 87 percent and many who would likely disagree about security or settlement issues are marching shoulder to shoulder for cheaper housing.

In response, Israeli Prime Minister Benjamin Netanyahu created a committee to tackle the issue of high costs, naming respected economist Manuel Trajtenberg to head the group. The Israeli parliament responded by calling a special session in the middle of its summer break, though this was largely a symbolic move and no substantive legislative action was taken.

Tied up in these economic issues are broader questions about the nation’s defense and way of life.

“Israel is essentially a welfare state,” said Bernard Avishai, an adjunct professor at Hebrew University who has written two books about Israel. “There’s a certain amount of your monthly income that goes to overpaying for life’s staples…but a third of your paycheck is going to the government, which is buying F-35s and running an occupation and paying for ultra-orthodox schools.”

Avishai said that the Netanyahu government’s initial response to the protestors was to essentially use high real-estate prices to justify Israel’s expansion into what some consider disputed territory. “The government essentially says, ‘You want housing? Here’s housing, welcome to East Jerusalem!’”

But he said that the young professionals driving these protests are not exactly settler material. “These people want to be a part of the world. They want to be cool. They want to live the life they lived in their 20s and 30s, when they traveled to India or Machu Picchu, before they came back and started a business selling software.”

The demonstrations are a vivid reminder of how much Israel’s economy has changed, from the socialist and agricultural state of its early years to a high-tech powerhouse that has created a number of multi-millionaires.

Emmanuel Navon, a professor of International Relations at Tel-Aviv University and member of Netanyahu’s conservative Likud party, argues that it is anti-free market monopolies that have caused the spike in prices while keeping salaries low, and that market liberalization can balance the economy.

“What Israel’s economy needs is more, not less, freedom and competition,” Navon wrote in an Op-Ed in Tuesday’s Jerusalem Post (subscription required).

Navon also said that the young people behind the protest movement are more motivated by politics than a desire for affordable housing and consumables.

“The main organizers of today’s protest in Israel,” he wrote in early August, “are more interested in ousting Netanyahu than in improving the lot of struggling families…Nobody has done more than Benjamin Netanyahu break up monopolies and to lower taxes, so protesters are picking a fight with the wrong person.”

Avishai concedes that leaders at the heart of the movement lean left, and that keeping the current broad coalition together will be a challenge going forward.

“If you look at the bios of the leaders, they mainly come from left-wing families,” he said.

“They all keep talking about social justice. That implies some kind of compromise with Palestinians. They’re being extraordinarily careful so that the people who are in the streets for (lower food prices) don’t know that they’re being led by lefties, but eventually the mask is going to have to come off.”

Few are willing to bet on what the near-term outcome of the protests will be, but analysts say that one of the most important outcomes already has been an awakening of sorts for Israel’s young professional class, a group long thought to be politically indifferent.

“People had given up on the Tel Aviv bubble waking itself up from its disinterested stupor,” said Levy. “Well, the bubble has burst.”

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