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Treasury official: Be careful we don't turn into Venezuela

Besieged Netanyahu announces virus handouts to all Israelis totaling billions

Widely panned plan will see all citizens aged 18 and over get checks for at least NIS 750 amid economic crisis, rise in infections; PM denies playing election economics

Prime Minister Benjamin Netanyahu addresses the media at a press conference in Jerusalem on July 15, 2020 (screenshot)
Prime Minister Benjamin Netanyahu addresses the media at a press conference in Jerusalem on July 15, 2020 (screenshot)

Facing rising criticism over his response to the financial crisis touched off by the coronavirus pandemic, Prime Minister Benjamin Netanyahu on Wednesday announced a new NIS 6 billion ($1.75 billion) financial aid package that will see the government cut a check to every Israeli.

The plan will see couples with one child receive a one-time payment of NIS 2,000 ($583), which rises to NIS 2,500 ($729) for those with two children, and NIS 3,000 ($875) for those with three or more. Single Israelis aged 18 and over will each receive NIS 750 ($218).

The funds are to come from social security payments and therefore likely won’t require formal legislation to be approved, but rather only ministerial support.

The plan has been met with significant criticism, including from Finance Ministry officials and Netanyahu’s coalition partners.

“We must get the economy running again. People are sitting at home, they aren’t consuming,” Netanyahu said during a press conference with Finance Minister Israel Katz at his office in Jerusalem, adding that the funds are meant to encourage more local consumption.

He called on politicians to quickly support the plan, saying he was sure the whole government would approve it and expressed hope it would not prove necessary to anchor it in new legislation, since that would take time.

Netanyahu said he wanted to “quickly get it to all Israeli households” and that “if we start arguing about why, it will take longer — weeks, I hope not months… We’ll never get it done.

“We need to get the wheels moving and make sure nobody falls between the cracks,” he said.

Israelis shop at Dizengoff Center in Tel Aviv on July 15, 2020. (Miriam Alster/Flash90)

He also appealed directly to Israelis who have faced financial difficulties amid the pandemic. “I hear your distress. You’re not alone,” he said.

Asked about the Finance Ministry’s opposition to the plan, Netanyahu was dismissive.

“This is not the first time I’ve argued with bureaucrats. Many bureaucrats argue with my requests, but in the end the responsibility is mine,” he said.

Netanyahu, a former finance minister, said the proposed grants were “essential” and that he did not need “lectures” on the economy from the Finance Ministry.

Netanyahu said he was also working on “a long-term plan for the safe reopening of the economy, so we can deal with the coronavirus for all long as necessary — six months, a year, even more than a year.”

Asked whether he was playing election economics, en route to another snap poll, he replied: “The opposite; really not. These are steps to get the economy moving, to create employment.”

He said he wasn’t ignoring the country’s growing budget deficit, but that the extreme uncertainty about the future required the government to take immediate action. “We don’t know what will happen to the global economy,” he said.

As of June 30, Israel’s deficit stood at 6.4 percent of GDP, or $16.9 billion, according to the Finance Ministry.

Avi Simhon, chairman of the National Economic Council, attends a conference of the Israeli newspaper “Makor Rishon” in Jerusalem, December 8, 2019. (Yonatan Sindel/Flash90)

According to Hebrew media reports, the NIS 6 billion plan plan is backed by Avi Simhon, the head of the National Economic Council, but faces opposition from Finance Ministry officials.

The Finance Ministry opposes the proposal on the grounds that all Israelis would receive money under the plan, regardless of their income level or whether they were hurt economically by the government-mandated restrictions to contain the virus.

A meeting between finance officials on the proposal devolved into a screaming match, with yelling heard in nearby offices, Channel 12 news reported.

Shaul Meridor, the head of the Finance Ministry’s budget division, reportedly warned during the meeting: “This is not a very smart way to distribute money.”

“We need to be careful not to become Venezuela,” he was quoted saying.

The network said Meridor was referring to the difficulties faced by Venezuela, which has the world’s highest inflation rate and has seen a major contraction of its economy in recent years, in raising money from capital markets due to financial impropriety.

Channel 13 said Netanyahu was seeking to fire Meridor.

No Bank of Israel representatives were involved in the formulation of the plan, the report said.

The Blue and White party, which is part of Netanyahu’s government, criticized the plan for failing to target those who are in need.

“Any economic support for Israeli citizens is welcome, but it needs to be anchored in a responsible and long-term plan,” Blue and White said in a statement.

It added: “Regarding the grants, Blue and White supports directly transferring money to citizens, but this needs to be done with an emphasis on those whose livelihoods was hurt… we’ll deliberate this later in the government.”

Blue and White MK Eitan Ginzburg was more pointed in his criticism.

“There’s no logic, neither economic nor social, in giving out the same amount of money to everyone when it’s clear that there are those who desperately need it and those who can get by without it,” Ginzburg tweeted.

He said he trusted Blue and White ministers to push “to fix this illogical distribution [of funds].”

Netanyahu, nonetheless, said he was confident Blue and White leader Benny Gantz would back the plan.

Prime Minister Benjamin Netanyahu (R) and Defense Minister Benny Gantz attend the weekly cabinet meeting at the Foreign Ministry in Jerusalem on June 21, 2020. (Marc Israel Sellem/Pool/Flash90)

The head of Lahav, Israel’s Chamber of Independent Organizations and Businesses, ripped the new plan.

“It is a surreal decision to give money to people who don’t need it, instead of people who are crying out. The self-employed sector is bleeding. Enough with the cheap populism,” Roee Cohen was quoted as saying by Channel 12. “The streets are on fire. We need real solutions.”

Earlier Wednesday, self-employed Israelis began receiving funds promised them as part of an aid package last week unveiled by the premier and finance minister.

While Netanyahu pledged to grant up to NIS 7,500 ($2,190) to self-employed workers hurt by the virus restrictions, many reported receiving significantly less. At his press conference, Netanyahu said 380,000 people got an average of NIS 4,700.

Barak Elmish, a private chef, told Channel 12 he received NIS 2,154 ($630). “They gave us crumbs,” he said.

The rollout of the new aid plans comes amid growing discontent over the government’s handling of the COVID-19 outbreak and the resulting economic crisis, and as Israel appeared poised to return to some kind of nationwide lockdown due to the continued rise in new infections.

Protesters hold signs during a demonstration against Israel’s government in Rabin square in Tel Aviv, Israel, July 11, 2020 (AP Photo/Ariel Schalit)

According to a Channel 13 poll released on Sunday evening, 61 percent of Israelis disapprove of Netanyahu’s overall handling of the pandemic, and 75% are unhappy with how his government has handled the economic fallout of the health crisis. Only 16% said that they were satisfied with the government’s economic response.

Over the weekend, thousands of people descended on Rabin Square in Tel Aviv to protest the government’s handling of the economic crisis and what they say is insufficient aid offered to small business owners and professionals in the hard-hit entertainment and hospitality industries.

As of Wednesday, 853,843 were out of work, amounting to an unemployment rate of 21%, the Israeli Employment Service said.

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