Fellow Likud minister Katz urges ministers to work together

Likud minister slams ‘out of touch, elitist’ Smotrich over soaring cost of living

In scathing broadside, Netanyahu ally Shlomo Karhi pans government’s daycare subsidies for working parents as only benefiting rich people, says he’s lost faith in finance minister

File: Prime Minister Benjamin Netanyahu (right) with Communications Minister Shlomo Karhi at the plenum hall of the Knesset, in Jerusalem, on May 1, 2023. (Yonatan Sindel/Flash90)
File: Prime Minister Benjamin Netanyahu (right) with Communications Minister Shlomo Karhi at the plenum hall of the Knesset, in Jerusalem, on May 1, 2023. (Yonatan Sindel/Flash90)

Communications Minister Shlomo Karhi of Prime Minister Benjamin Netanyahu’s Likud party lashed out Monday at Finance Minister Bezalel Smotrich, calling him and ministry officials “out of touch and elitist” and accusing them of failing to adequately tackle the country’s rising cost of living.

The attack on Smotrich came as Israel battles persistent inflation, and as the government faces public criticism that it has neglected the matter while focusing on its judicial overhaul plans.

“Prime Minister Benjamin Netanyahu didn’t form a ministerial committee on the cost of living for no reason,” Karhi said in an interview with the Ynet news site, referring to the panel the premier announced he would form last week, and which was convening for the first time on Monday. “The socioeconomic cabinet headed by Smotrich has only convened once over unrelated matters and for no reason.”

Karhi claimed that Smotrich, of the far-right Religious Zionism party, was a “prisoner” of Finance Ministry officials.

Karhi said that he had lost faith in Smotrich, taking particular aim at a plan for partial daycare subsidies for employed parents, which he charged ignored the needs of the most vulnerable. He criticized the coalition for advancing the watered-down policy, after Netanyahu campaigned on a promise of free daycare for all parents of kids up to three years old in the lead-up to the November election.

“It shows a complete disconnect when he gives tax credits only to rich people instead of free education. It says you are an elitist who doesn’t know what is going on in the periphery [Israel’s generally more disadvantaged north and south]. I come from the periphery and I know what is happening to people who don’t know what to buy at the supermarket because they can’t make ends meet. This disconnect can’t happen anymore.”

Finance Minister Bezalel Smotrich at the Knesset in Jerusalem, May 23, 2023. (Yonatan Sindel/Flash90)

Karhi nevertheless defended the recently passed 2023-2024 state budget, dismissing criticism of the extensive allocation of funds to the Haredi community.

Last month, lawmakers ratified the NIS 484 billion ($131 billion) 2023 budget and NIS 514 billion ($139.5 billion) 2024 budget, ending months of coalition bickering over funding priorities and satisfying demands made by Haredi and far-right parties, which hold the power to potentially bring down Netanyahu’s government.

“Nobody gave gifts,” Karhi insisted. “There are also good parts of the budget,”

Included in the spending plans for the next two years, the government has okayed the allocation of billions of shekels in funds to causes that the Finance Ministry and leading economists have warned will lower incentives for the Haredi community to enter the workforce and make it less qualified to do so, and will stifle economic growth.

Karhi’s scathing criticism of Smotrich was not shared by fellow Likud minister Israel Katz, however. Speaking with Ynet, Katz urged all ministers to work together, because “that’s what the public needs and expects the government to do at the moment.”

“I trust the finance minister. He is part of the team,” the energy minister said.

Israelis have been facing aggressive interest rate hikes and inflation in recent months. Last month, the Bank of Israel raised its benchmark interest rate for a 10th consecutive time, lifting borrowing costs by 25 basis points to 4.75 percent as it struggles to tamp recent inflation growth.

File: People shop for dairy products at the Shufersal Deal supermarket in Katzrin, on November 28, 2022. (Michael Giladi/Flash90)

The hikes by the Bank of Israel have rapidly fueled the costs of mortgage holders who are struggling to pay off monthly payments. Over the past year, the average cost of monthly mortgage payments has gone up by an estimated NIS 1,000 ($267).

In addition, in recent weeks, Israel’s largest food manufacturers have announced price increases in the retail sector, led by milk products and products such as bread, instant coffee, sugar and cocoa.

Polls have shown the public is dissatisfied with the government’s performance on the matter, saying that the coalition is concentrating on its contentious judicial overhaul instead of the spiraling cost of living.

A survey released by the Israel Democracy Institute last month showed that most Israelis believe that the high cost of living is the fault of the government’s inaction, 27 percent blame the large monopolies, and 3-4% attribute responsibility to local manufacturers, importers or supermarket chains.

Sharon Wrobel contributed to this report.

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