Leading economists: Western pressure over settlements, settler violence could spike cost of living

The Economists’ Forum for Democracy, which represents more than 60 economists, academics, and former senior officials, warns that mounting Western pressure and sanctions over Israeli West Bank settlements and settler violence could exact a heavy toll on the Israeli economy, leading to a spike in the cost of living.

The Economists’ Forum cautions that the issue gained urgency last month when the UK announced a ban on trade with Israeli settlements and 12 Western countries announced similar plans to impose or support restrictions.

“The damage to the Israeli economy could escalate if the measures expand from a handful of countries to a significant portion of Europe and spill over from the settlements to the Israeli economy as a whole,” the Economists’ Forum says in a letter. “There are growing concerns about a significant deterioration in economic relations between Israel and Europe, which will cause substantial macroeconomic damage.”

“The imposition of sanctions will lead to a significant increase in the cost of living,” the forum warns.

The worry is that measures initially targeting settlements and businesses operating beyond the Green Line could ultimately be extended to companies and banks inside Israel’s pre-1967 borders, given the difficulty of separating their activities and supply chains from the West Bank.

The Economists’ Forum called on decision-makers to change government policy towards settlements and settler violence, as current policy is deepening Israel’s isolation.

Settler violence has mounted in recent months, and the letter comes as two recent settler attacks, on European diplomats and a Washington Post photographer, have drawn sharp international condemnation.

“The failure to prevent Jewish terror jeopardizes Israel’s vital trade relations with nations around the world and threatens the entire economy,” the forum says. “The damage must be prevented now, while it is still possible.”

Among the signatories of the letter are Jacob Frenkel, former governor of the Bank of Israel; Zvika Eckstein and Avia Spivak, former deputy governors of the bank; Leo Leiderman and Michel Strawczynski, former heads of research at the bank; former Finance Ministry director generals; and Manuel Trajtenberg, former head of the National Economic Council.