ISRAEL: Is the Arab Spring spreading to the Jewish state?

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When the protest for affordable housing began, some dismissed the campaign as a ‘Woodstock’ of college kids on vacation. By the time Saturday night rolled around, tens of thousands demonstrated in Tel-Aviv and what started as a students’ summer protest became a nationwide push for change and a political headache for Prime Minister Benjamin Netanyahu.

A few months back, citizens’ protests targeted the pricing of specific commodities like gasoline, water and cottage cheese. Now, protest is everywhere. Students are camping out in the streets in tents. Dairy farmers are blocking roads with cows. Doctors are striking, the head of Israel’s medical association is on a hunger strike. The latest is a Facebook call not to show up for work on Aug. 1.

Israel’s economy is strong, the public is constantly told; the country has money, the economy is growing.

Then why is everyone angry? First of all, because they can be. A quick look around the neighborhood has reminded people they have power and can use it to rework priorities and redistribute resources.

Beyond that, some numbers (from a story by Sever Plocker, a financial journalist): Over the last five years, the average income in Israel has increased by 17% and food prices by 25%. Water rates have gone up 40% and gasoline by 23%. The average apartment price has gone up 55% and rent by 27%.

That last item, housing, sparked the protest sweeping the country. But it’s not only the last five years, Plocker writes. Real wages haven’t increased since 2000, while companies traded on the stock exchange have grown by 300%. The rich are getting richer, the middle class is treading water and ‘this unusual prosperity has passed it by,’ Plocker noted.

‘The government’s economic policies have resulted in 6,000 millionaires and 6 million beggars,’ said Shimon Peres of Benjamin Netanyahu’s economic policies, coining what has since become a classic Israeli catchphrase, ‘piggish capitalism.’

That was in 2004. Then-finance minister Netanyahu is now Israel’s prime minister -- and years of economic policy have just exploded on his shift.

Israel’s former economic incarnation was as a welfare state of sorts with heavy government involvement and ownership of most major companies. Later, governments began privatizing assets, cutting cumbersome and wasteful bureaucracy but placing prime public assets in a small number of private hands. Opposition leader Tzipi Livni once headed the authority for government companies and in her words, ‘privatized everything with a pulse.’ She’s since repented, but the effect of that ideology lingers. Increasingly, public services were privatized and outsourced, government budgets cut and the free-market economy reigned supreme.

Like the ideological divide between the Federalists and anti-Federalists, the debate is now over the degree of government involvement. Netanyahu, say observers, a free-economy ideologue, is beginning to understand its limitations. And the public wants the government to be the responsible adult and not leave them to the mercy of the market.

It’s a protest against the last three decades of extreme economic neoliberalism, said one student leader this week, time for the pendulum to swing back to a balanced midpoint.

One lawmaker has warned that if the government didn’t bring down housing prices, housing prices would bring down the government. While this isn’t happening just yet, public pressure is growing; the government is feeling the heat and politicians know when they’re in trouble. Interior Minister Eli Yishai suggested canceling parliament’s summer break and Netanyahu postponed a scheduled trip to Poland, part of Israel’s traveling lobby against the Palestinians’ initiative to ask the United Nations to recognize their statehood in September. This is no time to leave the stage to the opposition.

Polls show 87% of the public support the protests and only 32% are pleased with Netanyahu’s handling of the crisis, but it is too soon to assess the political impact on Netanyahu and his government.

For his part, Netanyahu, says he pinpointed affordable housing as a key problem upon taking office and identified the Israel Land Authority’s ‘monopoly’ and excessive planning bureaucracy as the main cause of the housing shortage and high prices. On Tuesday, Netanyahu announced his plan to solve the crisis.

-- Batsheva Sobelman in Jerusalem.

Above: Camping out in down-town Tel-Aviv to demand affordable housing. Credit: Matty Stern.