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What Israel's Next Finance Minister Means When He Promises Torah-guided Economics

It’s the Deuteronomy, stupid: Finance Minister-designate Bezalel Smotrich says religious observance will bring prosperity – but offers up policies that would do the exact opposite

David Rosenberg
David Rosenberg
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Religious Zionism leader Bezalel Smotrich. left, with Benjamin Netanyahu after agreeing to join the new government.
Religious Zionism leader Bezalel Smotrich. left, with Benjamin Netanyahu after agreeing to join the new government.
David Rosenberg
David Rosenberg

The religious component of the incoming government has been growing steadily stronger as the weeks go by. Even before last month’s election, Benjamin Netanyahu promised the ultra-Orthodox parties bigger budgets for the yeshivas and exemptions from the draft and the core curriculum. In the governing coalition talks now underway, he has agreed to create a “Jewish identity” office and transfer control over large parts of the Education Ministry to religious ideologues.

Now this religiousness has gone beyond the prosaic issues of money and power and has journeyed into the realms of mysticism. Bezalel Smotrich, the Religious Zionism party chief slated to become the next finance minister, said in an interview last week that economic policy would now be guided by the assumption that Israel’s Jews faithfully observe the Torah.

Referencing a passage from Deuteronomy familiar to those who recite the Shema, Smotrich told the ultra-Orthodox weekly Mishpacha: “Many economic theories have been tried. They’ve tried capitalism, they’ve tried socialism – but one thing they haven’t tried: an economic idea called ‘And if ye shall hearken diligently unto My commandments.’ ... If we implement Torah, we will have economic prosperity and great blessings. This will be my economic worldview.”

Smotrich has spoken in the past about turning Israel into a country governed by halakha, or Jewish religious law, “as it was in the days of King David and Solomon” – albeit with some adjustments for the 21st century. That is problematic enough, since the Torah’s views on the nitty-gritty of modern policymaking is far from clear.

But that’s not what Smotrich was talking about in his Mishpacha interview. Instead, he was offering a literal understanding of Deuteronomic and other verses about the economic abundance God promises if the Jews are religiously observant.

“The more the State of Israel promotes Torah, Judaism, the mitzvot [commandments] of settling the land, more kindness and more solidarity, then God will favor us with great abundance. And by the way, we will also have security,” he explained. “We believe in what is written in the Torah: ‘If ye shall hearken diligently unto My commandments ... I will give the rain of your land in its season’ [Deuteronomy 11:13-14], and there will be economic abundance.”

But if economic prosperity depends on the observance and faith of Israel’s Jews, then the country is headed into a deep recession. The great majority of Israelis aren’t Torah observant – certainly not in the way Smotrich and his ultra-Orthodox/religious Zionist camp understand it.

Under the circumstances, it would seem more logical for him to hand over the Finance Ministry to someone else and assume the role that’s been bestowed on Avi Maoz, the head of the extremist Noam party and the designated “Jewish identity” czar: the person who, inter alia, will make sure Jewish values are instilled in the schools and that only people who are halakhically Jewish can make aliyah.

But Smotrich’s remarks suggest he isn’t counting on a mass return to religious observance, but rather that economic policy should favor the minority who are observant – namely, the Haredim and religious Zionist communities.

As Smotrich explained to Mishpacha, he supported big increases in government spending on Haredi educational institutions “because learning the Torah is important, but also because I want the State of Israel to come and say declaratively: ‘Learning the Torah is important to me.’ It works for the sake of heaven, and it works in reality.”

By the same token, Smotrich also supports more money for settlements as a fulfillment of the commandment to settle the land and making the life of the Torah-observant community easier by eliminating the taxes on both sugary drinks and disposable dishes and cutlery (both of which are used more heavily by the ultra-Orthodox). For a finance minister guided by the requirements of Torah life, people’s health or the damage to the environment isn’t relevant.

United Torah Judaism leader Yitzchak Goldknopf speaking in the Knesset as governing coalition partner Bezalel Smotrich looks on.Credit: Noam Moskovitz

It will be interesting to see where else this takes Smotrich.

On the one hand, the Religious Zionism party platform and Smotrich himself advocate free markets, competition, deregulation and less government – and Smotrich reiterated that in the Mishpacha interview: “I will crush the bureaucracy, and Israel will become a huge center for international investment,” he declared.

On the other hand, his “Jewish” economic policy favoring the Haredi community and the settlers goes in exactly the opposite direction, calling for more state support and intervention.

We can only conclude that a Smotrich-led Finance Ministry will employ a two-headed economic policy: generous government support for the observant population; and lean government for all the rest.

Since the big budget surpluses Israel had enjoyed in the post-COVID era are quickly disappearing, Smotrich’s lean government for all the rest of Israel will mean fewer services, and less money for schools and infrastructure – that is, unless he plans to increase deficit spending, which would violate the spirit of less government.

Would such an economic regime turn Israel into a magnet for international investment?

The answer is no, for a good reason and a bad reason. The good reason is that, thanks to the high-tech industry, Israel is already a magnet for foreign investment. That is the one sector where Israel has a global edge.

The bad reason is that the kind of bifurcated economy Smotrich appears to envision would undermine everything that makes Israel “Startup Nation.”

Of course, investors like a lean, business-friendly government and the low taxes Smotrich advocates, but they also need an educated, motivated and innovative workforce. The proportion of Israelis not receiving an education in math and science would grow, however, as the government lavishes more subsidies on the Haredi minority.

Investors want infrastructure that can provide the telecommunications and transportation services that businesses need. But under Smotrich, the government will be hard-pressed to come up with the money for these kinds of things.

Investors also want to know that the rule of law applies – another principle Smotrich aims to undermine with legal reforms giving politicians more power over the judiciary.

Finally, they don’t want to invest in a country that’s at war. Today, the global business community has learned that Israel can cope with successive mini-wars and terrorism. They are blips on the screen. But with Smotrich and his ally, Itamar Ben-Gvir, poised to take control of the West Bank under the new government and impose hard-line policies, Israel’s ability to strike that delicate balance between war and business is about to be tested, perhaps fatally.

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