Netanyahu Is Tricking Israelis Like the Dutch Tricked Indians

The government is afraid of the people with vested interests; it prefers them to the 7.8 million citizens.

In case you didn't know by now, we have a gracious and compassionate prime minister whose only goal is to do well by the people. Even before the start of Sunday's cabinet meeting, he made a declaration on the "benefits" the government would grant its subjects: "reductions in housing costs, cheaper public transportation and lower prices for fuel and gas."

At the end of the meeting, when none of that had happened, Benjamin Netanyahu spoke about one important provision he did manage to pass "in the framework of the benefits": an exemption from customs duties on online purchases of up to NIS 1,200. He added that this was "another step in extending the tax breaks we have already approved." How many benefits can one receive in a single day? And how do hikes in income tax and corporate tax turn into "benefits"?

Netanyahu reminded me of the Dutch conquerors who bought New York from the Indians of the Lenape tribe for some strings of glass beads. The Dutch were certain the Indians would love them forever.

So the Indians in these parts must be informed that on Sunday they suffered a horrendous defeat. They received some glass beads, but they lost the chance to lower the cost of living. This is because the government is afraid of the people with vested interests. It prefers them to the 7.8 million citizens.

The problem is not the one-week postponement of the decision-making on implementing small reforms in the gas industry for households, the cement industry, the gas station industry and public transportation. Those aren't the major issues. The big story is that the important recommendations in the Trajtenberg report's chapter on competition weren't on the government's agenda at all. They disappeared. They were put off to some unknown date.

The following are recommendations for dealing with the main reason for our high food prices: the high protective customs duties on food products and the many non-customs duties that impede imports. Regarding industrial products, the Trajtenberg Committee recommended reducing the duties to zero within a year. But the government already surrendered a month ago to pressure from the industrialists and decided to lower those duties gradually over five years; this too was done circuitously, so it's not at all certain the reduction will be implemented.

But this is nothing compared to the evasion by Netanyahu and Finance Minister Yuval Seinitz of a root canal in the maw of the high customs duties imposed on food imports; for example, 190 percent on meat, 170 percent on chicken, 212 percent on powdered milk, 140 percent on butter, 298 percent on fresh onions, 127 percent on olives and 80 to 100 percent on olive oil, canned tuna, tomato paste, roasted peanuts and honey.

The honey story is interesting because the public thinks the Yad Mordecai monopoly is held by Kibbutz Yad Mordechai. Actually, the giant Strauss Group holds a 51 percent stake. One may import a certain amount of honey without customs duties. And who benefits here? The Yad Mordechai monopoly. In other words, the largest producer is also the preferred importer. So is it any wonder that the price of honey here is higher than in Europe?

Even the committee headed by Sharon Kedmi, the director general of the Industry, Trade and Labor Ministry, which last week was supposed to submit a list of reduced customs duties on food products, hasn't done so. Netanyahu isn't willing to confront the industrialists and farmers, so there haven't been any price reductions.

Moreover, the part of the Trajtenberg report on the Standards Institute has not been brought before the cabinet. Trajtenberg recommended that we allow the free import of all products that conform to an international standard, and let importers check products at approved laboratories in Europe. That way there would be no need to go through the Via Dolorosa of the Standards Institute, and importing would be quicker and a lot cheaper.

But the industrialists oppose this and the government is afraid. Nor has the cabinet had on its agenda Trajtenberg's recommendation that we significantly reduce our use of duties, ironically enough, to protect the monopolies. The industrialists oppose this too.

So instead of a reduction in customs duties and the elimination of barriers, Netanyahu has given us colorful glass beads. He of course is certain he has tricked us, just as the Dutch tricked the Indians.

Read this article in Hebrew