If Herzog Wants a Revolution, Here's What He Has to Say

Imagine if the Labor leader finally stopped allowing Benjamin Netanyahu to set the terms of debate and delivered this speech.

Bernard Avishai
Bernard Avishai
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Isaac Herzog
Isaac HerzogCredit: Olivier Fitoussi
Bernard Avishai
Bernard Avishai

Isaac Herzog promises a revolutionary change, a mahapakh, as the Likud’s victory in 1977 was called. But revolutions are made by leaders who kick through rotting doors. Where is Herzog’s kick? Herzog also speaks, justifiably, of economic inequality, the dangers of global isolation and Likud’s political extremism. But a mobilizing vision is not a list of grievances. What Herzog, co-leader of the Zionist Union party with Tzipi Livni, has not done is connect the dots: put together a story anyone can understand and repeat over dinner – a story he, given his experiences, can credibly tell.

Imagine if Herzog finally stopped allowing Benjamin Netanyahu to set the terms of debate and delivered the speech he and senior members of his team have only been implying – the speech his campaign desperately needs. It might sound something like this:

You all know that there is an economic crisis in this country. But nobody else will tell you the truth about it. We have monopolies and tycoons, yes, but we can’t escape this crisis just by cutting up the pie more fairly. We have to grow the pie much faster. And to grow it, we have to be a trusted part of the Western commercial world.

Prime Minister Benjamin Netanyahu’s diplomatic stalling on the occupation is isolating us. We are facing increasing hostility, company by company, university by university. The money we’ve wasted on settlements is just a small part of the wealth we’re giving up on because of what the world thinks of settlements. Isolation – which Netanyahu is bringing us – is a disaster.

I know, I know, we left Gaza and look what happened. Palestinian President Mahmoud Abbas (Abu Mazen) may be a reasonable man, but people like him get overthrown in our region, and we can’t risk missiles around our airport. I’ll come back to these problems, but first I want to be clear about the economy – your most immediate problem. I want to show you why looking at our business climate while ignoring our diplomatic climate misses the point. It leaves the job half-done.

Look, I was the minister of social affairs, I can give you numbers. Half of you are trying to finish the month on 6,800 shekels (about $1,800). A third of our children live in poverty. Since 2008, the cost of housing has risen 84 percent. The rich in the average developed country earn about 9 times what the poor do; in Israel, it is 14 times. Twenty families control half the wealth on our stock exchange.

We hear about all kinds of reasonable-sounding proposals, some of which I strongly agree with: break up the monopolies; loosen up control of public lands; nationalize the JNF; invest more in education, child care and health care; reform the value added tax; increase labor participation by ultra-Orthodox communities. But I have news for you. Even if we did all of these things, and somehow managed to equalize national income without causing our wealthiest investors to bolt to Switzerland, we would still be in crisis.

The problem is not – or, is not only – the distribution of wealth, but rather, the rate at which we create it. We should be like Singapore, whose inequality is worse than Israel’s, but which attacks its poverty more successfully, because its economy grew on average at about 5.5 percent per year from 2007 to 2014. Israel congratulates itself for growing at 3.5 percent annually since 2007, which is actually lower than it seems, since it barely outpaces the rise in our population. In Singapore, the average per-capita income is $55,000. In Israel, it’s $33,000.

Yes, we celebrate our great young entrepreneurs. But we don’t bother to ask why, overall, we grow so much slower now than other technology centers, not just Singapore, but also California and Massachusetts – and so much slower than we did in the 1990s.

The answer is simple. We are not getting the kind of investment we should be or building the relationships we could be. When we compare Israeli growth since 2000 to that in countries and regions very much like us, it turns out that we are a whole year’s GDP poorer than they are. That means the government has had 250 billion shekels less to spend on trains, roads, universities, hospitals. That means we have to make a terrible choice between defense and schools.

Building global ties

Netanyahu thinks we have to be a fortress. Naftali Bennett, of Habayit Hayehudi, tells you that we can act as we please – that his settler friends can take what they want without apology – because we make so many things the world needs that the world wouldn’t dare disconnect from us. This is stupid and dangerous. That’s not the way the business world works. Just look at Putin’s Russia since European and American businesses started to lose interest in investing there. Even Avigdor Lieberman publicly acknowledged our danger.

My colleague Erel Margalit has helped build dozens of businesses. Israel has to be a hub, not a fortress, he says. It must be a place where thousands of highly skilled globalist professionals build relationships with foreign professionals like themselves. In 1975, the 1000 largest global companies were made up of 83 percent tangible assets – buildings, machines, etc. – and 17 percent intangible assets – science, knowledge of markets, etc. Now the proportions are reversed. More than 80 percent of a company’s wealth derives from educated, technologically sophisticated people and the global relations they cultivate. Our own companies grow by fitting into the plans of other bigger global companies.

Oh, and around the world, educated technologists read the papers. Mr. Bennett: You cannot enrage the world’s intelligentsia and expect this to have no impact on your economic prospects.

The days of Pinhas Sapir, the late finance minister, and the Histadrut labor federation building toothpaste plants and textile mills to keep out foreign competition ended long ago. Educated people from other countries have to want to come here, learn here, teach here – invest here. If just one person on a development team at Philips, the electronics giant, says “no way,” that team will look for partners elsewhere.

Bennett says: To hell with them. Then they won’t get our great technology. This is childish. His own company, which sold anti-fraud software, needed to build relationships with banks around the world; many other companies offered anti-fraud software. Imagine if, today, European banks – which already apply sanctions on investment in West Bank settlements – were offered security software by a CEO known for Bennett’s politics.

We’re smart, but not that smart. Take the top 1 percent, the business geniuses, of America, Europe, China and India. That’s 30 million people. None of our big companies broke into world markets without bigger, foreign partners at crucial times. One senior venture capitalist I know describes the current environment this way: “If investors have already worked with Israel, they will continue. If they are Jewish, they will invest here to show solidarity. But if they are neither familiar with us or Jewish, we are already gadol aleihem – too much trouble.”

Let me be clear. Our future is in a global economy. That’s where Eretz Israel actually lives, that’s where we shine. The fact that business is so science-based today, so networked, so personal, has been our opportunity. But it is also what puts us in great jeopardy. We don’t export oil; we can’t eat algorithms. Every advanced country must deepen its integration with global commercial and scientific networks, from which they dare not disconnect. Palestinians will not just go to the International Criminal Court. They will go to the International Trade Organization, which can impose sanctions on us.

Young entrepreneurial and technology leaders in the West increasingly regard the occupation as violent, morally indefensible, and resulting not from a reasonable demand for security, but largely from settler extremism. Some Western criticism may not be deserved. But with Netanyahu and Bennett as the face of Israel, disdain for Israel will now increase – and fast – even in America. People speak of the Tel Aviv bubble, but Tel Aviv is the part of Israel not in a bubble. I’ll say it again: Israel cannot alienate the world’s intelligentsia and not suffer devastating economic consequences.

Okay, you say, but is this our fault? What about those missiles aimed at Ben-Gurion International Airport? What about missiles from Gaza? I agree. We need an answer. But here is another thing others won’t tell you. We will never be able to solve our security problems with endless occupation, nor can we solve them by ourselves. There are missiles from outside our borders, too. We need a regional solution, where the security forces of moderate states, along with the U.S. and Western states, face the challenge of Islamist extremism together.

Changing the status quo

I know Abu Mazen. He is as concerned about Islamist extremism as Egyptian President Abdel-Fattah al-Sissi and Jordan’s King Abdullah are. We need to pursue the 2002 Arab peace initiative while we can. Realists in the White House, in the future White House, in the EU, and in our own intelligence community are together on this. If we continue with the status quo, we will experience more violence, and who knows what this will mean for the Palestinian Authority, or for Jordan.

But, you say, we tried to achieve a peace deal and failed. This is a half-truth. We made offers, but never got to the point where U.S. mediation might have bridged the gaps. But why argue about the past? What’s clear is that, with Netanyahu and Bennett in power, the settlements only increase and diplomatic progress is impossible. We will never get to the point where we might become as creative in our peacemaking as we are in our defense strategies.

So here is the last thing nobody else will tell you – and Palestinian leaders are beginning to understand this, too, and even saying it publicly, at Davos and elsewhere: To make the dream of two states work, we cannot implement full separation. And why would we ever want to? There are 14 million people here in Israel-Palestine. North of the Negev, we share a territory the size of Los Angeles County. We already share a common urban infrastructure and business ecology with Palestine. They’ll need us to build businesses, we’ll need them to expand ours.

We shall need highly cooperative relations with our Palestinian neighbors to manage most of our sovereign affairs – not just to manage our common security vis-a-vis terror, as we are doing now with Abu Mazen’s police, but also to manage water, sewage, bandwidth, epidemics. We need cooperation to manage tourists crisscrossing borders. We will need cooperation in keeping ourselves from being flooded with African refugees.

We’ll need highly cooperative institutions, with Western and regional help, to manage an undivided municipality of Jerusalem, especially if sovereignty is shared. And when you recognize the inevitability of cooperation, you might more easily imagine accepting a small, symbolic number of Palestinian refugees living in Israel but remaining citizens of Palestine, while many Israeli settlers live in Palestine but remain citizens of Israel.

Two states, in other words, does not mean finally implementing the partition plan of 1947. Those days, too, are long gone. What we can look forward to, if we keep our heads, is something far better. Think of the Israeli jobs as the Palestinian economy, infused with Gulf and Jordanian-Palestinian investors, focuses on construction, retail, food processing, etc. – parts of our own economy where our own wages have been low. Think of the new opportunities, raising wages, that will open up. Think of opportunities for Israeli Arab citizens to partner with Jews in pursuing regional markets. Think again of tourism. Jerusalem gets perhaps 3 million tourists a year. Prague gets 12 million. Increase tourism by 4 million and our GDP increases by $8 billion.

Our politicians always say at this point, if you will it, then it is no dream. Actually, none of these underlying realities have to be willed to come true. They are already here. What has to be willed is the denial of them.

Netanyahu and Bennett are holding up a preposterous vision: of an Israel that remains an occupier yet remains a democracy, accepted by the world; an Israel with new, annexed territory from which the Palestinians have conveniently disappeared – gone, presumably, to make their homes in Jordan, from which the king and the Bedouin have conveniently disappeared; an Israel that remains at war forever, yet where our quality of life has not disappeared; an Israel that can survive in the international community so long as Likud leaders enjoy the support of the Republican Party, and of U.S. tycoon Sheldon Adelson’s billions, and where the 70-percent support of American Jews for the Democratic Party has also disappeared.

It is not too late. Give me and my team the chance to change things, to face realities bravely, cooperatively, and work with our allies to improve things. Give Tzipi Livni the chance to rebuild our foreign relations, Amos Yadlin the chance to put our defense forces back in a realistic posture, Manuel Trajtenberg the chance to budget for the things we need, Erel Margalit the chance to grow our industries, Shelly Yacimovitz the chance to help our poorest.

Stop focusing on the nonsense – on bottle deposits and contributions. This is the most important election of your lifetime. Imagine what another five years of Bibi and Bennett really means. We can change things.

Bernard Avishai is adjunct professor of business at Hebrew University and visiting professor of government at Dartmouth College. He’s the author, most recently, of “The Hebrew Republic” and writes regularly for The New Yorker online.

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