Why You Can't Use Uber in Israel

Israelis are paying high taxi rates because of a political battle in the government.

A user scans for an available vehicle using the Uber Technologies Inc.'s app on an  iPhone.
Bloomberg

It sounds slightly fantastic and even absurd, but the reason we continue to pay high prices to travel by taxi rather than benefiting from the good service provided by Uber is due to a bitter, bloody political battle between Transportation Minister Yisrael Katz and Prime Minister Benjamin Netanyahu.

At a recent meeting in the Prime Minister’s Office on the subject of the Economic Arrangements Bill that accompanies the budget, the Finance Ministry’s budget department proposed two changes related to taxi service.

The first proposal was to introduce the Via app, which has worked well in New York and Chicago, and allows people to take shared taxi rides. 

A driver can pick up two or three passengers who sign up via the app, with the result that each passenger pays less, while the driver earns more. The second change was increasing the number of sherut (shared taxi) lines, in light of the success of lines 4 and 5 in Tel Aviv.

Prime Minister Benjamin Netanyahu and Transportation Minister Yisrael Katz at a cabinet meeting, January 2016.
Amit Shabi

Both changes work in the same direction: improving service and making it cheaper. Their ultimate goal is to reduce the enormous demand for private cars, which stems from our backward public transport system.

This system obliges everyone to own a car if he wants to get to work on time or go to the beach on Shabbat.

Indeed, the lack of public transportation is our greatest civic failure. In this field, we lag vastly behind the rest of the West. We have no rail system worthy of the name, there are no subways, and the service we get from the Egged and Dan bus cooperatives is execrable.

We’re also the only Western country that has no public transport on Shabbat and holidays, which is a harsh blow for the poor, who can’t afford to own a car, and constitutes outrageous discrimination against them.

Studies show that our roads will become ever more crowded if nothing is done. Today, every car owner spends an average of 60 minutes per day in traffic jams. In another 15 years, it will be two hours.

The economic damage caused by traffic jams stands at about 25 billion shekels ($6.5 billion) per year. In another 15 years, it will be 40 billion shekels.

Now, let’s return to that meeting. Netanyahu listened to the two changes proposed by the treasury and asked, “And what about Uber?” Finance Minister Moshe Kahlon replied, “I’m also interested in Uber, but the authority rests with the transportation minister.”

Behind this brief conversation (reported here for the first time) lies a bitter political battle between Katz and Netanyahu, in which the former is using Uber as an unconventional weapon. If Netanyahu is for it, Katz will be against it.

It began in January, when Netanyahu returned from the World Economic Forum in Davos, where he met with the CEO of Uber. He told Katz, “We need to bring Uber to Israel, it’s good for competition.”

Katz exploded. Netanyahu is going to teach him about competition? After all, Katz has made sure to remind us at every opportunity that he’s the one who brought us “open skies,” competition at the ports and railway reform.

So he answered Netanyahu angrily: “Now you’re remembering to talk about competition? My job isn’t to take care of foreign tycoons, but of all Israeli citizens.”

But wait a moment. Taking care “of all Israeli citizens” is the exact opposite of what he’s doing. Katz has chosen to side with the taxi drivers because they have great power in his Likud party’s central committee, and some even serve as vote contractors.

The drivers don’t want everyone to be able to use their private cars to transport passengers for money. They don’t want competition. They don’t want fares to go down. Thus, they’re fighting Uber.

This week, the Katz-Netanyahu battle ratcheted up a notch. Katz got several decisions passed in the Likud secretariat that weaken Netanyahu’s control of the party.

Netanyahu’s associates responded by accusing Katz of smearing and undermining him. They even charged that he has joined the leftist choir in order to topple Netanyahu, no less. Yisrael Katz the leftist.

In January, Katz said he sees himself as Netanyahu’s heir. That was enough to mark him as the Netanyahu family’s Enemy No. 1.

The problem is that ever since, we’ve all been paying the price for their political brawl – this time, by torpedoing Uber’s entry into Israel.