Netanyahu Calls for Economic Growth to Fund Defense


Following a protracted struggle between the Defense and Finance Ministries in recent months over cutbacks in the military budget, Prime Minister Binyamin Netanyahu on Wednesday called for 4-5% economic growth over the course of the next decade to fund Israel’s security needs.

“We need to continue growing at 4-5%, at a higher level of per capita income,” he said in a message to the Israel Democracy Institute’s Eli Hurvitz Conference on Economy and Society in Eilat.

“The only way to fund our security needs…is through economic growth. Not through excessive taxation, not through getting the money from someone else,” he said, adding that fiscal responsibility was paramount.

Israel’s GDP growth topped out at around 6% over the past decade, in more recent years it has hovered in the 3-4% range, though still among the highest in Western countries.

Netanyahu outlined three areas for higher growth: Cyber security, expanding the transportation infrastructure, and developing new markets for Israeli exports, especially in China.

Netanyahu’s emphasis on keeping corporate tax and high-income tax rates down infuriated Opposition leader Shelly Yacimovich.

“Does Netanyahu think that the figure released yesterday, that 50% of the workers in Israel earn a maximum of NIS 6,541, is in an imaginary country? The Prime Minister must come back down to earth and understand that his citizens are collapsing under his policy,” she said.

In a pre-recorded interview aired at the conference, Bank of Israel Governor Karnit Flug seemed to validate both perspectives.

“I think the main challenge for the economy is continued growth at a satisfying rate, while creating a situation in which the fruits of the growth will be more widely distributed to all levels of the population and contribute to reductions in poverty and inequality,” she said, and added that it was crucial to maintain fiscal discipline and bring down the national debt.

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