Not rioting, just dreaming

After a month in Israel, I'm about ready to join a demonstration against the cost of living here myself. Even armed with pounds (admittedly not worth as much as they used to be) this is a really expensive country.

I feel constantly ripped off on small items - NIS 99 (£17) for sun-screen, NIS 75 (£13) for some water-melon and grapes (I returned the grapes). Day-care seems roughly equivalent to London, but with the average Israeli salary standing at NIS 8,700 (£1,506) a month, it must form an even bigger burden for many working parents.

Then there is the biggie - property. Jerusalem is for dollar millionaires only; the once-cheaper option for young couples, Modiin, is now equivalent to Edgware. Even smaller suburbs of the big cities, such as Tzur Hadassah, outside Jerusalem, start in the 1.5/2 million shekel range (£260,000-£350,000). Goodbye to my dream of selling up in London and buying mortgage-free in Israel.

So the hordes of Israelis protesting that they cannot make ends meet have a point. Israel's economic boom, with GDP growth of 4.7 per cent last year, a strong shekel and unemployment at just 5.7 per cent, has passed by too many middle-class people.

Netanayahu must not put Israel's economic health at risk

I have less sympathy, however, for their solutions. Here, the leaders of the revolution seem not only misguided, but dangerous- ready to risk Israel's economic miracle at a time when much of the West is facing financial ruin.

The problem is that most of those shaping the movement come from the radical left, including tiny parties such as Hadash (an Arab-Jewish faction with four Knesset seats) and Balad (three seats), and organisations such as the New Israel Fund. Their economic solutions come from the radical left as well.

The word that repeatedly comes up is "socialism". When, two weeks ago, the head of the Histadrut union mentioned "capitalism" to the Tel Aviv demonstration, the crowd booed.

What exactly do they mean by "socialism"? Do the majority of the demonstrators really hark back to Israel of the 1950s, with its food stamps and jobs for the boys - that is, Labour party members?

No, but they clearly want a much higher level of intervention and subsidies.

Many of their basic demands are utterly unrealistic: free child-care from three months upwards, for example. Nor can the government be expected to miraculously make "affordable" apartments available in central Tel Aviv.

Many of the demands seem to based on a sense of entitlement known as "magia li" - "I deserve" even if I cannot afford. No one has the right to live in the most desirable areas; few Englishmen expect to live in central London.

Most importantly, none of the demands have come with price tags or explanations of where the money - when calculated - is going to come from. The demonstrators want Israel's budget to be busted; this must not happen. And it would be equally foolish to seriously shift the orientation of Israel's economy towards middle-class benefits and intervention, when it is almost unique today in its upward trajectory.

The man who can take most credit for this is Benjamin Netanyahu, whose right-wing economic philosophy and belief in the free market has guided the economy for years.

One look around Europe, on the verge of a double-dip recession - and London's riots - shows what the future holds if they mess with the winning formula. The protestors do not realise how lucky they are collectively.

The government's Trajtenberg panel, set up to propose solutions to the demonstrators' complaints, is due to report within weeks. The demonstrators have set up an alternative commission.

It is a shame that this is shaping up to be a battle rather than a dialogue, as many problem-spots need addressing: not only the legitimate frustrations of the middle class, but also the neglect of development towns and Arab towns, income gaps between rich and poor, starving education budgets, high unemployment among Charedim and Arabs, out-of-proportion investment in settlements, et cetera.

Netanyahu must be responsive and do whatever he can. But under no circumstances should the Israeli Prime Minister risk the country's basic economic health. And if these radical parties disagree, let them win the argument through a vote - not on the streets.

    Last updated: 10:26am, August 22 2011