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The Rise of Neo-Conservative Think Tanks in Israel

The brief history of a peculiar context

It was 2009, and the Institute for Zionist Strategies (IZS) had a problem. Over the previous two decades Israel’s judiciary had grown increasingly, and to the IZS unacceptably, liberal and activist. Taking note of a number of rulings that had promoted greater formal equality among citizens, the IZS began considering how it might prevent the Israeli Supreme Court from issuing any more of what they saw as radical decisions – decisions that eroded the Jewish character of Israel. A particular target was the court’s landmark Ka’adan ruling, which in 2000 barred the state from discriminating against non-Jews in the allocation of state land.

In response, the IZS began promoting a new Basic Law (the Israeli equivalent of a quasi-constitutional amendment) that would undercut such rulings by re-anchoring the nation-state in the Jewish people. Last July, almost 10 years and many legislative attempts later, Benjamin Netanyahu’s conservative coalition passed this Nation-State Basic Law, triggering a controversy that has raged over the last three months. Still, ten years, hundreds of man-hours, and millions of dollars later, the IZS at last had its victory.

Interestingly, though, while the IZS’s staff is largely Israeli, its funding is not. The Institute for Zionist Strategies is funded by conservative donors from the U.S. Nor is the IZS alone in this – it is only one of a plethora of American-funded, neoliberal, neoconservative Israeli think tanks that have grown in activity over the last decade. Like their American counterparts, these think tanks specialize in promoting the ideals of the free-market.

Joining the IZS on the list of the most influential new think tanks are: the Kohelet Forum, the Shalem Center, and Mida, a digital-only news magazine. Under the auspices of a supportive national government, these organizations combine unequivocal support for the Israeli settlement project with outspoken condemnation of organized labor, welfare services, and “big government.” Although their foci differ, taken together they compose an active attempt to change popular attitudes favoring social-democratic institutions – attitudes which are widespread even after two decades of strong economic liberalization – and to restructure Israel into a fully-fledged neoliberal and neoconservative society.

But the fundamental tension within this combined vision, between a liberal side that celebrates an amoral individualistic market and a conservative side that champions moralized and hawkish state power, meant that previous attempts at implementing it were met by political and electoral failure. On the one hand, Israel’s history of a strong corporative model that steers the political economy has made both welfare and egalitarianism popular concepts across Israeli society. And the exclusionary politics of recent years helped to maintain the ethos of national solidarity – and with it the support for an interventionist welfare state.

On the other hand, a neoliberal transformation in the 1980s and 1990s not only fractured many of those collective national institutions and replaced them by free markets, it also attempted to replace the foundational ethno-nationalism of Israeli Jewish society with a civic-based identity and peace-based prosperity. It is this cultural foundation that groups like the IZS are working to overturn. Thus, although the current government might be the most conservative ever to be formed in Israel, its officials are trapped in the contradictions of Israeli neoconservatism and neoliberalism; in a form of politics that represents both a backlash-to and a deepening-of the liberal order of the last decades.

Enter the think tanks and policy centers surveyed here, whose heavily funded advocacy intends to remove the obstacles set by those two conflicting currents. By using a national cause to justify their economic aims, associating deregulation with unleashed state power, and targeting influential religious sectors as the carriers of the change, these groups prepare the ground for further neoliberalization in public opinion, academia, the press, and public service.

Each of these American-funded think tanks draw on different moments in the political economic history of the Zionist project and of the labor movement that led it, both as their successors and as opposers. Revisiting these moments can reveal the circumstances that allowed for their recent ascent to political power, as well as the current setting that still limits their operations. In a second, later essay, I will discuss the strategies used to overcome those limitations.

***

Both because of its Kibbutz model and its vast array of workers-owned enterprises, the popular imagination tends to see Israel’s economy as originating from a socialist-oriented ideology. To an extent it is, but liberal thought and practice were never wholeheartedly rejected by the labor movement that shaped Israel’s polity from the 1920s to the 1970s.

During those decades, and led by Mapai (the Workers’ Party of the Land of Israel) and its longtime leader David Ben Gurion, the labor movement took advantage of both socialist and capitalist tools to promote party control. In fact, the alliance between Zionism and Jewish Labor only began out of a temporary conjunction of interests: the latter wanted to popularize a movement which, up until the 1920s, had seen little gains in Palestine. The former wanted to assure that new Jewish labor organizations operating in Palestine could compete with the existing Palestinian-Arab rural labor force. Simply put, the labor movement offered the best solution for the Zionist national goal – settling Jews in Palestine for the purpose of state-building – and the best target for its funds. The alliance between the two movements would provide labor parties complete political control over all major national institutions for half a century and would establish the “developmental state” logic of the Zionist Project, first as a pre-state community and later as a sovereign state.

Under that logic, industrial production during the British Mandate was mainly owned by private capital. This shifted during the post-statehood 1950s, when “national needs” focused on absorbing an influx of impoverished Jewish immigrants while at the same time preventing the return of Palestinian refugees expelled during the 1948 war. To this end the government nationalized, subsidized, and established many industries, including: energy, chemicals, construction, transportation, and finance. In addition, the government was highly involved in structuring the economy. It guided both capital accumulation and credit distribution, enacted full employment policies, and even controlled prices. Then, as the economy stabilized in the 1960s, the state liberalized its control of currency and trade, encouraging the development of a private sector. The pendulum of market intervention shifted again after the 1967 and 1973 wars, especially because huge investments were made in the swelling military industries now tasked with supplying an expanding army with the equipment to police the newly occupied West Bank, Sinai Peninsula, and Golan Heights territories.

In the labor market, a split corporate model developed during this time. This model established strong protective systems and generous social benefits for the privileged workers organized under the powerful peak labor federation Histadrut but left the rest with liberal labor arrangements and a weak universal state welfare system. Excluded were Palestinian Israeli citizens, Jewish Mizrachim, and, following the 1967 war, Palestinian day-laborers. Those excluded from the high-quality jobs organized by the Histadrut were forced to rely on the general welfare system, which until the 1970s provided meager, means-based relief, and little or no unemployment benefits. The policies of the long Labor rule, then, were actually based more on ethno-national and republican logics than on social-democratic goals – something clearly exemplified by Ben Gurion’s motto for the labor movement: “From Class to Nation.”

Even during these decades of labor movement dominance, however, liberal economists persistently pushed for policies grounded in “economic efficiency.” But, in a political environment that questioned the relevance of economic laws to the local economy’s character, such calls were routinely dismissed. Indeed, the pendulum swings toward and away from the free market during the first six decades of the Zionist project were not accomplished by ideologues but by practical state administrators who coordinated economic activity by corporatist guidelines.

It was the changing political, economic, and foreign-relations conditions of the late 1970s that provided liberal economists a window of opportunity to take hold of policymaking. A new generation of Labor Party leadership composed of people who made their careers in state, military, and party bureaucracy was more open to seeking the advice of technocrat economists. During these years key “republican” institutions of the Israeli state, including the Histadrut, the military, and state-guided credit, were weakened both financially and politically – and this only increased when Labor was voted out of government in 1977. This shift in attitude resulted both in an increased demand that subsidies be given to powerful, “big economy,” conglomerates, and in a rejection of the standard wage raises normally provided for unionized workers.

These practical and ideological shifts had, by the mid 1980s, produced an Israeli economy that was suffering from hyperinflation, a fiscal crisis, and a deficient trade balance. Liberal economists in both academia and government (notably, and crucially, backed by Reagan’s Secretary of State George Shultz and his economist advisors) were quick to offer monetarist rescue plans to resolve this problem. It was these plans that results in what is still to this day the watershed moment of Israeli neoliberal restructuring: the 1985 Emergency Economic Stabilization Plan (EESP).

The EESP triggered in Israel what is, by now, a globally familiar path: two decades of massive privatizations, budget cuts, free flowing capital, an increasingly independent central bank, and a liquidation of the Histadrut’s assets and political power. But – and this is a crucial point for the Israeli case – this era of liberalization was also one of peacemaking. So, while the “Oslo years” of the 1990s opened the door for foreign capital, new commercial markets, and imported consumer goods, it also opened up space within which an inclusive, citizenship-based collective identity could begin to form. This Israeli version of cosmopolitan citizenship favored legal equality and civic individualism, and it slowly began to overtake the previously dominant ethno-national identity. Although at the time this identity was promoted mainly by the Labor government (with the support of newly created business groups and an outward-looking secular bourgeoisie), since then every Israeli governments, whether liberal or conservative, has continued along this path.

What the long trajectory surveyed above reveals is the central role that the idea of Israel as a “Jewish nation” has had in shaping Israel’s political economy. It has served as a goal, a justification, a “pacifier” of class conflicts, and finally, as an objective of reaction. What this long trajectory means is that all of the IZS’s efforts to curb the actions of an “activist,” “liberal” Israeli court took place on this ideological ground. The IZS – and all the rest of the new, externally funded think tanks – must make the case for re-anchoring the Israeli state in the Jewish people not in the abstract, but within Israel’s particular history.

***

The Nation State Law, born in the halls of the new neo-con think-tank movement, was itself a challenging agenda item for the IZS. Still, compared to the effort to reconcile Israel to the neoliberal agenda it was relatively-easily accomplished policy goal: neither decades of privatization nor a strong electoral drift towards the nationalist right have changed public support for government intervention or a strong welfare system.

In fact, polls repeatedly show that more than half of the Israeli population prefer a “socialist” or “social democratic” approach to the economy. Even more, a huge majority of Israelis still support raising taxes on the super-rich, having a union in their workplace, and taking public control over natural resources. And, unlike such trends in the United States, in Israel these preferences are strikingly broad, holding true regardless of age, income level, religious sector, or party preference.

This partially explains why Israeli citizens have not accepted the increasing influence of neoliberal policies quietly. Indeed, a wave of social justice protests broke out in 2011, including the largest popular mobilization in the country’s history. These protests have been successful in bringing social-democratic views back to the public sphere after lying dormant during the 1990s and the 2000s. It also explains the recent rise of an Israeli “neoliberal thought collective” more than 20 years after the neoliberal project was declared victorious.

The current wave of neoconservative, American-funded think tanks is a response to the stubborn persistence within the Israeli public of social-democratic views on the how the economy ought to be managed as much as it is a response to the peace and liberalization “package deal” of the 1990s. That is how groups like the Kohelet Forum or Shalem Center, can both decry the judicial limitations on state power and the authority of legal advisors – a legacy of the neoliberal era – and push for further privatizations of state assets. It is how such think tanks can stress the importance of Jewish national resilience while also pushing to cut welfare. In a forthcoming, second essay, I will discuss the strategies such think tanks are employing to pursue such an abnormal transformation.

Ben Weinberg is a master’s student in Sociology at The New School for Social Research. His research focuses on inclusion and exclusion in welfare regimes. Before coming to The New School, he was the Chief Editor for the Israeli-based parliamentary watchdog The Social Guard.

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