Israel’s Tahrir[3]: Ripple Effect on Politicians, Financiers Continues…

In late August, after first sending proxies to defame Israel’s social-justice protesters as “radical lefties” – a move that backfired spectacularly;

then trying the silent treatment, hoping that the Israeli public known for its short attention span will lose interest – only to get served with repeated bouts of unprecedented nationwide protests;

Prime minister “Bibi” Netanyahu tried a third trick: appoint a committee. The move won him a partial reprieve, mostly from the mainstream media. And using the quiet and the back-to-school period, local governments began dismantling the tent cities one by one.

Now the committee, headed by Prof. Manuel Trachtenberg – a well-meaning, former-Argentine-radical, but nevertheless neoliberal economist – has submitted its conclusions. They include partial restoration of some of the social safety net that Bibi has worked so hard to shred, to be funded by taxes on the rich and corporations.

Bibi brought the conclusions last week for adoption by his government cabinet. He lost the vote. Only 12 ministers, all from his own parties, voted together with him, and 15 – from all other coalition parties, plus two of Bibi’s party – voted against. Most of the vote against was because the Trajtenberg recommendations do not go far enough.

A week later, Bibi managed to pass the resolution, after modifying it to satisfy the demands of the one party who thought Trajtenberg asked for too much. Who was that? You guessed it: Israel’s de-facto Prime Minister, the man Bibi loves caving to again and again – foreign minister Lieberman. Once again, Bibi takes a fall and loses points in the public’s eyes, while “Yvet” Lieberman emerges winner, the tough guy catering to the hard-right macho crowd.

For anyone following Israeli politics, these are the unmistakable sounds of a government gradually falling apart.

I had some debates with bloggers who claimed that Bibi’s situation is solid as a rock. Some new additional Israeli laws supposedly make it harder than ever to end a government before its 4-year term is up. Well, the proof is in the pudding. Since the 1980’s, no Israeli Knesset (parliament) has lived out its term, despite various rules enacted to improve stability.

And btw, here’s a hint: if your Knesset happens to be a terrible one – and this one definitely is (just like the current US House) – “lack of stability” is not such a bad idea.

It nearly always starts the same way. First, a party that perhaps didn’t belong in the coalition in the first place, leaves (check: Labor had left). In parallel, public trust in the government fast erodes (big-time check). Remaining coalition members, and PM’s own party, begin to look around and to triangulate between the PM and the public, weakening him into a de-facto lame duck. This is where we are getting to now.

As I predicted in the original version of this post (last week on Daily Kos), after some shoving, Bibi indeed passed some version of the committee recommendations through cabinet. But his political blood has met the water. Now at every single turn, he might find most of his coalition, including elements in his own party, balking and trumping him. The next stage is the opposition beginning to craft a strategy to call early elections. Eventually, they either succeed directly, or the PM decides to pre-empt them with his own call, in order to appear in control.

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And this is just one of the ripple effects felt nowadays by the big-wigs, from the supposedly “burnt out” protest.

In other news, Zehavit Cohen, chairman of the board of the Tnuva food giant, has been forced to resign. Cohen, in her arrogance, has turned herself into the face for all that is wrong in the Israeli economy. Tnuva is a venerable brand-name that began in 1926 under the British Mandate, as a socialist farmer-owned cooperative to sell milk products. With neoliberal economy hitting Israel since the 1980’s, it has branched out into many activities, but its hold on a majority of Israel’s dairy market has continued to be its core business and claim to fame.

In 2006 the Israeli government deregulated dairy products, despite Tnuva’s monopoly status.

Within months, the international APAX private equity firm made a bid to buy Tnuva. After some haggling, and votes to approve in many kibbutzim and moshavim (two forms of formerly-socialist villages), APAX Israel became majority owners in early 2008 for a company value of $1 Billion. Cohen, CEO of APAX Israel, appointed herself chair of the board, shoved the CEO aside and began to micromanage the company.

From 2008 to mid-2011, Tnuva jacked the price of dairy like crazy. Cottage cheese went up 39%. The pretext was the rise in commodity markets in 2007; but when looking at the period 2006-2011 (click on chart in the linked Hebrew article) you can see that in 2006-2011 cottage went up 24% more than the price Tnuva pays for milk. In 3 short years Tnuva made a billion dollars for APAX, and the company’s value soared after investors realized that it was sold for a song.

It’s the same old story all over the world. Financial vultures prey on assets, usually via leveraged buy-outs. Often, the “opportunity” is made possible via a friendly government move. Then they squeeze the crap out of them, generating nice indicators that drive “shareholder value” up, and making sure that the bought-out financial “press” drools all over their brilliance. Then they find a sucker to buy the carcass at an inflated price, and fly away to kill another business. Zehavit Cohen, an Israeli who emigrated to the US before college, learned the trade and returned as a fast-track financial whiz to eventually head APAX Israel branch – placed herself, in her folly, as the face of that vulture. The financial press went gaga over her. She was elected “Woman of the Year 2010″ by the business journal Globes, and gave them a hubris-filled interview (Hebrew link). It is perhaps telling that Globes readers made a very different choice: they voted to give the title to MK Shelly Yechimovich, the politicians most closely associated with the social-justice agenda, and who was now rewarded by winning leadership of the Labor Party.

Back to billion-tossing Zehavit Cohen: she didn’t count on one thing. Even the Israeli consumers, not known for consumer activism, have their limits. People, simply, could not afford cottage cheese anymore. And that’s where the social protest began – with a boycott on cottage cheese. Later in the summer, when the general protest wave was already in full steam, a complete boycott of Tnuva was called.

To be honest, when I got the initial “boycott cottage” FB statuses and emails – many of them, indeed I’m proud to say, were from so-called “radical lefties” – this cottage thingie looked funny. With all the crap, the Occupation, etc. etc., you are boycotting cottage cheese? But that’s because I’m not there day to day, seeing commodity prices increase without bound (not to mention housing prices), while the government and the financial press celebrate Israel’s amazing GDP growth at your expense.

Perhaps more poignantly: not following business news, I hadn’t noticed Tnuva’s ghoulish transition. Tnuva had been a symbol of something from slower times, something shared, simple, basic. Something from the farm; from Zionism’s (now, sadly, largely abandoned) attempt to return the “Wandering Jew” back to work the earth. A symbol of much that was good and whole in Israel. True, over the years its image has become somewhat stale, but still – Tnuva was Tnuva. Now, those APAX vultures took that symbol and raped it in broad daylight, turned it into a sad farce, into a robotic monster preying upon the public – with the government setting up this horror via the crime of deregulation.

Faced with this symbolic abomination of a “new economy” devouring the very fabric of society, ordinary Israelis suddenly remembered that underneath the veneer of apathetic consumerism, they are still the children and grandchildren of revoluationaries and rebels and militants; of the crazy people who had built this nation up from the rubble and ashes of Jewish suffering. That they’ve still got it in them, the fight and the spirit. Not just to fight the Arabs when called upon in the fog of fear and disinformation – but also to pick their own fights for what they really believe in.

Over the summer, due to the boycotts Tnuva lost 12% in sales and its dairy market share fell from 57% to 50%. It has now announced an across-the-board 15% price cut (beyond cuts already made during the summer) – with its competitors having to follow suit.

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Another, particularly destabilizing breaking news, is that resident M.D’s in public hospitals have now submitted their mass resignation. There have been rolling doctor strikes and slowdowns for months in Israel. The medical association finally closed a deal with the Treasury, but residents felt left out. Now, the residents left negotiations with each side blaming the other for bad faith (I don’t know why, but I tend to believe the residents more than Bibi’s Treasury hacks). Hospitals across Israel are grinding to a halt. Before the social protests, this type of brinkmanship has routinely paid handsome dividends for the Treasury negotiators; not this time.

The universally-forgotten root cause, as far as I understand, for all the chronic budget and salary problems in public health services – is the undercutting of the health budget, carried out by Bibi himself in 1996 when he exempted employers for paying their share of the healthcare tax.

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So this wave of dissent is not over, not for Bibi (I dare him to bet on the public’s apathy and credulity again – it will be fun to watch…), not for Israel’s many business monopolies and their crony politicians –

– and certainly not for the social protest movement. Only fools would count it out. They plan a return to massive protest and strike action in early November.

However, the protest too is inching closer towards a moment of truth, regarding the Elephant in the social-justice Room: the Occupation. The protest movement, despite originating and receiving most of its street-crowds from the left (hence the early attempts to brand organizers as “radical leftists”), has succeeded in remaining inclusive – encompassing constituencies all the way from the genuine radical left and Israeli Palestinians, too “quality of life” apolitical settlers. As last week’s post described, members of the latter group (QOL settlers) mob-assaulted members of the former (anti-Occupation activists) a few days ago. As one of the activists wrote in a poignant self-reflective post (Hebrew, translation mine):

The most terrible thing is that we will still meet this people [who had assaulted us]. At the bank, on the street, on the bus. They are part of our society

One flank of the protest movement sees the Occupation as the biggest social-justice issue of them all; the other flank benefits directly from the Occupation, and sees its end as the end of the world. Sooner or later, the moment of truth will arrive.

Stay tuned…