In November 2011, at the G20 summit in Cannes, France, then-French President Nicolas Sarkozy and then-U.S. President Barack Obama were caught in an unintended private moment. Their conversation was overheard by several French journalists because their microphones or interpreter headsets were left on. The leaked three-minute exchange notably included Sarkozy and Obama discussing the Israeli Prime Minister. Sarkozy described Benjamin Netanyahu as “slow” and “lazy,” to which Obama responded that he found Netanyahu difficult to deal with.
This leaked conversation made headlines across the globe, particularly in the United States, France, Britain, and Israel. The interest stemmed from the fact that these critical remarks came from two of Israel's closest allies, who described its leader in negative terms. While the criticism was shocking, it was not unprecedented. Netanyahu has long been criticized both inside and outside Israel for being evasive and deceptive, traits some believe have helped him maintain power for years.
Recently, however, criticism of Netanyahu has intensified. His focus on personal and political gains, allegedly at the expense of Israeli interests, has drawn particular ire. This is especially evident in his handling of Israeli detainees in Gaza since last October. Netanyahu is accused of sabotaging potential exchange deals with Hamas to avoid political fallout and loss of power. Despite numerous efforts by detainee families to push for a deal, Netanyahu's resistance has persisted.
Israeli officials and media have suggested that Netanyahu's stubbornness in negotiating the exchange deal is driven more by personal motives than practical or security concerns. This stance is blamed for the death of six Israeli detainees whose bodies were discovered in a tunnel in Rafah. This incident stirred public outrage and led to a general strike organized by Israel's powerful labor union, Elist Rot, on September 2.
Today, we'll explore how this strike impacted the Israeli economy, how it concluded, and whether such events might recur. I’m Ashraf Ibrahim, and this is Economic Informer+.
In the late 19th century, Jews facing persecution in Europe began migrating to Palestine, then under the British Mandate. Jewish immigrants struggled to compete with local Arab labor due to differing wage expectations. To address this, the Zionist movement aimed to establish a separate Jewish economy, protected by the British. This led to the formation of the Histadrut organization in 1920, which was not merely a labor union but a crucial element in the colonization of Palestine.
The Histadrut aimed to ensure that Jewish workers had exclusive access to jobs and resources, thus minimizing competition from Palestinians. Its role in consolidating Jewish control over land and labor was significant, and it also founded a Zionist militia that became part of the Israeli military. The Histadrut's influence was pivotal in shaping the economic and military landscape of Palestine.
The solution that the Zionists arrived at was to establish a separate Jewish economy in Palestine under British protection. In this economy, Jews would dominate all jobs and services, receiving higher wages. This led to the idea of founding the Histadrut organization in 1920, about three years after the Balfour Declaration was issued. This organization can be considered one of the most significant and dangerous in the history of the Israeli occupation because, contrary to what some might think, it was not merely a trade union or a normal labor organization aimed at protecting its members. The main goal behind the establishment of the Histadrut was to colonize Palestine by enabling Jewish workers to control land and resources and ensuring that Palestinians would not compete with them in any way. All of this was done under the watchful eye and protection of the British.
The Histadrut played a crucial role in establishing Jewish control over land and jobs in Palestine, leading to the expulsion of Arabs. This is why former Israeli Prime Minister Golda Meir, who was appointed in 1928 to the Executive Committee of the Histadrut, described it as a great colonial agency. Besides its prominent role in enabling Jewish control over the land, which encouraged further Jewish immigration to Palestine, the Histadrut also founded a Zionist militia that became the nucleus of the Israeli military. Due to its role in solidifying Zionist economic and military power in Palestine, former Israeli Prime Minister David Ben-Gurion once said that without the Histadrut, it is doubtful that there would have been a state, given its provision of protection and financial support to Jewish settlers and its substantial benefits to its members over Arabs, who were prohibited from joining the Histadrut.
In the late 1950s, specifically in 1959, as the Israeli economy needed labor, the Histadrut began allowing Arabs living within the occupied territories to join the organization. However, this did not include residents of the West Bank and Gaza, who remained barred from joining. Even among those Arabs permitted to join, they faced discrimination within the organization, with Jewish members receiving greater benefits. Although these benefits, particularly the financial ones, were primarily funded by member contributions, Palestinians were denied even the benefits for which they had paid. Despite this, the Histadrut continued to grow in size and strength, becoming one of the largest forces within the Israeli economy due to its ownership of companies and institutions in various sectors, from banks to healthcare. By the late 1980s, its membership had reached over 1.6 million, enabling it to play a significant role in Israeli politics and influence various political parties.
However, during this period, the Histadrut's power began to wane, or more accurately, its influence was curtailed by Israeli politicians who felt threatened by the Histadrut’s growing power, whether at the expense of the government or the private sector. This observation highlights a key feature of the Israeli economy: it is controlled and influenced by three sectors: the public sector, the private sector, and the Histadrut.
A wave of efforts to strip the Histadrut of its assets and influence began, led by the Likud government. The Histadrut was seen by the Likud party as one of its most significant assets, including its bank, Bank Hapoalim. As the Israeli government moved against the Histadrut alongside other banks, the Likud continued its efforts to dismantle the Histadrut’s economic empire, cutting off its government subsidies. When the Labor Party returned to power in 1992, one of the Histadrut's main sources of income was the membership fees paid for health services. In 1995, the Israeli Knesset approved a national healthcare project that dismantled the Histadrut’s healthcare system and deprived it of a crucial revenue source.
These developments led to the transformation of the Histadrut from a massive economic entity with numerous companies in various sectors to a labor union primarily concerned with the welfare of its members. The current membership stands at 799, which is less than half of the number at the end of the 1980s. Despite this reduction, the Histadrut remains a significant force within the Israeli economy, capable of paralyzing it if needed. This power stems from the fact that its members are distributed across almost all major sectors of the Israeli economy. Thus, the general strike emerged as an important weapon used by the Histadrut against the Israeli government, typically revolving around improving the conditions of workers and employees.
However, recently, the Histadrut called for a general strike in Israel for reasons unrelated to worker conditions. On August 31, 2024, the Israeli military announced the discovery of six bodies in a tunnel in Rafah. It was later revealed that these were the bodies of six Israelis who had been held in Gaza. Israeli media reported that, according to estimates, the hostages had been killed shortly before their bodies were found. This information sparked public outrage in Israel, particularly among the families of the hostages, who blamed Prime Minister Benjamin Netanyahu for their deaths and failure to return alive due to his obstinacy and attempts to obstruct the exchange deal for personal gain.
The situation was exacerbated by the revelation that at least four of the six hostages had already been listed for release in the first phase of the exchange deal. The focus of public opinion shifted to the fate of the Israeli hostages in Gaza, with the belief that it would be nearly impossible to release them without an exchange deal. The deal was seen as the only solution, but Netanyahu was obstructing it by insisting on two contentious points: the retention of Israeli forces in the Philadelphi Route and in the Nahal Oz area, which the Palestinian side adamantly rejects.
The day after the discovery of the six bodies, the families of the Israeli hostages in Gaza met with the Prime Minister to persuade him to call for a general strike in Israel to paralyze the economy and pressure Netanyahu to stop evading the exchange deal that would return the hostages to their families. That evening, Bar David addressed hundreds of thousands of Israeli protesters in Tel Aviv, announcing that starting the next morning at 6:00 AM, the entire Israeli economy would go on strike. The next day, the strike affected crucial sectors of the Israeli economy, including transportation, aviation, education, banks, and government offices. Based on previous experiences, such strikes cost the Israeli economy hundreds of millions of dollars daily. Thus, this sudden strike was a significant blow to the Israeli government, especially to Netanyahu, who was seen as the sole obstructionist to the exchange deal supported by the majority of Israelis.
In response to the strike and its impact, Netanyahu’s ally, Finance Minister Bezalel Smotrich, threatened strikers with the loss of their salaries. On the same day, the Israeli Attorney General, at the request of Smotrich and Netanyahu, filed an urgent request with the Israeli Labor Court to issue an injunction against the strike. The court indeed issued an order halting the strike, citing it as politically motivated rather than related to labor rights. Consequently, this ruling theoretically prevents the Histadrut from calling future strikes for the same reason.
Later that evening, Netanyahu appeared on Israeli television, explaining the significance of the Philadelphi Route and his willingness to sacrifice Israeli hostages to maintain control over it. Netanyahu’s insistence on retaining control of the route was essentially a pretext to undermine the exchange deal, as confirmed by former Israeli War Council member Gadi Eisenkot. Eisenkot accused Netanyahu of evading and being dishonest with Israelis by concealing that he had agreed three months earlier, specifically in May, to withdraw Israeli forces from Gaza entirely, only to later reassert control over the Philadelphi Route.
This brings us to the episode’s question: In the proposed 2025 budget by the Israeli government, Finance Minister Smotrich estimated the cost of the Israeli aggression on Gaza at $68 billion—a significant amount for the Israeli economy. The question is whether the increasing economic pressures on Israel might compel Netanyahu to finalize an exchange deal and end what Smotrich himself described as the longest and most costly war in Israel’s history, or will he continue to resist until all hostages in Gaza are dead?