Billionaire businessman Brandon Korff, heir to the Paramount empire who divides his time between Tel Aviv and Los Angeles, has decided, in a strategic move that fundamentally changes the US media market, to sell control of his media and film empire to David Ellison, heir to Larry Ellison's media empire. The deal is valued at $8 billion. One of the most interesting and significant deals in the US media market tells the story of the next generation of the most influential Jews in the world.

A major deal that is changing the US media market is closing these days, in which control of the Paramount Global empire will be sold from the Korff family to the Ellison family for $8 billion. Behind the scenes are two young Jews, the next generation of the world's most influential Jewish businessmen: Brandon Korff and David Ellison.

Thirty-six-year-old Korff is the son of Shari Redstone, the chairwoman of the media empire Paramount Global, which the family inherited from the grandfather, Sumner Redstone. Korff is a successful businessman who, along with his family, holds the holding company National Amusements, which controls Paramount. Alongside his activities in media and entertainment, Korff is a well-known businessman in Israel after having a three-year relationship with top model Yael Shelbia. Korff divides his time between Los Angeles and Tel Aviv and has donated to IDF soldiers and war-wounded since the start of the war.

David Ellison (41), son of billionaire Larry Ellison, a young Jew and successful businessman in his own right, has offered to buy National Amusements, the Korff family's holding company, to take over Paramount Global, the media giant that owns MTV and Nickelodeon. As part of the deal, Ellison is in discussions with Paramount about merging his film and television studios, Skydance Media, into a larger media company after completing the purchase.

The deal is valued at $8 billion, and according to economic experts, the merger of the companies will lead to the creation of a media giant that will significantly impact the US media market.

Korff and Ellison grew up in families that hold economic empires but created independent and dominant business worlds that have now culminated in a major deal. "This is the next generation of global Jewish leadership," says a source familiar with the details. "These two young men love Israel, are connected to their Judaism, they have Zionist values, and it is very encouraging to see that in such successful families, the values are passed on to the younger generations. Both secretly donate a lot to the State of Israel and the IDF. It is a positive message to the Jewish world that Korff and Ellison are the next generation of global Jewish leadership, connected to Israel and upholding Zionist values."

Shifra Shahar, CEO of the Warm Home for Every Soldier Association, said:  "I would like to thank a very special donor who, amid all the difficulties of the ongoing war, found it important to host a Shabbat meal with lone soldiers in appreciation for everything they do for us. The soldiers enjoyed it so much, both the meal and the gesture from an overseas donor, and it was so important for them. These days more than ever, the support from the Jewish diaspora is significant and touches the hearts of the soldiers and us. Thank you very much, Brandon."

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Israel's Consumer Price Index rose by 0.1% in June, in line with analysts' forecasts, as the country grapples with persistent inflation, a new report by the Central Bureau of Statistics reveals.

The annual inflation rate climbed to 2.9%, remaining within the Bank of Israel's target range but edging closer to the upper limit. A sharp increase in rent prices, particularly for new tenants, stood out among the various factors contributing to the overall price increase.

Significant price increases were observed in several categories: culture and entertainment rose by 1.2%, housing by 0.5%, and food and home maintenance each increased by 0.3%. For instance, the price of ice cream increased by 4.2%, wheat beer by 1.9%, crackers by 1.7%, and tahini by 1.5%.

Notable price decreases were recorded in fresh fruits and vegetables, which fell by 2.5%, transportation and communication, down by 0.4%, furniture and household equipment, down by 0.3%, and healthcare, which decreased by 0.2%.

Rent prices saw a substantial increase. For tenants renewing their leases, monthly rent rose by 2.2%, while new tenants (in sample apartments with tenant turnover) faced a steep 4.2% rise.

In the housing market (which is not included in the Consumer Price Index), there was a 0.8% increase when comparing transaction prices from April-May 2024 to those from March-April 2024.

A year-over-year comparison reveals dramatic regional differences in housing prices. Breaking down by district, the following price changes were observed: Jerusalem (2.1%), Northern District (0.6%), Haifa (0.7%), Central District (0.0%), Tel Aviv (1.2%), and Southern District (0.2%). Prices for new apartments decreased by 0.5%. Overall, housing prices rose by 3.4% over the past year.

In a year-over-year comparison of transaction prices from April-May 2024 to April-May 2023, the annual housing price index increased by 3.4%. All districts saw price increases: Haifa (8.3%), Northern District (4.9%), Southern District (3.6%), Jerusalem (2.9%), Tel Aviv (2.6%), and Central District (2.3%). The annual index for new apartment prices decreased by 0.9%.

Analysts predict that inflation will reach 3% as soon as July, hitting the upper limit of the Bank of Israel's target range. The central bank's forecast for the next 12 months projects an inflation rate of 3.2%.

In May, the CPI rose by 0.2%, with an average increase of 2.8% over the past 12 months. May's index was notably impacted by fruit and vegetable prices, which surged by over 10%. Conversely, Israelis' expenditures on overseas travel and domestic tourism decreased by 7.4%.

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Israel's job market is undergoing substantial changes, according to a comprehensive analysis conducted by the Strategy, Research, and Policy Planning Division of the Labor Ministry. The study, which examined employment trends over the past decade, aimed to understand how global shifts – including rapid technological advancements, artificial intelligence, climate change, and economic processes – have impacted Israel's workforce.

The findings indicate that these global changes have already influenced the Israeli job market, with further shifts anticipated. The analysis reveals an increased demand for workers in technological fields and data science, such as database professionals, software developers, and electrical and electronics engineers. The healthcare and security sectors have also seen notable growth.

Conversely, traditional industries have experienced a decline. Various manufacturing roles have seen decreased employment, reflecting the transition to automated processes and advanced technologies in production. Similarly, the shift to digital banking services has led to a reduction in bank teller and clerk positions.

An International Monetary Fund (IMF) report emphasizes that the rapid development of artificial intelligence will significantly impact the job market. While AI is expected to boost productivity and wages, it may also exacerbate economic inequality. An IMF analysis of OECD countries' exposure to AI adoption indicates that Israel's exposure level is relatively high.

The study also assessed countries' readiness for AI adoption, considering factors such as education, internet accessibility, and regulation. Israel's readiness level is relatively high compared to other OECD countries but not sufficient. The report stresses the need for investment in education and skill enhancement to protect workers at risk of being left behind.

Experts point to several fields expected to be in high demand in the coming decade:

1. Artificial Intelligence and data science: As technology advances, the need for experts who can develop, maintain, and operate AI-based systems and analyze large datasets is increasing.
2. Healthcare and personal care: With an aging population, healthcare professionals and personal care providers are likely to see increased demand.
3. Green energy and environment: Climate change concerns and clean energy initiatives are driving growth in renewable energy and environmental technology professions.
4. Logistics and automation: The rise of e-commerce is creating demand for experts in supply chain management, robotics, and optimization.
5. Remote work and global team management: The shift towards remote and hybrid work models is increasing demand for managers skilled in leading global teams and experts in remote work technologies.

Labor Minister Yoav Ben Tzur said, "The Ministry closely monitors job market trends to identify rapidly developing changes. We're adjusting resource allocation and training programs to meet evolving needs for both employees and employers."

Ben Tzur added that the ministry is increasing investment in technological colleges in response to growing demand for tech professions. "More women from diverse backgrounds are completing high-tech studies and entering the industry. The Ministry provides guidance and support from pre-training to job placement," he said.

Deputy Director General of Strategy and Policy Planning at the Labor Ministry Ifat Citroen emphasized the importance of continuous skill development. "Staying informed about job market trends and being willing to acquire new skills is crucial in this rapidly changing environment," she said. "It's essential for reducing socioeconomic gaps in Israeli society."

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The decision by a French court prohibiting the entry of Israelis to a defense exhibition was suspended on Tuesday as well as the  French government's decision to prevent those manufacturers from showcasing their products in the pavillions.

The prestigious exhibition, taking place between June 17-21, is considered one of the most important in the defense industries. The court's original ban was handed down in response to pressure by pro-Palestinian groups, but it will now be suspended hold because of the temporary injunction issued on Tuesday.

The court ban had prevented Israelis from attending the event in an official capacity as agents or representatives of Israeli arms manufacturers, essentially denying any work-related meetings by Israelis there. Although it did not prevent Israelis outright from attending, the organizers forced Israeli nationals to sign a waiver that they were not there in any official capacity.

Ce formulaire est une initiative très malheureuse, décidée dans l'urgence du fait de la décision de justice du 14 juin.

Le COGES adresse ses excuses et rappelle qu'il a fait appel contre la décision du tribunal de Bobigny. https://t.co/iFTEW7MPga

— Eurosatory (@cogeseurosatory) June 17, 2024

The District Court's now-cancelled decision prevented Israeli companies' from sending representatives to the confab, just week after the government announced that Israeli arms manufacturers would not be allowed to showcase their products at the arms exhibition because of the ongoing war in Gaza. The government's decision at the end of May to prevent Israeli companies from exhibiting at the fair – which led to the cancellation of the participation of dozens of Israeli companies that were supposed to exhibit there – was also effectively overturned on Tuesday.

The French government's original decision had barred Israeli arms manufacturers from showcasing their products at the arms exhibition because of the ongoing war in Gaza, and this also resulted in their products being covered in other countries' booths.

Saisi en référé d'heure à heure à la demande de la Chambre de commerce France Israel, le Président du Tribunal de commerce de Paris vient de juger que la mesure d'exclusion des société israéliennes de Eurosatory est discriminatoire. Il a ordonné de la faire cesser. Je suis très… pic.twitter.com/ZQz4kJ8Ioe

— Patrick Klugman (@PKlugman) June 18, 2024

The prestigious exhibition, taking place between June 17-21, is considered one of the most important in the defense industries.

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Property tax rates in Tel Aviv are poised for a dramatic 8.8% spike starting January 1, 2025, surpassing the nationwide average increase. This anticipated surge stems from the state's contribution to the city's Metro rail project. It is noteworthy that the 2025 property tax order (Arnona) has yet to receive approval but will be presented for ratification on Monday.

The release of the Consumer Price Index for April revealed the impending increase encompasses a nationwide "automatic pilot" rate adjustment of 5.29% determined by the Ministry of Interior, coupled with an additional 3.5% levy specific to Tel Aviv residences to partially finance the city's share of the Metro project costs – a tax effectively imposed on the municipality by the state.

Consequently, this increase is projected to inflate overall property tax payments by 1.9 billion shekels in 2025, with households shouldering an additional 0.9 billion shekels and the business sector bearing the remaining one billion shekels.

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In recent weeks, the importance of core studies in the Haredi sector has been widely discussed in the context of coalition funds, which include billions of Shekels for Haredi educational institutions that do not teach core studies, thus reducing the chances of Haredi children integrating into the future job market.

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In the meantime, data on the ground show a considerable improvement in recent years in some of the numbers related to Haredi education and employment.

So, for example, the number of Haredi students taking matriculation exams – even if they are not entitled to a certificate - rose from 24% in 2008 to 44% in 2021. Within five years, the number of those eligible for matriculation in the Haredi sector increased from 2% to 6% among Haredi males and from 20% to 25% among Haredi females (2016-2021).

This data is based on the 2023 publication of the Israel Democracy Institute's yearbook on the Haredi sector, which has been published for eight years and reviews the changes that have taken place in recent decades in various fields in Haredi society, including education, employment, and lifestyle.

The survey also shows that at the beginning of 2023, there were approximately 156,036 yeshiva students in the Haredi sector. This was after a year in which the increase of the number of yeshiva students slowed down to 2.5% in 2022, at the end of which the Haredi parties joined the coalition, and increased again by 4.1%.

It must be noted that this number of Haredi yeshiva students includes unmarried men, most of whom are under 23 years old, and married men, most of whom have been studying for many years even over age 31. Institute researchers point out the clear connection between the presence of Haredi parties in the coalition and the growth rate in the number of Haredi yeshiva students. Since 1999, the only years that showed a decrease in this number were 2013-2014.

The Haredi population in Israel numbers approximately 1,335,000 people, which is 13.6% of the total population. Young people up to age 19 comprise 58% of the Haredi population compared to 31% in the general Jewish population. In 2030, the Haredi population is expected to reach 16% of the total population, while there are expected to be about one million Haredim up to the age of 20, who will constitute 25% of this age group.

Technological professions are a top priority

About 16,700 Haredi students, comprising 5% of all students, studied in institutions of higher education in the 2022/23 academic year. Their number increased this year by about 900 students, an increase of 7%. Sixty-nine percent of Haredi students are women.

Another interesting statistic that emerges from this study is that 15% of Haredi female students are studying computer science (compared to 13.5% among non-Haredi female students). This is a jump of 63% in four years. The number of Haredi men studying computer science among all Haredi students is significantly lower than the number of non-Haredi Jewish students (19% versus 28.5%, respectively).

Video: Haredim protest in Beit Shemeh / Credit: Israel Police

Editor of the Haredi society's yearbook, Dr. Gilad Malach, explains the data in a conversation with Israel Hayom: "The Haredi society is a 'studying society,' that directs its sons to focus on learning Torah, and this has led to a dramatic change in the role of women in this society. If a few decades ago they were employed as teachers – today, in order to support the household, they have to work in high-quality positions, in many cases in professions in the field of technology."

Malach adds: "As a result, the curriculum in Haredi high schools for girls changed rapidly, and now includes English, mathematics, and technological subjects. The training curriculum in the high school seminaries, which in recent years also offers a variety of technological tracks, has changed. Many Haredi women prefer to undergo technological training in a full academic track, generally on a Haredi campus, resulting in a situation where the percentage of women studying computer science is even higher than non-Haredi women."

Malach went on to say that "this change allows many married yeshiva students to continue studying in yeshiva, and we have therefore seen an increase in recent years in the number of married students that does not fall short of the general rate of growth of the Haredi society. The only cases in which the increase in the number of married yeshiva students was stopped was due to strong economic pressure on the Haredi society, or when support for Torah studying decreased.

"We saw this in 2003 when child allowances were cut, and in 2013 with the cut of the yeshiva budget. We may also see this in the near future as a result of the expected economic crisis following the war or as a result of new priorities set by the next government."

New record

Another optimistic figure relates to the field of employment in the Haredi society. In 2023, a new record was registered in the number of employed women and men: about 110,000 Haredi men in the prime working age group (25-64), which comprise 55% of Haredi men, are working – a figure that has not been seen since 1995. This is a continuation of the increase observed in 2022 to about 53%, after a stagnation of rates at 50%-52% in 2015-2021.

Moreover, in 2023, the number of working Haredi women of prime working age crossed the 80% threshold for the first time and jumped to 157,000, an increase from 142,000 last year. To be noted that the 2023 figures are correct for the first three quarters of the year, and it is possible that the final figure for 2023 will be lower, especially among Haredi men, due to the situation in the local economy, alongside coalition funds for Torah institutions.

However, the average monthly income for Haredi men dropped from 76% in 2003 to 50% of the average monthly income among non-Haredi Jews in 2021. In this year, this amount stood at NIS 9,707 compared to NIS 19,279 among non-Haredi Jewish men. In that year, Haredi women earned an average of NIS 8,230 a month, 67% of the average monthly income among non-Haredi Jewish women (NIS 12,330).

A decrease in the incidence of poverty

There has been a decrease in the incidence of poverty among Haredi families from 39% in 2015 to 34% in 2021, a very high figure in comparison to the general population (21% in 2021). It is possible that the decrease is a result of an increase in the employment rate of Haredi women and an increase in the level of income among employees, together with an increase in state support for married yeshiva students and child allowances. In addition, the rate of Haredi children who lived below the poverty line after payments of child allowance was 47% in 2021.

Household income: a 19% increase has been registered in gross monthly income for a Haredi household over a period of six years (from NIS 12,616 in 2015 to NIS 14,978 in 2021), but this amount is still 55% lower than the gross income for a non-Haredi Jewish household (22,047 shekels).

Editors of the Haredi Society Yearbook, Dr. Gilad Malach and Dr. Lee Cahaner, from the Israel Democracy Institute, point out that "there is a clear trend towards a rise in the standard of living of Haredi households, as a result of a rise in the number of working Haredi women and a renewed increase in the rate of working Haredi men after a few years of treading on the same spot."

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The American credit rating agency Fitch Ratings is keeping a close watch on the judicial reform developments in Israel, Israel Hayom has learned. 

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The company has held a round of meetings with economic officials, with its economist – who visited Israel this week – expected to publish their decision regarding Israel in early August. 

Video: Anti-judicial reform protesters in Jerusalem

According to senior Israeli economic officials who met with members of the Fitch delegation, the company keeps tabs on the developments and has spoken with many officials and saw the anti-reform protests. 

"Fitch knows that Israel has a strong economy, but they want to see what will happen with the judicial issue. They are aware of the impact so far of the legislative process on high-tech investments and activity in general," one of the officials said. 

According to the source, for Fitch Ratings, "the non-extension of the term of [Bank of Israel] Governor [Amir Yaron] would be a worry. But they are aware that it could take a few months until Netanyahu decides on this. As we know, the prime minister only decides at the last minute."

In May, Fitch Ratings issued a special update regarding Israel, when it complemented its economic strength but expressed concern that the legislation could hurt Israel's A+ sovereign credit rating.

"Israel continues to face high levels of internal social and political tension, and the advancement of certain policies favored by the governing coalition could aggravate these strains and influence the sovereign's rating," Fitch said in a report released at the time titled "Strong Economic Growth Key to Israel's Debt Trajectory."

Similar questions are likely to be soon asked by the economists of the S&P ratings company as well, which in mid-May affirmed Israel's Aa-/A-1+ credit rating and stable outlook. 

The company's announcement said that its prediction was based on the assumption that an agreement would be reached on the judicial reform, allowing tensions to ease. 

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CEO of OpenAI Sam Altman met with President Isaac Herzog in Israel Monday.

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The two two "spoke about the advantages and dangers of the new technology and also about issues of morality and ethics that it raises," the president said in a tweet. "And of course we discussed about the possible cooperation with Israel. We are a global power in technology, eager to contribute to all of humanity in this field and do good to the world."

On Sunday, Altman and an OpenAI delegation met with Education Minister Yoav Kisch.

The meeting revolved around artificial intelligence and the future of the world of employment and education in the age of AI and aimed to examine the positive impact of AI technology on education.

The participants met at the Tel Aviv branch of Masterschool, a global network of online career-training schools.

Israel Hayom also learned that on Sunday evening, the OpenAI delegation met with 12 Israeli high-tech entrepreneurs at Dream Israel, a company that is developing the next generation of defense cyber capabilities using AI.

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Three hours after doing an allnighter in the Knesset to pass the state budget – the largest in Israeli history – Finance Minister Bezalel Smotrich gave an interview to Israel Hayom rather than catch up on some sleep. 

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Clearly feeling a sense of great satisfaction and breathing a sigh of relief after clearing a major hurdle, Smotrich tried to sidestep the infighting in the coalition during the interview. Despite not shutting an eye for more than two hours, he comes alive when talking about his economic agenda. 

Q: Congratulations on the budget. Are you happy with it despite the heavy criticism – including by your Finance Ministry officials – on the wasteful spending for Coalition partners' demands? 

"It wasn't an easy feat to accomplish; nevertheless, this is a truly good budget, and it is also fiscally conservative and it reins in spending, which is critical in the inflationary environment we are in. This environment poses the biggest challenge for this government right now. I said right from the get-go that we will keep spending in check. We have to ensure that our fiscal policy is in lockstep with the monetary policy, otherwise, the Bank of Israel governor will have to hike interest rates again and again."

Having passed the budget, it's clear that Smotrich exudes confidence, resulting in clear-cut statements on taxation – and head-on attacks on the media. "We went for a budget that sets a target deficit of 0.8-0.9%, but now the chief economist says we are going to hit 1.1%. But even if we end up with 2%, this is nothing to worry about. All the lies in the media, all the doom and gloom about cutting back on programs, and the articles on how my ministry is supposedly considering raising taxes. But I am willing to say – taxes won't go up; there won't be cuts to programs, because we don't need it."

Q: Can you pledge that you will meet the goal of having a 0.9% deficit at most?

"No, but I don't have to. The normal deficit goal is 2.5%. We are now in an era of global uncertainty, and perhaps this could be a great opportunity for the Israeli market. We have a safety net: Even if we see revenues drop between 30 to 40 billion shekels in 2024, we will have still not crossed the 2-2.5% threshold. We will not raise taxes, perhaps even go the other way." 

Q: Let's talk about the special property tax fund that will use money collected by rich municipalities in order to fund projects in poorer ones. 

"For more than 20 years the Knesset has been trying to enact it. When I became minister, the Budget Division told me that it should be used as a bargaining chip so that I can eventually take it out of the budget as part of a compromise. I got into the matter and spent hours on end studying this. I told them, 'No way; we are going to have it passed. This is the right thing to do, and we have to legislate it.'"

Q: But you are going to hurt the revenues of strong municipalities that know how to use the infrastructure at their disposal, like Tel Aviv.

"But who built this infrastructure? The state. Tel Aviv is Tel Aviv not because of Mayor Ron Huldai. If you put Huldai in Dimona, Dimona would not become Tel Aviv because it is not on the sea and it is not in central Israel. And above all, the state has not invested hundreds of billions of shekels in Dimona over the years on infrastructure."

Q: The budget doesn't tackle the cost of living that much.

"We have bolstered the disposable income Israelis have in a significant way by expanding negative income tax eligibility, by giving work allowances to those who get lower pay, and by increasing tax breaks for those who have children. The reform in the meat industry increases the maximum period in which you can sell frozen goods from 80 days to 120 days – like in the rest of the world. This will increase imports. The budget gives more in direct subsidies and we do not hurt farmers. Imports have been down because measures that were supposedly against pests created barriers. The budget invests two billion shekels ($536 million) for the next four years in encouraging innovation so that more technology can be phased into service and thus agricultural output will increase." 

Q: What about cracking down on monopolies? What happened to that bill? 

"That bill was not fully honed. We have received many inquiries from small manufacturers who have to rely on large distribution networks because they cannot get direct access to supermarkets. We are going to set up next week a committee that is similar to what they did to the banks, and in three months we will get recommendations. The main thing we have proved in this budget is that I am not beholden to anyone and I have the guts – and the ability – to fight over this. We are going to pull up our sleeves to tackle centralization and monopolies.

"As a right-winger who espouses a free market, I don't want to intervene but as a government, our goal is to create conditions for real competition, and that is why we have to break up monopolies that have been built over decades. These are monopolies that have been built under the auspices of the law with regulatory worlds that have been ultimately serving them, the strong actors. These are powerful forces. A beverage corporation has become the owner of a media outlet. These companies invest hundreds of millions of shekels in advertising. I have no doubt that I will have a difficult fight ahead. We will start with the food, and then move on to big pharma and other sectors that are centralized and we will open them up to competition."

Q: Do you believe prices will start coming down during your term? 

"The answer is yes. Absolutely. We will promote decentralization and the lifting of regulatory barriers. Look at Carrefour. It sells some 5,000 products across Europe, but only 1,000 in Israel because it has to go through so much red tape, like the Via Dolorosa."

Q: You passed an increase for the allowances given to Haredim in yeshivot and you added more funding to Haredi institutions that don't teach the core curriculum, defying the advisors in the Finance Ministry and most of the economists. 

"That is correct. Let me say upfront that we have maintained the preferred status of the state educational system, and we continue to prioritize incentives to teach core curriculum subjects. There are some institutions that get only 55% of the funding because they teach only 55% of the core curriculum. This criterion was set more than 20 years ago. Over the years, due to various pay benefits and after-school programs and so forth, the 100% rose to 200%, but the 55% stayed in place. So in effect, the 55% became 24%. Now we are just restoring it to its former size. This should be commended…I don't hide my views – I hold Torah study in high regard and I think this is an important value in a  Jewish state. Those who are good at it will continue to do it, and those who are not will join the job market at a much earlier age. I know one thing: Coercion never worked and will never work. Those who think that what has failed for the past 75 years [will work] can do so until the cows come home; however right this stance may be, it is not a smart one." 

Q: So you believe that increasing the funding for Haredi schools will not be a negative incentive for integrating Haredim in the job market, despite what your professional staff say? 

"You must understand that that the opinion of those professionals [in the Budget Division] doesn't mean that all those billions in increases will cost us trillions in 2060, it just means that the new funding will cement the current trajectory we are already in. I believe this prediction is wrong. While there is no denying that one of the biggest challenges for the Israeli economy and for me as finance minister is to integrate populations into the job market, you have to keep in mind that the Haredi population has been undergoing a major transformation, including social changes and cultural shifts. There is no one quick fix.

"In the grand scheme of things, Haredi women do go out to work, Haredi men's integration has been too slow but it's happening. I can't force them to enter professions that involve subjects they did not study in school. I don't think a hungry or poor boy will be more inclined to join the job market – the opposite is true. And we see this conclusion in every study on the matter: When a person has a better life, they open up to the world and want more, and this makes him integrate more."

Q: So the Budget Division was wrong?

"I think it is wrong, but I have a great working relationship with them. I like them and respect them. I never stop them from issuing their analysis papers, since I am a real democrat. But eventually, I have to decide. And it is my prerogative and my duty."

Q: You really think your approach will help integrate Haredim? 

"I have a conceptual disagreement with them. I come from a constituency that does serve and integrates in the job market. But I also know how to admire the Haredi dedication to Torah study and their willingness to pay a price for it, to live a simple life in poverty, and to admire the large families and their dedication to good deeds and mutual assistance and care." 

Smotrich does eventually concede in the interview that over the long run, Israel has to make changes if it wants to see a bright socioeconomic future. "I know that they know," he says, "that something has to be done on the sidelines." 

Q: Can you understand why those who do not see Torah study the same way don't want to subsidize yeshiva students and that this has an adverse economic effect on Israelis? What is your answer to those who say that the state prefers to give yeshiva students stipends but not university students? 

"These are not stipends. They just retroactively get more funding due to the increase in funding for Haredi institutions. A student in the Bezalel Academy of Arts and Design costs the state some 38,000 shekels (USD 10,000) a year. We subsidize this. We subsidize students who major in gender studies and the arts. We invest in them. A normal country invests in the arts, in humanities, in arts. If everything is viewed through an economic prism, then let's fund only those faculties that are conducive to the economy's productivity. I am not dismissive of the humanities or Bezalel, but what's the contribution to the economy in having students throw paint on the wall and call it art? Those who want to pursue gender studies should pay for it, why should we fund it? Because that is what a normal country does. If I give Habima – the national theater – 50 million shekels ($14 million) and fund cinema with tens of millions of shekels, then I can also fund other values. The funding for yeshivot is much lower. The yeshivot get some 2 billion shekels ($530,000) a year, and the Council for Higher Education gets 13.5 billion ($3.6 billion). Can you tell me how much of that really goes into the sciences and how much goes into the humanities? That's fine, I am for this; woe to us if we do not fund culture and sports, but if we do all this – I can also give two billion shekels to yeshivot because they are a key part of society for those sitting in the government. We fund the general public the most; the Haredim get only a little portion."

Q: But when an Israeli looks at the distribution of Coalition funds, they see the government's values, not his own. It all goes to the religious, the Haredim, and to the settlements. 

"That is not true. We increased budgets across the board, in all fields. Only one percent of the budget actually reflects the government's values, that is what democracy is all about. I wanted to give funds to the Oppositions's causes as well, and even set aside part of the budget for that. I told them, 'Let's have a proper discussion, give me some causes,' but they decided to shout and fight rather than take what I was offering. So we are funding pro-family projects with several million shekels, what's so bad about that? I'm not ashamed of that. These are my values. I got seven seats in the election, I too have the right to promote my causes under the auspices of democracy." 

Smotrich quips that he would like Israel Hayom to make "two thirds of the interview about economics," in what is a telling example of how he wants to avoid talking about the government infighting as manifested in the fissures in his relations with Otzma Yehudit leader Itamar Ben-Gvir and the Haredi parties.

Q: Ben-Gvir has accused you of giving handouts to your friends and forgetting about the Negev and the Galilee. The Haredim wanted more funding, but you adamantly refused at first. Is that how the system works? simple extortion?

"You overdramatize everything. These are things every finance minister has to experience. The coalition agreements were initially about 70 billion shekels in total but I insisted on limiting them to 12.5 billion, and then we added a few billions. This came along with spending cuts because I refused to break this limit. It was actually Itamar, for whom I have a lot of respect, who got the best treatment when it comes to the coalition agreements. I think he launched a cynical campaign on the backs of the Negev and the Galilee. The budget has billions of shekels for those two areas. To say that there is not enough money just because some ministry that is held by your party is untruthful, unfair, and non-collegial."  

Q: But this has become a pattern – the Haredim and Ben-Gvir made threats and got what they wanted, and this was not the first time that Ben-Gvir boycotted the government. 

"Threats must be out of the question. This government is good for the Right and for the Israelis. The alternative is to have the Left partner with the enemies and supporters of terrorism. That is why we have to make sure the government stays in power. Boycotting votes must be out of the question and I think that on this issue, Itamar was gravely wrong and everyone says so. He wanted more funds, and that's fine, but I hope he doesn't boycott again." 

Q: In light of all these tensions, is it safe to say that you and Ben-Gvir won't run on the same list next time around when there is a Knesset election? 

"There is so much time left before a general election is held: three and a half years. I have tremendous respect for Itamar and we have a great professional relationship. We made sure the budget supports his programs so that he succeeds in the important task he has taken upon himself. We ran together on the same list for a tactical reason. The fact that Otzma Yehudit and Religious Zionism are two separate parties is not new. Will they once again stand for election as a technical bloc? You can ask me in three and a half years.

Smotrich says he has "daily, and close" contact with Prime Minister Benjamin Netanyahu every day. He says they are in lockstep on economic issues as well. He further stresses that there is no basis for the rumors that he threatened to resign during the budget talks. Now that the budget is over, the judicial reform appears to be heading back to the forefront. 

Q: S&P decided to keep Israel's credit rating in place because the reform was put on hold. The protests are waning. Are you now going to put it back on the table? 

"The credit rating agencies didn't cite the reform; they cited the uncertainty that has been created due to irresponsible elements that were willing to take down the house with them, who went to those agencies and asked to take down the rating and scare off investors based on lies on the reforms. You ask me if I am willing to capitulate to those who want to hurt the economy and threaten to drill a hole in the ship because they don't like the democratic choices? I will not do that, because if I do, we could just end the story called Israel and close the book on democracy. We were elected – and not by a thin margin – based on a clear judicial platform and I am saying this outright: The process of judicial reform has been set in motion and cannot be rolled back. Had State Party leader Benny Gantz looked at this through a rational prism, we would have already reached an understanding but the Opposition has no interest in reaching that point and creating calm; they just want to engage in dialogue for the sake of dialogue. As far as they are concerned, this is just a pastime."

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Bank of Israel Governor Amir Yaron appeared to show a readiness to stop raising interest rates after this week's 25 basis points hike. Speaking with Israel Hayom, he left room for action should economic surprises emerge that could have him continue raising borrowing costs. 

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Asked about the recent government decision to give costly allowances to ultra-Orthodox constituents as part of the Coalition agreements, he said, "I would like all Haredi children to have an equal opportunity to join the job market and have the necessary skills to do that."

He appeared to send a warning that the government's decision might not serve this goal, and does not properly tackle the cost of living. 

Q: Knesset Member Israel Eichler (United Torah Judaism) said you have failed to bring down inflation and there you must submit your resignation.

"I have long been aware of his insights. In 2019, I gave a speech highlighting the importance of the Haredi sector, the importance of obtaining skills, and the Haredim's contribution to the growth of Israel's economy. The figures show that taxes will have to go up by 16% if demographic trends continue. He called me antisemitic after that speech, so allow me to ignore what he said." 

Q: But on the merits of what he said, perhaps higher interest rates have not delivered the goods? 

"The opposite is true. The process of raising interest rates, which we have led with resolve, has won much praise from all the international bodies. You have to realize what would have happened had we not done that: We would have found ourselves with much higher inflation, perhaps in the double digits – much like some countries have been experiencing. I would like to remind you that this kind hurts income and inflicts particular pain on the weaker classes. We could have reached a situation where people turn to other currencies when writing up contracts such as lease agreements. These would have damaged financial decision-making in Israel. Thus, we have to understand what the alternative price would have been for our actions. We understand that the process of raising interest rates causes pain, but if we had not acted this way, it would have been much worse and the risk of inflation getting worse would have been that much greater." 

Q: When will we be able to see hikes stop? 

"Of course, I am not going to give a promise, since we make each decision based on the data and on what we anticipate. We were taken aback by the latest consumer price index for how high it was – and we weren't the only ones. Although it had one seasonal component that was high, the bottom line is that inflation remains stubborn. We also expect the next CPI to be high. But if no big surprises emerge in the next CPI – and if there are no events that could lead to a significant depreciation of the shekel – we would be able to say that we are already in an interest rate environment that we asses to be sufficient for having us move toward the inflationary goal." 

Q: Does that mean that you won't go beyond this week's decision and the benchmark interest rate will stay at 4.75%? 

"While this is what we assess, this is not a pledge. We are determined and we continue doing whatever it takes. Right now, we just have an assessment that we have an environment that helps reduce inflation back to its goal as we see the current circumstances. In any event, we act based on the figures and we will do everything we can if needed." 

Q: Do you feel that you are on your own in this battle? Should the government do more? 

"We must make a distinction between the cost of living and the recent wave of price increases. In specific events – like after the outbreak of war in Ukraine – the government can definitely help on a temporary basis. But we see that sometimes it is hard to stop this from being a one-off thing. As for the cost of living – I stress once again that Israel is expensive on a range of issues. When it comes to the retail sector, we must make sure to introduce structural reforms. When it comes to housing, we must increase supply, we must boost building permits and zoning approvals, but we also have bids at lower prices. And of course, there is the issue of transportation. Unfortunately, all three things lack a magic wand that could bring a quick fix, but we have to reform those sectors."

Q: You previously said the government's budget was responsible and fiscally restrained. Do you still hold that view? 

"The budgetary framework is conservative and meets the monetary policy, as well as the wage agreements. But within that framework, there are not enough growth-inducing elements or parts that tackle the three main sectors that I mentioned regarding the costs of living." 

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