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Benjamin Netanyahu: A Realtor with No Buyers

Beyond his well-known love of mildly fancy hotels in Israel and abroad, I do not know much about the personal tastes of the prime minister of Israel. I thus could not tell you whether Benjamin Netanyahu is a fan of rock music. But if he is, he could find some solace in the 1972 hit song of the Scottish outfit Stealer’s Wheel, whose chorus runs “clowns to the left of me, jokers to the right.” The title of the song: “Stuck in the Middle with You.”

For Mr. Netanyahu finds himself politically isolated and maligned by both Left and Right precisely when he needs the most company. Some weeks ago, Mr. Netanyahu’s government proposed what is surely the most significant bill of the fledgling administration but also perhaps the most significant reform effort seen in Israel in a long time. The so-called Law of the Lands bill aims to loosen the strict regulation of land ownership in Israel. It proposes to transfer land currently possessed by the Israel Land Administration (up to 93 percent of the total landmass of Israel) to the people who actually inhabit it — in essence, a mass fire sale of government lands. If passed, the bill would be the largest land-privatization act in the history of the country.

It has been a little remarked fact, certainly outside Israel, that Israeli land is as state-controlled as it is. This is partly because the current system does allow a form of almost de facto ownership. Israelis typically get long-term leases (for as long as 99 years in some cases), which pretty much give them the freedom to dispose of their private castles just as they wish. Still, the ultimate deed of ownership, whether it be for a residence, office tower, or orange grove, usually belongs to the state.

The effects of state control have been far from benign. The cost of land is always unbelievably inflated because of the “scarcity” of land. There’s still plenty of unoccupied land in Israel, but only the Israel Land Administration gets to decide what can and cannot be built, and they are stingy with their permission slips. Along with this situation has grown up, quite naturally, a system of spoils and patronage, in which “friends” of the Israel Land Administration (no, not North American charity contributors) get exclusive rights to development projects, perpetuating Israel’s ruinous commercial oligarchy. The Netanyahu bill could remedy Israel’s chronic real-estate shortage, drive down prices, and encourage the growth of the “ownership society” in a country where most people barely hang on with huge proportions of salary going straight into rent.

Despite its populist intent, a staggering coalition is emerging against the Law of the Lands. In a front-page hit piece in the Israeli business daily Globes, Lilach Veisman reports that one skeptical Netanyahu aide leaked that Netanyahu had met with business people from Arab countries interested in the development of the Palestinian territories. Veisman quotes the source as saying, “Who could guarantee that they [the Arab businessmen] would not build here?” The right-wingers claim not to like the bill, because they fear the ownership of foreign Arabs. “Netanyahu should strengthen the ‘Israeli law,’ ” the aide said — “Israeli” here seemingly does not include “Israeli Arab.”

Netanyahu has faced this line of assault before. The story goes that former Prime Minister Ariel Sharon had refused then Finance Minister Netanyahu’s proposal to privatize lands for fear that Saudi speculators would buy up the country. To this, one of Netanyahu’s close aides apparently retorted: “Saudi Arabians have no shortage of sand in Arabia, and even if they want to take some of Israel’s sand back with them, they can try.” A warrior and not an economist, Mr. Sharon did not seem to get the point. Be this as it may, the fear of an Arab takeover is totally overblown. Arab ownership could not undo Israeli possession; every Talmud student, as well as every reader of John Locke, should know that possession is 9/10th of ownership.

While his opponents on the Right are blinded by xenophobia, the opponents on the Left are simply blind. In the same article, Veisman also quotes another associate of Netanyahu to the effect that the bill was “born in a meeting over whiskey and cigars with businessmen.” So the charge from the Left is that this is simply an aristocratic coup. The bill would favor only the “powerful captains” and hurt the “average man,” said the source. So let us see.

A bill that would flood the market with new land, lower prices, and enable ownership would benefit only the existing captains of industry? Ehud Barak, the lately very sensible chief of the Labor party, had originally rejected these cries and sided with Netanyahu. But he has received an angry letter from party members asking him to reconsider.

Full disclosure: There would be losers if the law of the lands passed. Any land speculator or plutocrat hoping to cash in on illicitly received contracts from the Jewish National Fund will see the value of their land possession nose-dive. Existing home owners will in fact see important declines in home values. But the gains would be vast. As the supply of housing increases, prices will fall, and Israelis long forced to be permanent renters might at last become owners. Most significantly, it would give the restless Israeli character some new and attractive objects, encouraging innovation, development, and growth. At the same time, increased and wider ownership of land by all residents of Israel just might improve prospects for peace.

Despite these benefits, the forces right now seem aligned against Mr. Netanyahu as the bill gets set for a vote next week. It is not clear if Ehud Barak can ignore the shrieking from his own party, nor whether Mr. Netanyahu can control his right flank. Reading the hit piece in Globes (and surely he reads the papers), Mr. Netanyahu might be justly perplexed. Thinking he had benefited the wide populace of Israel, he instead finds that he aims to “only benefit” Israeli captains of industry as well as Saudi speculators, perhaps at the same time. Stealer’s Wheel’s “Stuck in the Middle with You” expresses great exasperation: “Trying to make some sense of it all, I can see it makes no sense at all.” The song seems to be about a hallucinogenic trip, but the prime minister might find it uncannily close to describing current Israeli political reality. Go figure.

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