Oligarchy in the Holy Land — Tiny Number of Families Dominates Israel's Economy
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But most Americans probably don't know that the 2nd most unequal "rich" country is the close ally and client state of Israel, whose own oligarchs own a significant slice of the Israeli economy.
And the Israeli people’s anger is increasingly being directed at the Israeli tycoons that hold an immense amount of wealth. Ordinary Israelis see the oligarchs as a testament to the vast gulf between the very rich and the rest of Israel. For many, inequality is the main economic issue in the country. But the Israeli economy didn’t always have such striking inequality. The country was a lot more equal when it was operating on a more social democratic model—at least for Jews—in the decades after 1948.
Today, about 20 Israeli families control a disproportionate amount of the Israeli economy. The families, whose holdings span the gamut of the Israeli economy, lay claim to about half the Israeli stock market and own one in four Israeli firms, according to the Financial Times. In 2010, a parliamentary report found that 10 business groups, most of them owned by wealthy families, control 30 percent of the market value of public companies. The families have holdings in real estate, financial services, supermarkets, the airline industry, telecommunications and more.
Tycoons like Yitzhak Tshuva and Shari Arison are cases in point. Tshuva owns Delek Group, one of Israel’s biggest companies. It has investments in energy, infrastructure, insurance and financial companies. Tshuva is also a chairman at the El-Ad Group, a major real estate company. Arison is the owner of Bank Hapoalim, but also is involved in real estate and water.
The tycoons’ fingerprints can be found on much of what makes Israel tick. What it all adds up to is an oligarchy, a system where a tiny slice of Israelis maintain a stranglehold over much of the Israeli economy.
These facts are no shock to Israelis. They live it everyday, made all the more apparent by the high cost of housing. The government has taken a keen interest in the problem, particularly since massive protests sparked by the high cost of living and inequality. They’ve convened committees, like the Knesset committee on economic concentration, established in 2010.
A report from that committee singled out business groups that control both financial and non-financial companies. In November 2013, Israeli Prime Minister Benjamin Netanyahu criticized the high level of concentration in the economy. “The primary factor in the lack of competition in Israel is economic concentration fostered by cartels or the monopolistic behavior of wealthy individuals,” Netanyahu told the Israel Democracy Institute. The OECD has also singled out Israel’s concentration of wealth as a problem to be addressed.
Despite the high-level handwringing, the Israeli economy has yet to undergo the radical changes some activists and analysts say are needed to break the hold the small number of business groups and families have on the economy.
The Dankners--and especially the scion, Nochi Dankner--is one such powerful family.
The family made its money in the salt industry. Most of the family couldn’t keep up their financial success, though, bedeviled by internal squabbles and failed investments. The exception was Nochi Dankner, whose net worth is $1 billion, according to Forbes. For many years, he was the chairman of the IDB Group, which has stakes in the insurance, biotech and finance industries.