No Room in Zion?

By Alex Joffe • Thursday, July 28, 2011

Tent camps are appearing across Israel in protest over the high cost of housing. The high cost of everything in Israel (recall the cottage cheese boycott earlier this year) has led to widespread economic and social dissatisfaction, with otherwise serious commentators making overheated analogies to Tahrir Square and the Arab Spring. Something must be done, but what? Prime Minister Benjamin Netanyahu has promised to address the crisis, this week announcing initiatives that may go some way toward mollifying protesters in need of housing. But protestors themselves seem unable to point to long-term solutions, and political rivals on all sides are sharpening their knives.

Relevant Links

This Isn't Tahrir Square Hagai Segal, Ynet. Tel Aviv real estate protests translate genuine distress into demagogic outcry.

Missing the Point Nehemia Shtrasler, Haaretz. The protesters on Rothschild Boulevard want the state to continue controlling the land. They don’t understand that this is costing them billions.

Needed: Antibiotics, Not Aspirin Dror Marmor, Globes. Local authorities, developers, and banks are the biggest obstacles to reforming the housing market.

To say that the housing situation in Israel is distorted is to understate matters, as a brief look at the history of the country's settlement patterns illustrates. Very little of this history is "natural." Zionism, in its socialist and neo-liberal manifestations, has shaped the landscape as much as wars. Though Tel Aviv is the center of protests, the city itself is relatively new, having been founded only in 1909. Bat Yam, on Tel Aviv's southern border, was founded in 1926, while Herzliya to the north was created in 1924. Nearby Petah Tivkah, Rishon L'Zion, and Ramat Gan (cities within the Ayalon Highway belt, now each with populations over 150,000) were founded in 1878, 1882, and 1921 as agricultural settlements. Overall, the Gush Dan region of Israel's central coast and foothills, an area of less than 600 square miles, is home to over 3.2 million Israelis, some 42 percent of the population.

Meanwhile, Israel's development towns represent another path toward urban development. In the early 1950's, Jews flowed into Israel from Arab countries. The coast was already perceived as overcrowded, and strategic and economic decisions were made to spread these (non-Ashkenazi) Jews into the more thinly populated Galilee and the Negev. Sderot, Dimona, and Netivot in the Negev were created in 1951, 1953, and 1956. Their total population today is around 80,000. Kiryat Shmona (population 23,000) was created in 1949, while the ancient site of Beth Shean gained a Jewish majority only after 1948.

The Zionist imperative to settle the land has played out in different ways, but with predictable results. Housing pressures, commensurate with population growth, have increased. As the kibbutz movement collapsed during the 1980's, privatization schemes allowed many to sell their lands to pay off debts. This was especially profitable to those kibbutzim remaining in the Gush Dan region, while others have essentially been converted into garden suburbs. As for the massive immigration from the former Soviet Union, it also reversed a prior movement away from Tel Aviv to older cities such as Ashdod and newer ones like Modi'in.

Then there were strategic imperatives. Construction of Jewish communities in the West Bank under Labor and Likud governments entailed huge investments in infrastructure and defense. Another such strategic imperative saw additional waves of construction in and around Jerusalem to incorporate the north, west, and east into the Jewish city. The original 1970's belt neighborhoods like Ramot, Gilo, and Pisgat Ze'ev expanded and were joined by many others, such as Ramat Shlomo and Har Homa, several of which now have ultra-Orthodox majorities. But Jerusalem is a case in itself. In the center of the city, older neighborhoods like Mamilla have been completely remade with luxury residences, most owned by non-Israelis and occupied only on Jewish holidays. Belt highways to the north and south have been built and an expensive light rail system has been carved through the center of the city. But secular Jews continue to leave Jerusalem, Arabs continue to apply for residence permits, and the labor participation rate among remaining Jewish males is under 45 percent—over 20 percent lower than in Tel Aviv.

Obviously, economics has played a big part in many of these changes. The economic liberalization of the 1990's and early 2000's saw the decline of the last remnants of socialism and the rise of entrepreneurialism and high tech industries. New wealth creation spurred new demands for housing, new American-like patterns of consumption, and American-style social inequality. The average price for a four-room apartment in Tel Aviv, up 30 percent in 2010, increased another 12 percent in the first quarter of 2011 and now stands at over 2.25 million shekels (approximately $662,000). But overall Israeli wages have remained stagnant, along with investment in education and social services. Subsidies for ultra-Orthodox have increased, while prices have skyrocketed.

How is the government to respond in the face of market fluctuations, while also dealing with the multiple burdens of history, demographics, and geo-politics? Netanyahu has proposed reforming planning and building commissions and permitting rapid construction of another 10,000 housing units, half of which would be rental units. Proposals have also emerged to limit profits on investments in second (or additional) homes, as well as for rent controls. A proposed "affordable housing plan" for Tel Aviv would allocate new residence units to young families. Two exclusively ultra-Orthodox cities are also planned for the northern Negev and the outskirts of Haifa, each with a population of over 50,000. (When, or if, Jewish residents of the West Bank are resettled from across the Green Line, it will be necessary to find housing for up to 300,000.)

But, as with so many of Israel's crises, so long in the making, no solutions to the housing problem can emerge in the short term. Even with an admirable fiscal situation and what appears to be a historically low unemployment rate, any solution will encounter obstacles and entail trade-offs. Additional housing can come either at the expense of ever-shrinking green space and agriculture, or through the redevelopment of still higher-density housing, such as high-rises. But all this is the price of success, with the attendant rewards and costs of the revolutionary transformation of Israel into a global high-tech superpower. Whether neo-liberal or socialist solutions are adopted, the only things that are certain are that, for now, social discontent will remain high, and traffic will increase.

Alex Joffe is a research scholar with the Institute for Jewish and Community Research.