Tent-city protest targets Israel's 'tycoons'

THEY are mainstays of the society pages and glossy magazines. Some are praised for the hospital wings they have built, others are gossiped about for their quirks.

But these days, the handful of wealthy families who dominate the Israeli economy are assuming a new role: one of the chief targets of the tent-city protesters who have shaken Israel in the past month.

The "tycoons," as they are known even in Hebrew, are suddenly facing enraged scrutiny as middle-class families complain that a country once viewed as an example of intimate equality today has one of the largest gaps between rich and poor in the industrialised world.

The tent-city protesters, who have shifted the public discourse by demanding affordable housing and other essential goods, issued a document last week calling for a new socio-economic agenda. Topping their goals: "minimising social inequalities".

"What is keeping people on the streets is the question that if we are all having a hard time and we are all working and paying taxes, who is making the profits?" said Daphni Leef, the 25-year-old filmmaker who began this protest movement with a Facebook posting and remains at its centre. "We know there are certain families that have a lot of money and a lot of influence and there is no transparency. People feel deceived."

Those families - the Ofers, the Dankners, the Tshuvas, the Fishmans and others - account for the ten biggest business groups in the country and together control some 30 per cent of the economy. They will doubtless be among the targets at another set of street demonstrations planned for last night. "It is becoming clearer to more and more people that this issue of concentration of wealth has become more important," said Einat Wilf, a legislator who submitted a bill last year aimed at tackling the issue. "As a result of the protests, there is much more political will to fight it than in the past."

Others counter that wealth concentration is only one of the factors contributing to middle-class anger and that focusing on it diverts attention from other equally important matters, such as the swollen defense budget, subsidies for the ultra-Orthodox and the cost of settlements in the West Bank and East Jerusalem, where the interior ministry said last week that it would build 1,600 units and announced plans for 2,700 more.

But the issue has had strong populist resonance. Although Israel's economy is strong, the data on wealth concentration, published by the Bank of Israel, are unsettling. A small group of family-owned companies control banks, supermarket chains and media, cellphone and insurance companies. They borrow heavily, posing risks for the larger economy and, through a web of interconnecting enterprises, make it harder for others to get into the markets they dominate.

"These are called pyramid schemes because through shares in one company they take control of a second company and, through that, of another one on down a chain of holdings," said Eytan Sheshinski, an economist at the Hebrew University of Jerusalem. "They are able to move profits through the pyramid, which cannot happen in the US because of the tax system there." Still, the Bank of Israel study shows that while the US, Britain and Germany have much less concentration of wealth than Israel, the country's on a par with Switzerland, France and Belgium, and wealth is far less concentrated than is the case in Sweden.

Last year, prime minister Benjamin Netanyahu formed a committee to find ways in which to reduce the power of monopolies.

Daniel Doron, who directs the Israel Centre for Social and Economic Progress,said he was convinced that the way in which failing state assets were privatised in the 1980s and 1990s led to dangerous consolidation, just as it did in the former Soviet Union and some Arab countries, like Egypt and Syria. Banks; construction and mining companies, all owned by agencies of the state and all in varying degrees of trouble, were sold to those who could afford to buy them. "It was basically selling assets to cronies," Doron said. Once the economy started to pick up in the late 1990s, these companies used their market positions to increase fees sharply, he said. "Today, the whole Israeli economy is built on rapacious elites fleecing consumers."

At the time of the sell-offs, some say, the Right favoured them for ideological reasons while the Left wanted to get the economy out of the hands of the government, which the Right often controlled.

Now Israelis of all political stripes are worried. Perhaps the best example is Nochi Dankner, chairman of IDB Holdings. His group controls Super-Sol, the largest supermarket chain; Cellcom, the largest mobile phone company; Netvision, one of the largest internet companies; and Clal Finance, one of the largest financial institutions. He just bought a controlling share of Maariv, one of the largest newspapers.

Control of media companies, especially as they have become less profitable, has many here especially concerned. Commercial television stations are partly owned by tycoons, as are several of the newspapers. Sheldon Adelson, an American-Jewish casino owner and friend of Netanyahu's, publishes a free Israeli newspaper widely seen as promoting the prime minister's agenda.

Netanyahu's committee is expected to make recommendations in the next month. They may include a change in corporate tax as well as antitrust laws. But it will not recommend the kind of income redistribution many protesters seek."It used to be politically impossible to go after the cartels, but now that 300,000 people have gone out in the street, we have a mandate," an Netanyahu aide said. "But the PM is not going to make this a socialist country again."