Jewish Journal

Poverty in Israel: The divide deepens between the haves and have-nots

by Dina Kraft

March 8, 2007 | 7:00 pm

Photos by Brian Hendler. Slideshow courtesy JTA

In a shimmering luxury hotel overlooking the Mediterranean Sea, Israel's banking and financial elite mingled over cocktails recently with foreign investors as they watched Donald Trump on a live telecast praise the strength of the Israeli market.

Across the street from the David InterContinental, meanwhile, more than 1,000 people protested the country's premier business conference, chanting "welfare before wealth."

Welcome to 21st century Israel in microcosm.

Once idealized as a socialist paradise, the Jewish state is increasingly becoming a country of two classes -- those who have soared in the increasingly capitalist economy and those who have stumbled in its wake.

Despite its much-mythologized egalitarian image, Israel has always experienced economic gaps. But now the divide between haves and have-nots has grown to alarming proportions. If economic policies and other factors have spawned a privileged class, they also have produced a deeply entrenched underclass populated by the elderly, Holocaust survivors, Arabs, immigrants, ultra-Orthodox Jews, single parents -- even two-income families.

One of the many faces representing this underclass is R, a poverty-stricken, 43-year-old mother of four.

At a Tel Aviv-area hospital, she weeps in the corridor as her children are being treated.

"Things are very hard for people like us; there is no life, no holidays, no Shabbat," said R, who lives in the Tel Aviv suburb of Holon, about five miles from the hotel hosting the business conference.

Like others interviewed for this series, R was so ashamed of her plight that she asked that her real name not be used. Her apartment was repossessed recently by the bank, and now she faces eviction from another one because she cannot pay the rent.

R stopped working full time as a government clerk when two of her children became chronically ill. She and her family now live mostly off her husband's monthly salary of $760 as a moving company employee. Government child allowances and her occasional work cleaning the staircases of apartment buildings bring the family's monthly income up to about $1,010, officially putting the family among Israel's 20 percent of households living below the poverty line.

Poverty rates in Israel reached a new peak in 2005, although they leveled off in 2006, according to statistics by the National Insurance Institute, the Israeli equivalent of the U.S. Social Security Administration. According to institute findings, one of every four Israelis -- 1.6 million people -- lives below the poverty line.

Thirty-five percent of children are living in poverty, leaving Israel with this unhappy distinction: It ranks among Western countries with the greatest percentage of poor children, according to the Insurance Institute.

"Children who grow up in poverty are more than likely to live in poverty as adults," said John Gal, an economist at Hebrew University. "They won't have the capacity, human capital and capabilities to be able to get out of poverty, to be mobile in society."

Chana Eliyahu, 35, grew up in a family living in poverty, and now as an unemployed single mother of a 2-year-old girl, she has become part of that cycle.

She lives off of $640 a month in welfare and child subsidy payments and has trouble finding full-time work because she suffers from anxiety attacks.

Eliyahu lives on the second floor of an apartment building in one of Tel Aviv's roughest neighborhoods, one populated by drug dealers and prostitutes. To reach her small apartment, one has to pass brothels and climb a staircase reeking of urine and rotting garbage.

Her daughter, Hila, is her inspiration to find a better life outside the walls of an apartment where she fights off rats and cockroaches and tries to ignore the peeling paint.

"My dream for her is to live in a normal place," said Eliyahu after collecting a week's supply of dry goods and diapers from Food for the Disadvantaged, a relief group. "She'll go to a school where there are no drugs or violence and will go to extracurricular activities. We'll do her homework together. She's so smart."

The Rich Get Richer

Meanwhile, about a mile away from Eliyahu's apartment at the Israel Business Conference, Israeli Prime Minister Ehud Olmert boasts that the nation's economy is in top form.

As evidence that at least one sector is thriving, consider that the number of Israeli millionaires per capita is twice the world average, according to the 2005 World Wealth Report. Approximately 7,400 Israelis are worth at least $1 million, the report said, including 84 who have at least $30 million.

The total liquid assets of Israel's upper echelon grew by 25 percent to $30 billion between 2004 and 2005, according to the report. Those designated by the report as the nine richest Israelis made their fortunes in everything from diamonds to real estate to communications to entertainment.

During his December speech at the David InterContinental, however, Olmert also acknowledged the roughly one-third of Israeli children living in poverty and announced $143 million in government funding for a new program that aims to help children at risk.

Although the general standard of living in Israel has risen in recent years, the lower socioeconomic classes have seen their situation plummet, largely due to massive cuts in government social spending that began in 2002. The budget cuts reflect an ideological and policy trend that is reordering the country's class structure, according to Uri Ram, a sociologist at Ben-Gurion University of the Negev, and the author of the upcoming book, "The Globalization of Israel: McWorld in Tel Aviv, Jihad in Jerusalem."

Even the Labor Party, which typically is associated with generous social welfare spending, said Ram, has gone back on its founding values to become a part "of this process of transforming Israel from a welfare society into this kind of free-market, corporate-dominated society."

French immigrant Gilles Darmon saw immediate evidence of that socioeconomic transformation when he arrived in Israel in 1994, and it shocked him.

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