With all the external challenges on the horizon, perhaps Israeli Prime Minister Benjamin Netanyahu's biggest threat is coming from within as yesterday he gave the Israeli public another reason to get involved in the country's social protests…
Let's discuss his decision to enact a series of steps including the raising of the Value Added Tax, the raising of taxes on gasoline, alcohol and cigarettes, and imposing a surtax on high income earners and an across-the-board budget cut at Government ministries.
Two factors seemed to have spurred Netanyahu into announcing these steps right now.
The Bank of Israel Governor Prof. Stanley Fischer showed the Prime Minister a 'yellow card' regarding the economy (to use Olympic terminology).
That's because economists with the international credit rating agencies are concerned that the Israeli economy is in danger of deteriorating.
The other reason is the need to prevent investors from “running to the dollar”.
Many in Israel are calling on the Prime Minister to show leadership and courage and immediately take up the issue of the people's demands within the State's 2013 budget.
Critics are saying that the Government must be alert to two factors that play an important role in the public's response to the raising of taxes and cutting of services;
They say be careful in raising taxes on the rich out of concern over the flight of capital from Israel, but the accumulation of money without the distribution of services causes damage to the public's trust in the Governments 'non-bias' stance.
The second point is that for many Israelis the general feeling is that both the Arabs and ultra-orthodox Jews, who have access to public services, must be fully brought into the cycle of those who pay taxes.
Enjoy the opening ceremony of the XXX Olympiad!
Middle East Correspondent