JERUSALEM — Facing his most serious domestic challenge since he took office, Israeli Prime Minister Benjamin Netanyahu said Sunday that members of his government would meet with protesters, a day after tens of thousands of Israelis took to the streets to demonstrate against rising housing prices and the high cost of living.
Two weeks of grass-roots economic protests have put pressure on Netanyahu to address demands for greater state involvement to remedy widening gaps between rich and poor and complaints by many middle-class Israelis that living costs are outstripping their salaries.
The protests over housing, which began with a tent camp in Tel Aviv, have spawned similar encampments in other cities. Saturday night’s demonstrations were the largest since the start of the protest wave, which was inspired partly by anti-government uprisings in neighboring Arab countries. Police estimated that more than 100,000 people demonstrated in 10 cities across Israel.
Polls have shown broad public support for the protesters and a sharp drop in Netanyahu’s approval rating since the demonstrations began, with shouts of “The people want social justice!” and demands that the prime minister step down.
The protests have drawn people from across the political spectrum and have taken place outside Israel’s established political parties and their leaders. The demonstrations have united hawks and doves, those on the left and those on the right, who have traditionally lined up according to their stance on the Arab-Israeli conflict. And while the protests represent a strong groundswell of public sentiment, they have not shaken Netanyahu’s broad-based right-wing coalition, which maintains a solid majority in parliament.
Speaking at the start of Sunday’s weekly cabinet meeting, Netanyahu pledged “to change our priorities” and announced that he would appoint a team of ministers and experts to formulate a plan “to ease the economic burden on Israeli citizens.” The prime minister said he would ask the team to “invite representatives of different groups and various sectors” to share their grievances and proposals before the plan is adopted by the government.
But Netanyahu warned against “irresponsible and populist steps that could bring the country to the situation of certain countries in Europe, which have reached the brink of bankruptcy and mass unemployment.”
Finance Minister Yuval Steinitz, a focus of criticism, warned that reforms demanded by the protesters, who have called for “a welfare state now,” could plunge Israel into a debt crisis similar to those plaguing Spain and Greece.
“As finance minister, I have a responsibility to prevent Israel from reaching a situation of economic anarchy,” he told reporters. “We see the talk about the debt crisis in Europe. We even hear talk of a possible default in the United States. My supreme duty is to see to it that we do not reach such a situation in the state of Israel.”
Steinitz said that while steps would be taken to reduce monopolies and increase competition, “we will not turn the rich and the businesspeople and the investors and industrialists into the enemies of the people, because they are part of a healthy economy.”
Israel’s gross domestic product growth is projected at 5 percent this year, and unemployment has declined to a record low of 5.7 percent. But many Israelis say they are struggling to make ends meet because of the rising costs of housing, fuel, utilities and food.
In another sign of pressure on the government, the director general of the Finance Ministry, Haim Shani, resigned Sunday, citing long-standing differences that he said were magnified by the protests.
A recent Facebook-driven consumer revolt forced a reduction in the price of cottage cheese, an Israeli staple. Social workers and doctors have held lengthy strikes over pay and working conditions, and young mothers have protested high day-care costs.
Vice Prime Minister Silvan Shalom said domestic social concerns were moving to the fore after years in which the public debate has been dominated by the conflict with the Palestinians and other external threats.
“We are moving away from a security mind-set to a social mind-set,” Shalom told Channel Two television.
Dan Shilon, a columnist for the newspaper Maariv, urged Netanyahu to step down. “Nothing will stop the protest,” he wrote. “Not a panicked tax cut, not the summer recess of parliament, not the autumn rains, not Katyusha rockets in the north or Qassam rockets in the south, not an attack on Iran nor missiles on Tel Aviv. Nothing will extricate you.”