The anti-capitalist demonstration at the recent Israel Business Conference was mounted by the usual crew: leftist youth and student groups, the Communist Hadash party, gay leftists, the Greens, etc. But it was also sponsored by supposedly “mainstream” organizations such as the New Israel Fund and the Israel branch of the US Reform Movement.

Months ago we warned that failure by Finance Minister Silvan Shalom to enact vital reforms may “lead to loss of control and an inability to tackle the numerous crises” threatening the economy.

And indeed, the crisis is upon us. But rather than deal with the immensely bloated and wasteful bureaucratic public sector or with our monopolies and their costly inefficiencies that impede growth, Shalom blames all our difficulties on external causes (which do indeed aggravate the crisis). He tries to weather the crisis by devising a half-baked deal between workers, industry and the government. If miraculously implemented, such a deal may temporarily pacify labor unrest. But it will leave the more dangerous structural problems unattended, with grave consequences.

As a result of last fall’s violence and the ensuing efforts to rescue the peace process, security concerns have once again eclipsed all other public policy issues in Israel. Despite years of talk about the need for economic reform, therefore, major changes are not likely in the near future. But once the government of Prime Minister Benjamin Netanyahu has some breathing space, there is reason to hope he will do more than talk.