Netanyahu faces criticism over cryptocurrency proposal to counter possible sanctions

Jerusalem, Israel. Prime Minister Benjamin Netanyahu, seeking re-election this week, has faced criticism from economists and political opponents over his suggestion that cryptocurrency could help Israel withstand possible international sanctions.

Preparations for wider sanctions

Speaking to Israel’s Channel 10 on Friday, Netanyahu said he was making preparations for the possibility of broader sanctions against Israel. He suggested that restrictions could extend to banks, requiring an alternative economic system, and said work was under way on currencies that could circumvent such measures.

When asked if he meant cryptocurrency, Netanyahu confirmed that he did and identified blockchain technology as another option.

His remarks followed an announcement last month by Britain, France and Canada that they would prohibit imports originating in Israeli settlements within the West Bank. That decision was the latest of several measures directed at Israel’s settlement policy, highlighting increasing diplomatic isolation from some longstanding allies.

Central bank and economists push back

In an unusual public rebuke, the Bank of Israel rejected cryptocurrency as a means of circumventing sanctions. It urged political leaders instead to pursue policies that would prevent such restrictions from becoming necessary.

The central bank said Israel should maintain economic ties with its principal trading partners and concentrate on averting sanctions and the damage they could cause to the economy.

A letter signed on Sunday by more than 100 economists expressed alarm at Netanyahu’s proposal. Its signatories included former Bank of Israel officials, former central bank governor Jacob Frenkel and several Nobel laureates.

They warned that the proposal would increase unemployment, reduce foreign investment and cause Israel’s international economic standing to collapse. Drawing comparisons with South Africa, Iran and Russia under similar sanctions, they said Israelis would experience a sharp decline in living standards. They also warned that the state’s capacity to fund security and protect itself from enemies would be seriously weakened.

Netanyahu appeals to voters

Netanyahu continued defending his record on Sunday and called on voters to support him. He said he and US President Donald Trump had another two years in which to work together towards overthrowing Iran’s rulers.