Days before a high-stakes national election, Prime Minister Benjamin Netanyahu has stunned the Israeli political and financial establishment by warning that the country must prepare for a future of international sanctions and the cessation of American financial assistance. In comments that have reshaped the closing arguments of the campaign, Netanyahu proposed the creation of a “bypass economy” utilizing cryptocurrency to maintain financial operations if Israeli banks are cut off from the global system.
Speaking to a financial journalist on Friday, the Prime Minister offered a bleak assessment of Israel’s long-term reliance on the United States, suggesting that billions of dollars in annual military and economic aid would eventually vanish. “It’s over,” Netanyahu said regarding the assistance. “It’s only a matter of time.”
The Prime Minister’s outlook reflects a period of deepening diplomatic isolation for Israel. Following years of conflict in Gaza and an escalation of violence by Jewish settlers against Palestinians in the West Bank, traditional allies have begun implementing or weighing significant economic penalties. Last month, the British government announced trade sanctions targeting settlements and the entities that finance them, utilizing sharp rhetoric to describe the displacement of Palestinians in the region. Additionally, nations including Canada, France, and Spain have expressed support for restricting trade with settlements, a move that financial experts fear could eventually target Israeli financial institutions directly.
Netanyahu’s suggestion that Israel could rely on cryptocurrency to circumvent such measures was met with immediate resistance from the Bank of Israel. In a rare public intervention, the central bank stated that digital currencies are not a viable route to bypass international sanctions. The bank’s leadership urged the government to focus on diplomacy to prevent the imposition of sanctions rather than planning for their arrival, emphasizing the necessity of preserving ties with major global trading partners.
Political rivals were quick to seize on the Prime Minister’s comments. Gadi Eisenkot, Netanyahu’s primary challenger in Tuesday’s vote, characterized the proposal as a “Bibi-coin vision” that would dismantle the Israeli economy for generations. Eisenkot warned that moving toward an insular, crypto-based system would end high-tech investments, national security stability, and even basic international consumer access.
Opposition leader Yair Lapid, a former prime minister and finance minister, echoed these concerns. Lapid argued that Netanyahu’s path would lead to a ruined economy and the collapse of the foundational military alliance with the United States. Adding to the chorus of criticism, Jacob Frenkel, a former governor of the Bank of Israel, warned that withdrawing from the international financial system would turn Israel into a global “leper.”
The current rhetoric stands in contrast to the Prime Minister’s earlier “super-Sparta” concept, where he suggested Israel must become a self-sufficient, militaristic society. Critics note that such an insular model is fundamentally incompatible with Israel’s modern economy, which is heavily reliant on a technology sector that requires constant foreign investment and global integration.
Netanyahu has since attempted to moderate his stance, describing cryptocurrency as merely “one option” among several to address potential financial pressures. His campaign continues to insist the economy remains robust, pointing to record export revenues, a strong shekel, and low unemployment. However, a recent report from the State Comptroller warned that the cost of living for average Israelis is “skyrocketing,” driven by low competition and structural market challenges.
While security and foreign policy usually dominate Israeli elections, polling from the Israel Democracy Institute indicates that the economy has emerged as the primary concern for voters heading into Tuesday’s poll. The prospect of international isolation and a fundamental shift in the nation’s financial architecture has now become a central question for an electorate already feeling the strain of rising prices and prolonged conflict.
