Israeli Prime Minister Benjamin Netanyahu said he is exploring the use of cryptocurrency to circumvent potential financial sanctions on Israel, drawing criticism from opposition figures who said it would turn the Jewish state into an economic pariah like Iran.
“We need to prepare ways to evade banking sanctions through an alternative economic system,” Netanyahu said in an interview with Israel’s Channel 10. “You know what that means – the currencies that can bypass them. I’m working on that too.” Asked whether he meant crypto, the Prime Minister said: “Very correct.”
Netanyahu was speaking ahead of the Oct 27 election, where he faces a strong challenge from former general Gadi Eisenkot.
Opposition leader Yair Lapid said the Prime Minister’s proposal for evading potential sanctions “belongs to countries like Iran, Russia, and Venezuela – nations whose banks are cut off from the world, whose companies cannot accept payments, and whose young people are fleeing”.
“That’s his vision,” Lapid added in a post on social media platform X.
In September, 12 major countries, led by Britain, pledged coordinated measures against Israeli settlements in the West Bank. British Foreign Secretary Ed Miliband said the moves would also cover individuals and companies providing financing, construction and other services to the settlements.
That raised fears of sanctions on Israeli banks that could rattle the tech-export-driven economy.
“The concern is that foreign banks will cease providing correspondent services to their Israeli counterparts, effectively severing Israel’s ability to conduct international economic activity,” said Yair Avidan, a former banking supervisor at the Bank of Israel.
Netanyahu “is finally admitting that Israel faces a real danger of diplomatic isolation and economic sanctions, yet instead of explaining how he intends to prevent them, he is already talking about preparing a ‘sanctions-bypassing economy’”, said former finance minister Avigdor Liberman, leader of Israel Beytenu, an opposition party. He vowed to “break Israel out of diplomatic isolation and eliminate the threat of sanctions” if the opposition takes power.
In the interview, Netanyahu also warned that decades of US military aid would end, forcing Israel to finance its defence on its own.
“If you think we will continue receiving what I secured twice – tens of billions of dollars in American aid for the defence budget – you’d better prepare yourselves and get used to the idea that this will not continue,” he said. “That is because America has changed, not because Israel has changed. It will end. It is only a matter of time.”
Netanyahu said Israel has two more years with US President Donald Trump, but must prepare for a less favourable Washington after he leaves power.
The US and Israel have agreed a memorandum of understanding which runs through 2028 and provides US$3.8 billion (S$4.9 billion) annually, largely for military procurement from the US.
Washington extended a supplement of at least US$15 billion during three years of war triggered by Hamas’ October 2023 attack on Israel, which claimed the lives of 1,200 Israelis.
Netanyahu said Israel could afford higher defence spending after robust growth, despite three years of war. “For years, we kept defence spending under control to encourage economic growth,” he said. “Now the economy must support defence, because without security, there will be no economy.” BLOOMBERG