Two activists from the Meshanim Kivvun (“Changing the Direction”) protest group were arrested Sunday after staging a demonstration outside the offices of the Religious Zionist Party faction in Jerusalem, spotlighting deepening public frustration with the government’s handling of the cost of living, state budget, and funding priorities.
According to the group, the protesters went to confront faction head Finance Minister Bezalel Smotrich over rising prices and what they describe as misplaced government spending that, in their view, overlooks the needs of most citizens.
“Citizens are collapsing under the cost of living, prices keep rising higher and higher, while at the same time the ‘plunder government’ continues to prioritize coalition funds over economic recovery,” the activists said in a statement. “The government is illegally funding institutions that do not teach core curriculum subjects, keeping unnecessary government ministries in place, and scattering money to advance its extremist ideology, instead of investing in the welfare of the citizens themselves.”
They added: “This plunder cannot be allowed to continue without a fight. The looting of the public purse will soon come to an end, and the government of failure will go home.”
Demonstrators also criticized Smotrich’s leadership, saying, “We’re here because Smotrich is our finance minister, but it’s important to remember who put him there: the Likud, the largest and ruling party… We have a coalition that places the needs of some population groups over the good of the whole.”
Within an hour of their arrival, police arrived and removed the activists. Two were subsequently arrested and are currently awaiting legal proceedings.
Increased living costs lead to public discontent
Israelis have been grappling with increased living costs in recent years, with prices for housing, food, and basic services remaining elevated even as economic growth has slowed, as well as the ensuing war. Official discussions in the Knesset have noted that while global food prices have eased, costs in Israel have continued to rise, fueling public discontent.
The 2026 state budget has become a flashpoint, exposing political fractures within Prime Minister Benjamin Netanyahu’s government. Smotrich has promoted the budget as a vehicle to lower the cost of living, break monopolies, and stimulate competition in key markets, including the banking sector.
However, opposition lawmakers have sharply criticized the plan, arguing it will burden the middle class and shift resources to politically sensitive sectors.
A particularly contentious element of the budget has been funding allocations related to the ultra-Orthodox (haredi) community, including subsidies for yeshivas and continued exemptions from military draft obligations. Critics, including Bank of Israel Governor Amir Yaron, have warned that heavy spending on these exemptions and benefits could undermine long-term economic growth and strain working and serving Israelis.
The budget fight has also put pressure on Israel’s fragile coalition: Shas has publicly threatened to withhold support for the budget unless legislation protecting haredi draft exemptions is passed, potentially jeopardizing the finance bill’s approval and risking early elections.
In late December, the High Court of Justice issued an interim order freezing a planned transfer of NIS 1 billion in budget funds earmarked for ultra-Orthodox educational institutions, after a petition argued that the allocations were approved improperly and without sufficient legal oversight.
The court’s directive requires the state to justify the urgency of the transfer before a final ruling is made, and has intensified scrutiny of how coalition funds are being allocated amid broader economic stress.
The unfolding budget standoff comes amid sustained political tension in Israel. With ongoing debates over military conscription, economic strain due to regional security challenges, and internal disputes within the governing coalition, public protests and legal challenges have become more frequent.
The 2026 budget must still pass through multiple Knesset votes by the end of March to take effect. Failure to do so would lead to automatic dissolution of the legislature and likely trigger early elections, heightening political uncertainty just months before Israelis are expected to go to the polls.