What’s happened: This morning a memorial siren sounded across Israel in honour of Holocaust Remembrance Day.

• The traditional opening ceremony at Yad Vashem in Jerusalem on Monday evening was this year prerecorded and was held without any audience because of the ongoing security situation.
• In his speech President Herzog noted, “There are those who seek to destroy this home that we built, even today. For two and a half years, the State of Israel has been at war, since that frightful day, the October 7th massacre. In every place and every site I visit, I see Israeli society and the spirit that animates it. Across the length and breadth of the land, in bomb shelters, at sites destroyed by missile attacks, in hospitals, in command centres, and volunteer hubs, I see the solidarity, the heroism, the devotion, and the mutual responsibility.”
• He used the opportunity to call for national unity, saying, “History has repeatedly taught us the high price of internal fighting and division and, alternatively, the strength of mutual responsibility and fraternity. Based on that memory, based on everything that our people has endured, we must say to ourselves, especially today: We did not rise from the fire of the crematoria only to burn in the fire of quarrel.”
• Prime Minister Netanyahu said in his speech that the establishment of the State of Israel may not have ended antisemitism and belligerence against the Jewish people but, as opposed to the past, the people who seek to destroy us bring destruction down upon themselves.
• Netanyahu said, “This year we will remember that the State of Israel is at its all-time peak in strength. Who could have imagined 80 years ago that our bold air force pilots and the American military’s pilots would defend, wing-to-wing, the Middle East, Israel and the United States of course, to defend civilization from barbarism.”  
• As in previous speeches, Netanyahu connected the memory of the Holocaust to the Iranian threat. Netanyahu said, “Indeed, we have destroyed large parts of the industry of death that the Iranian regime had developed over decades: the nuclear plants, missiles, UAVs, the naval fleet, the air force, and vast quantities of other weapons systems. Had we not acted, the names Natanz, Fordow, Isfahan and Parchin might have been remembered eternally in infamy, just like Auschwitz, Treblinka, Majdanek, and Sobibor. But we acted, and how—in an unprecedented historic partnership with President Trump and the United States.”
• Netanyahu also criticised Europe, which he said “has forgotten so much since the Holocaust, can learn many things from us, primarily: the sharp distinction between good and evil, which, in the moment of truth, requires us to go to war for the sake of good, for the sake of life. Europe, which vowed after World War II to defend the good, is infested today with a deep moral weakness. Europe is losing control over its identity, its values and its commitment to protect civilisation from barbarism.”

Context: Israel formally designated “Holocaust and Heroism Remembrance Day,” on the Hebrew date of 27 Nisan in 1951, after the Knesset debated several options.

• The date chosen is a week after Passover, close to the anniversary of the Warsaw Ghetto Uprising, which began on Passover. For the then young State of Israel the main driver was to connect remembrance of the Holocaust with Jewish resistance. Whereas International Holocaust Remembrance Day on January 27 marks the anniversary of the liberation of Auschwitz-Birkenau.
• This year there are 116,880 Holocaust survivors still alive and living in Israel. Just over 13,000 survivors died in the last year. There were 115 Holocaust survivors who were among the thousands evacuated from their homes as a result of the latest Iran war.            
• In Israel, the memorial is also an opportunity to reflect on growing antisemitism around the world. There have been over 1,000 antisemitic incidents around the world in the last year, resulting in 20 Jews killed, 15 of whom  in the terror attack on Bondi Beach. This figure reflects a 30 year high.

Looking ahead: Direct talks between the ambassadors of Israel and Lebanon are due to begin later today in Washington.

• In parallel, the operation Bint Jbeil is expected to continue for a few more days.
• Next Tuesday Israel will mark Memorial Day for those fallen in wars and terror attacks, and the following day celebrate Israel’s 78th Independence Day.

What’s happened: The Knesset passed the Death Penalty for Terrorists bill into law last night, codifying into law what had been for years a slogan of the far-right. Opposition party Yisrael Beiteinu, an early pioneer of the slogan that even in its days as part of a coalition never seriously advanced the proposal, supported the bill. United Torah Judaism, an ultra-orthodox party inside the coalition, opposed it.

• The law has drawn the ire of liberals in Israel and nearly all of Israel’s allies. It calls for a mandatory death penalty for those convicted of terrorist murder of Israelis.
• The law is not expected to survive challenge in the Israeli Supreme Court, though as the legislation itself is largely understood to be populistic rabble-rousing, this may be the point.
• Among its many weaknesses before judicial review: the distinctions it makes between crimes in the West Bank and inside Israel, the mandatory nature of the penalty (rather than execution being a maximum sentence), and the very fact of bringing a form of civilian law into the West Bank that isn’t limited only to Israeli citizens.
• Nearly every professional body in Israel opposed the legislation. The National Security Council, a body inside the Prime Minister’s Office, warned that aspects of it contradicted international law. The Ministry of Foreign Affairs warned that it could put Israel in violation of treaty commitments.  Justice Ministry officials have also noted problematic the application of civilian legislation in the West Bank to non-Israelis (since 1967, an emergency order has allowed Israeli legislation to apply to Israeli settlers living in the West Bank, but the Knesset has largely refrained from legislation that directly applies to the Palestinians).
• As a result, it is highly likely that the Supreme Court will determine that this new law is illegal, which would only add to the ongoing tension between the current government and the court.      
• Itamar Ben-Gvir, the politician most associated with the bill, was seen in Knesset opening champagne to celebrate the bill’s passage, an image that rankled many in Israel not just for its poor taste and bad decorum, but also because it later emerged that at the time that was going on, senior officials already knew what the public did not yet know, namely that four IDF soldiers had been killed in combat.

What’s happened: The budget deadline is perhaps the most urgent economic issue connected to the war in Iran, but it is far from the only one, or even the most significant.

• Fighting the war — on multiple fronts — is itself very expensive. Writing in Yediot Ahronot, Sever Plocker estimates, using figures from the Twelve Day War last year, that direct war expenditures can amount to 60 billion shekels per month. The loss of output from the partial shutdown of the economy amounts to some 30 billion shekels. Taken together with the costs of recovery and reconstruction from war damage, the war’s direct costs easily top 100 billion shekels (almost £25 billion) for each month that it rages.
• Direct costs to the US are enormous in absolute terms ($11 billion dollars so far, according to an estimate in this morning’s New York Times), but unlike in Israel, negligible as a portion of total economic output.
• The war threatens to impact the global economy too in ways which will affect Israel as well. Energy market disruptions could send the global economy into a recession, while a spike in energy prices could set in motion price inflation.
• On the budget itself, the cabinet met Wednesday on Zoom and agreed to add 28 billion shekels to the 2026 defence budget. The deficit target was raised to 5.1% from 3.9%.
• The budget also included a large amount set aside to “coalition funds,” the local euphemism for direct earmarks for the Haredi sector and West Bank settlers. This was already in the vicinity of 5 billion shekels and in the new budget approaches 6 billion. Israeli commentators speculated that this is what made possible the agreement of the Ultra-orthodox parties to vote for the budget despite not getting the conscription law, which had been their principal legislative priority for this Parliament.
• Opposition MK Gilad Kariv of the Democrats described the budget as a “looting budget,” because it was, in his words, “the seizure of property and money in wartime.”

What’s happened: The coalition survived a budget vote in Parliament yesterday when a first reading of the 2026 budget passed by a 62 to 55 majority.

• The ultra-Orthodox parties had threatened to boycott the vote and had, until yesterday, refused to support the budget without  securing a new bill on draft exemptions for the ultra-Orthodox public first.
• The three ultra-Orthodox parties are the Sephardic Shas party, as well as the two Ashkenazi ultra-Orthodox parties, Degel Ha-Torah and Agudat Yisrael, which together run on a joint list known as United Torah Judaism (UTJ). Agudat Yisrael is the party of the Hasidic community and Degel Ha-Torah of the non-Hasidic Ashkenazi Haredi community, known informally as ‘Lithuanians.’
• A vote scheduled for earlier this week had to be scuttled once it became clear that the coalition did not have a majority. Wednesday’s vote was made possible by Degel Ha-Torah’s decision to support the budget even without a final agreement on the conscription bill. Shas followed suit (though its leader Aryeh Deri was absent at the vote), but Agudat Yisrael did not vote with the coalition.
• The chairman of Agudat Yisrael Yitzchak Goldknopf tied his party’s decision to abstain from the vote to his dissatisfaction with the steps taken against ultra-Orthodox draft-dodgers in the absence of a new law exempting them from service. “We cannot stand by,” he said in the Knesset debate. “This government will be remembered as the one who puts young men behind bars.”
• Finance Minister Bezalel Smotrich hailed the new budget and the performance of the Israeli economy in general. “After two years of a costly war, the State of Israel is a powerhouse of strength,” he told members at the opening of yesterday’s parliamentary debate. “We predict a 5.2 percent growth in GDP in the coming year. Inflation is returning to the target range, between 2% and 2.5%, we are curbing the cost of living and preserving the value of the money of Israeli citizens.”
• Opposition MK’s slammed the budget, with Yair Lapid describing it is as “unhinged” and another member of his party criticising in particular the record-breaking 7.5 billion-shekel allocation of “coalition funds,” the Israeli euphemism for direct political earmarks which mostly benefit the ultra-Orthodox community and West Bank settlers.

Context: Passing a first reading was a major hurdle for the 2026 budget and for the governing coalition in general. By law the Finance Committee is assigned 60 days to review the budget between the first and second reading. If the Knesset cannot pass a budget in its final form by March 31, parliament is automatically dissolved and new elections are scheduled within two months. In this year’s case, that would be only a minor drama as elections are currently scheduled for no later than October of this year.

• When no budget is in effect, the state operates by the so-called “one twelfth rule,” whereby all outlays from the last agreed budget are maintained on a month-to-month basis until a new budget is passed. In 2020, Israel operated on such a continuation budget for the entire fiscal year.
• The current budget proposal projects 812 billion shekels (about £190 billion) in expenditures, of which 112 billion shekels (about £26 billion) is slated for defence. There will be an operating deficit of about 3.9% of GDP, significantly lower then the figures for 2025 (4.7%), 2024 (6.8%), and 2023 (4.2%), but still much higher than the operating deficit during 2002, the last full year before the war in Gaza broke out, when it stood at 1.9% of GDP. In 2020, the year of the pandemic, the deficit was a staggering 11.4% of GDP.
• The political drama in the lead-up to the budget vote had little to do with the actual budget and more to do with the contentious efforts by the government to come up with a compromise on ultra-orthodox draft exemptions. Though no final compromise was reached, negotiations with the Chair of the Foreign and Defence Committee and the Committee’s legal counsel on a few controversial passages in the text of a draft form of that bill reached a breakthrough on Tuesday. 
• The current version of the conscription bill would grant a blanket exemption for full-time yeshiva students and set modest targets for drafting ultra-Orthodox men who are not enrolled in full-time study. There are currently 80,000 military-age ultra-Orthodox men who have avoided entirely national service. The IDF says it needs at 12,000 to meet its current manpower shortage.
• The version of the bill currently being advanced would ostensibly force a number close to that (but still smaller) to enlist, however, as critics point out, many of the legal sanctions for evading the draft, such as a cut in daycare subsidies for fathers who avoid mandatory services, would become dead letters, almost guaranteeing no real enforcement of the draft requirement. The bill would also end legal sanctions against those who dodged the draft in the year leading up to the bill as well. In its current form, it is likely to be challenged in court — and overturned.
• The Committee’s legal counsel had earlier blocked text that the coalition MK’s favoured with the warning that in its current form, the law would easily be struck down by the Supreme Court as violating the equality provisions of Israel’s quasi-constitutional Basic Laws. The exact phrasing of the new compromise solution is not yet known, but is widely expected to be struck down anyway on similar grounds.
• Historically in Israel, coalitions are fractious with different factions functioning at cross purposes with each other. The current narrow, right-wing, coalition in power since the election of 2022 has been unusually solid and stable, with few major areas of disagreement despite being remarkably unpopular in public opinion polls since its first months in power. The issue of draft exemptions for the ultra-Orthodox public has been one of the only issue that has emerged as a major point of contention inside the otherwise relatively united coalition.

Looking ahead: Following the successful vote last night, the budget bill moves back to the Knesset Finance Committee. It will need to pass a second and third reading in the plenum to become law.

• Even with a budget, the coalition will still need to conjure a compromise on the conscription bill to stay in power to the end of this parliament’s term. For that compromise to have any legal validity it will have to involve language that does not invite intervention from the Supreme Court invalidating the law entirely. Neither of these events — and certainly not both — appear likely at this time.

What’s happened: An explosive interview by a former spokesperson for Prime Minister Netanyahu regarding the leaking of classified documents, dominated headlines in Israel and ignited reactions on all sides of the political divide.

• Eli Feldstein, a former spokesperson for Netanyahu and a suspect in two ongoing criminal investigations into national security breaches in the Prime Minister’s Office, spoke at length on the programme Yihye Tov on the public broadcaster Kan. The interview was split into three parts, with the first two broadcast over the last two nights and the third due to be broadcast tonight.
• The interview on Kan as well as an investigative report on the Hebrew i24 network sparked renewed interest in two overlapping scandals: the leaked classified documents and the Qatari influence campaign in the Prime Minister’s Office. Feldstein is connected to the ongoing investigation into both.
• In the parts already broadcast, Feldstein confirms that the leak of classified information to the German newspaper Bild in September 2024 was done to influence Israeli public opinion and reduce pressure on the Prime Minister on the hostage issue. In the second part of the interview, broadcast last night, Feldstein alleges that Netanyahu knew of the leak beforehand and approved of it afterward.
• He does not offer any specific proof of Netanyahu’s alleged knowledge of the leak beforehand, in contrast to the very specific details he does provide about Netanyahu’s alleged subsequent approval  as well as the Prime Minister’s alleged direct involvement in an effort to plant a question at a press conference after the leak which would allow Netanyahu to insinuate in his answer that the IDF had deliberately hiding the information in the leaked document from him.
• In the first part of the interview, broadcast two nights ago, Feldstein paints  a picture of Netanyahu focused on crafting a media strategy that would absolve him of “responsibility” for the October 7 massacre.
• The Prime Minister’s Office denounced Feldstein’s statements as “a long series of false and recycled allegations” from someone with personal motives trying to deflect responsibility from himself.

Context: The revelations of the last 48 hours concern two separate scandals, with overlapping involvement from three key figures close to the Prime Minister.

• The first scandal, which was the focus of most of the interview that was broadcast on the Kan public broadcaster, concerns the unauthorised handling of classified documents, allegedly in an attempt to influence domestic Israeli public opinion.
• The alleged actions occurred in the days immediately following the murder of six Israeli hostages in a Gaza tunnel. On August 31, 2024, IDF forces discovered the bodies of six hostages who had been executed by their captors one or two days before. The hostages had survived eleven months of captivity, abuse, and deliberate starvation since their abduction by Hamas on October 7, 2023.
• When the Hamas terrorists detected an Israeli forces operating nearby, they chose to murder the hostages to ensure that they would not be rescued, as had happened only a few days earlier with the Israeli Bedouin hostage Qaid Farhan al-Qadi. The discovery of the bodies sparked outrage in Israel leading to the largest demonstrations at any point in the two years of the war, with estimates of over 500,000 people assembled at various protest sites on September 1 as well as a general strike.
• It was in this context that the Prime Minister’s spokesperson Eli Feldstein leaked a classified intelligence assessment from months earlier that speculated that Hamas was using the hostage issue to manipulate the Israeli public and divide it.
• According to Feldstein, the documents were deliberately leaked to a non-Israeli media outlet not subject to Israeli censorship because no Israeli outlet would have been able to legally reveal classified information that had not been cleared for publication.
• The leak, and subsequent reporting about the leak, took the wind out of the sails of the protest movement, and the pressure on the Prime Minister to reach a hostage deal rapidly abated after the initial burst of anger over the murdered six hostages.
• Feldstein himself was not authorised to see the classified documents in question. He was also not directly employed by the Prime Minster’s Office, as he had not been granted the necessary security clearance. His salary was not paid for by the PMO, but rather through a complicated arrangement where money was transferred to him allegedly from an American lobbyist with connections to Qatar. In the interview, Feldstein claimed he did not know about the Qatari connection at the time.
• The second, overlapping, scandal concerns an alleged Qatari influence campaign in the Prime Minister’s Office, involving Feldstein himself and two other figures considered very close to Netanyahu, his aide Jonatan Urich and the lobbyist Yisrael (“Srulik”) Einhorn.
• Feldstein spoke very little about the Qatar affair in the first two parts of the interview. The third part will be broadcast tonight. 
• At the same time, an investigative report on the Hebrew i24 channel, normally seen as broadly sympathetic to Netanyahu, revealed a close coordination between Urich and Einhorn to release statements to the Israeli press, ostensibly reflecting the views of senior security officials, which tallied with Qatari priorities and very often disparaged Egyptian role in the hostage negotiations. Einhorn’s PR firm had earlier received payment from Qatar to promote the country’s image in the lead up to the 2022 World Cup.

Reactions: Most politicians and media figures aligned with the governing coalition denounced Feldstein and defended Netanyahu, with the exception of Minister Amichai Chikli (Likud) who said that there was “no way to defend what was revealed” and called for an investigation into the Qatar affair.

• Those opposed to Netanyahu were scathing in their criticism. Former Prime Minister Naftali Bennett said that “Netanyahu’s office betrayed the State of Israel and IDF soldiers during wartime and acted on behalf of Qatar for financial gain, and Netanyahu himself is covering it up…Whether Netanyahu knew or did not know that his office was working for the enemy in time of war, both possibilities require his immediate resignation.” In other media appearance, Bennett repeatedly used words like “treason” and “betrayal” to describe the alleged actions of the Prime Minister and some of his closest advisers.
• Gadi Eisenkot, chair of the new Yashar party, and briefly a minister in Netanyahu’s expanded war cabinet, said that “while the country was shaking with anger and pain over the murder of our six hostages in the tunnels, while the Israeli people went into the streets heartbroken—the prime minister wasn’t engaged in getting the rest of the hostages back, but rather in psychological warfare against his own citizens. He waged a psychological campaign that was designed to poison the public and to silence the families’ outcry.

Looking ahead: Israel is due to hold a general election by 27 October 2026. However, the election could be brought forward due to difficulties surrounding the budget and legislation on Haredi draft exemptions. There are also rumours circulating that Netanyahu will dismantle his government and will call an early election.

• Prime Minister Benjamin Netanyahu’s party, Likud, is leading in the polls, but his governing coalition is projected to fall short of an overall majority.
• In parallel, Prime Minister Netanyahu continues to appear in court facing trial on corruption charges. At the end of November, he requested a pardon from President Isaac Herzog, which is currently under consideration.

What’s happened: On Friday the cabinet approved the state budget for the upcoming year.

• Prime Minister Netanyahu described it as a “responsible, balanced budget,” that “meets all the security needs of the State of Israel.”
• Beyond the military achievements over the last year, Netanyahu also highlighted the country’s economic strength, “Investments are flowing and will continue to flow. The stock market is breaking records. The shekel has strengthened. Interest rates have dropped and unemployment is at a low. And all this during a war. No one believed this either, but we believed, you believed, Minister of Finance, and we did it together.”
• “In the current budget, we intend to lower taxes, including income tax. We also intend to reduce regulation and streamline our governmental systems.” According to Netanyahu, the “most important thing in this budget is aid and grants for IDF soldiers in the standing army and in the reserves, and for their families, because they deserve it. We will grant them all the support they need, a framework we have already built, and it will grow even larger. Together, we are presenting a good budget for the State of Israel, and I am certain that this budget will pass.”
• The proposed budget amounts to 662 billion shekels (about £154 billion) and would leave the government with an operating deficit of 3.9 per cent of GDP.
• On Monday, Netanyahu was forced to attend a Knesset session triggered by 40 signatures from the opposition. Addressing the plenary, Netanyahu said that the government was also on the verge of completing the first stage a bill which would regulate draft exemptions for the ultra-Orthodox public.
• Leader of the Opposition Lapid blasted the Government for “approving a budget of corruption and draft-dodging.”
• Naftali Bennett, widely seen as a leading contender to replace Netanyahu as prime minister in the next election derided the budget as a “protection” racket of a Government“extorted by draft-dodgers, and bankrupting those who serve.”

Context: The process of cabinet approval of a government budget proposal was, in comparison to most years in Israel, unusually late and remarkably drama-free.

• Normally, the government finishes its proposal by July, and from there the budget moves to parliament. This year, Prime Minister Netanyahu preferred to hold off until after the fighting in Gaza (and elsewhere) ended before bringing a detailed proposal for the defence budget.
• There was a political calculation too. The unresolved dispute over the ultra-Orthodox draft exemption legislation threatened to topple the government over the past year and trigger early elections, and as long as that threat hovered over the horizon, there was little to be gained publicising potentially unpopular tax increases and spending cuts that might never have been implemented anyway.
• The draft dispute is also a principal reason why the budget resolution in cabinet was significantly less contentious than in previous years. The ultra-Orthodox representatives are currently not part of the cabinet as part of their pressure campaign on the draft issue, although they are not voting with the opposition.
• Crucially in order to pass the budget in parliament the government needs the ultra-Orthodox MKs in order to have a majority. They will only support the budget if they also receive the legislation over military exemption that they are pursuing.
• The biggest disagreement in the lead-up to Friday’s budget vote was regarding the defence budget. The initial gaps were enormous, with the Defence Ministry asking for 140 billion shekels (£33 billion) and the Treasury only granting 90 billion (around £21 billion). A revised downward estimate of reserve army service, a large drain on the defence budget since the October 7 war broke out, paved the way for a compromise on the figure of 112 billion shekels (£26 billion).
• Overall, this year’s budget has less dramatic  reforms than last year’s. Income tax brackets are once more inflation-linked – after having been frozen last year which lead to higher tax rates for middle class families.
• VAT exemptions on personal imports were raised, despite industry opposition to the measure. A dramatic reduction in dairy import tariffs was included in the budget proposal despite fierce opposition from local dairy farmers.
• On the other hand, the Treasury proposal to end the VAT exemption on tourism-related services, especially hotels, was successfully blocked following pressure from hoteliers. This policy has featured in many budget proposals over the years and never passed, though this year it survived to a very late stage before being abandoned.
• There are many sectors that face economic hardships due to the war, including reservists and those evacuated from their homes in the north and south. There is also an understanding that those who survived the attacks, as well as those wounded and bereaved, all require and deserve full rehabilitation.
• The Treasury was expected to propose shutting down at least five and possibly more Government ministries seen as superfluous. Expectations were that such a proposal would ultimately be whittled down or dropped entirely, but in the end the Treasury did not even include this measure as a proposal at all.
• The budget proposal also included what in Israel are indelicately referred to as “coalition funds,” last-minute earmarks for narrow sectoral interests. The total of these earmarks was 5.2 billion shekels, and they went almost entirely to religious institutions, with the majority of the money directed toward West Bank settlements.

Looking ahead: Historically, no Israeli government has ever successfully passed a budget in an election year.    

• The budget now moves to its first plenary reading in the Knesset and then to parliamentary committee discussions. By law, the Knesset has until March 31 to pass a budget. Failure to do so would automatically dissolve parliament and lead to elections within three months.
• Elections are currently scheduled for October 2026, so even in the event that a budget is not passed, this would only move the next election up by four months.