Proposed Budget Cuts Threaten Financial Aid for Immigrants as Israel Grapples with War Costs

As Israel enters the second year of an ongoing war that has already drained its military and economic resources, the government is facing increasing pressure to balance its budget.

One of the most contentious proposals in the wartime budget for next year is a significant reduction in the financial stipends provided to new immigrants, known as “olim,” a cornerstone of the country’s immigration policy for decades.

The cuts, which have sparked fierce debate, could undermine Israel’s commitment to encouraging Jewish immigration during a time of rising global antisemitism and growing demand for aliyah.

Financial Strain and the Need for Budget Cuts

The proposed budget cuts are part of an effort to tackle Israel’s growing budget deficit, which the government aims to reduce by 40 billion shekels (roughly $10.6 billion).

As the country continues to fund its military operations in Gaza and Lebanon, and as more citizens are called up for reserve duty, the government has had to explore ways to balance the books.

This has included slashing public services and raising taxes, with the aim of easing the financial burden of the ongoing conflict.

For decades, Israel has provided financial assistance to new immigrants to help them adjust to life in the country.

This aid, which can amount to over $15,000 for a family, is crucial for many olim, helping them cover living expenses and other costs in the early months after arrival.

Additionally, immigrants are entitled to other benefits such as temporary exemptions from certain taxes, free language instruction, and health coverage.

However, under the terms of the proposed budget, the government intends to make cuts to this financial aid while raising taxes.

New Eligibility Requirements for Immigration Assistance

One of the most significant changes is the introduction of an asset test for prospective immigrants. Under the new rules, anyone with assets exceeding 500,000 shekels (about $133,000) would no longer qualify for financial assistance.

For those who fall under the threshold, a 10-percent increase in the benefit is proposed. This means that only new immigrants with fewer assets would continue to receive the full financial support.

While such cuts to immigrant assistance have been discussed in the past, they have never been fully implemented.

This time, however, the proposal has been approved by the cabinet and is now set for a vote in the Knesset, which must take place by the end of March 2025.

The outcome of this vote will have far-reaching implications for both Israel’s immigration policy and the long-term future of its economy.

Concerns About the Impact on Aliyah

The proposed reductions have sparked widespread concerns, particularly among those who view them as a test of Israel’s commitment to encouraging aliyah, or Jewish immigration.

Under Israeli law, anyone with at least one Jewish grandparent is entitled to citizenship, and authorities often point to the number of Jews choosing to move to Israel as evidence of the country’s strength.

Robert Singer, former CEO of the World Jewish Congress, expressed his concerns in an opinion piece for the Jerusalem Post. He argued that reducing benefits for new immigrants could have serious long-term consequences for Israel.

“At a time when Israel’s economy requires growth, undermining the support system for new Israelis is not only shortsighted but detrimental to our collective future,” Singer said.

He also emphasized the symbolic importance of the government’s budget decisions, noting that they send a critical message about the country’s values and priorities.

Opposition Within the Knesset

The proposed cuts have met with opposition from several Knesset members, particularly those from parties representing immigrant communities.

Oded Forer, a member of the Yisrael Beytenu party, which traditionally caters to Russian-speaking immigrants, warned that reducing immigrant benefits could discourage aliyah during a time when Israel needs it the most.

Forer, who chairs the Knesset’s Committee for Immigration, Absorption, and Diaspora Affairs, pointed out that many Jews, especially from Eastern Europe, are choosing to immigrate to Israel to support the country in its time of crisis, including by enlisting in the military.

“We are at war right now and there are many immigrants who come here to enlist in the military,” Forer said. “The country needs every Jew who would choose to join it.”

Opposition to the cuts is also coming from within Israel’s Immigration and Absorption Ministry.

Avichai Kahana, the ministry’s director general, argued that the government should be as welcoming as possible to Jews in light of the rising tide of antisemitism worldwide.

“Jews around the world are experiencing antisemitism at levels not seen for decades, which is driving more people to apply for immigration,” Kahana said. “Especially now, the financial assistance should be boosted.”

Increased Demand for Aliyah Amid Global Antisemitism

The past year has seen a significant surge in interest among Jews from around the world to make aliyah, particularly following the brutal October 7 Hamas attack on Israel, which killed over 1,200 people.

Many Jews in the Diaspora, motivated by a heightened sense of solidarity with Israel and a desire to escape growing antisemitism, have sought to move to Israel in response to the crisis.

Alison Keehn, a 58-year-old American Jew from Montana, is one such individual. She is currently in the process of applying for aliyah, a decision spurred by the political climate in the United States, which she says has left her feeling increasingly alienated.

“Being Jewish was always normal up until this moment,” Keehn said in an interview. “We were raised to believe that never again was never again, that no one is going to come and round us up. But now we don’t know. We don’t know what to think.”

Keehn’s desire to move to Israel has been amplified by the recent loss of both her parents. “The only family I have now is Judaism,” she said.

However, Keehn expressed concern over the proposed cuts to immigrant benefits, particularly in light of the rising financial support for haredi Orthodox institutions, which is set to increase under the same budget.

“If Israel is cutting benefits for new immigrants but increasing funding for other areas, such as haredi institutions, that would be ridiculous,” Keehn said. “At the same time, I understand the need for restrictions, as not everyone is honest about their financial situation.”

Impact of Proposed Cuts on Immigrant Numbers

The proposed cuts come at a time when the number of aliyah applications from North America, particularly the United States, has seen a sharp increase.

According to Nefesh B’Nefesh, a nonprofit organization that assists North American Jews with their aliyah applications, the number of Americans who have opened applications for aliyah nearly doubled in the year following the Hamas attack.

Approximately 11,700 applications were opened in the year after the attack, compared to the roughly 5,500 applications in the year prior.

However, the number of new immigrants to Israel has been steadily decreasing in recent years. Following the Russian invasion of Ukraine in 2022, there was a significant influx of immigrants from Eastern Europe, but that wave began to decline sharply after the October attack.

In the year before the attack, around 63,000 people made aliyah, but that number fell to approximately 30,500 in the year following the attack.

Immigration from non-Eastern European countries has been particularly slow, with government figures showing the slowest pace of immigration from these regions in at least a decade.

Nevertheless, in recent months, there has been an uptick in the number of immigrants arriving in Israel, which suggests that many of the individuals who filed aliyah applications after the October attack are now following through with their plans to move to Israel.

Government Justification for the Cuts

The Israeli Finance Ministry has defended the proposed cuts, arguing that they are necessary to reduce the country’s budget deficit.

According to Tair Rabukhin, a spokesperson for the Finance Ministry, the changes to the immigration benefits were designed to protect the most vulnerable populations.

“We are trying to minimize the impact on disadvantaged populations while shifting the burden as much as possible to the more well-off ones,” Rabukhin said.

In addition to the cuts to immigrant benefits, the budget also includes a rise in the value-added tax (VAT) from 17% to 18%, a move that has drawn criticism for disproportionately affecting lower-income families.

Conclusion: A Crossroads for Israel’s Immigration Policy

The proposed cuts to financial assistance for new immigrants have ignited a debate over the future of Israel’s immigration policy, which has long been a symbol of the country’s commitment to welcoming Jews from around the world.

As the war continues to place unprecedented strains on Israel’s economy and resources, the government faces a difficult decision: How to balance the financial realities of the present with the long-term goal of maintaining a robust and diverse Jewish population.

The outcome of this debate will have profound implications for Israel’s identity, its economy, and its relationship with the Jewish Diaspora.