Public policy limits in the Israeli defence industry
Scholars and journalists have criticised Israel's governmental system as ineffective or unstable, pointing at shortcomings in its policy-making capabilities. However, explanations of what limits its performance have been partial, as they focus on formal attributes of government institutions or the characteristics and interactions of individuals and groups. They have neglected the causal relationship between institutional features, public policy decisions and capabilities. The study seeks to address this gap in academic literature by offering an in-depth view into the system's workings. It investigates the policy implemented by the Labour government in the defence industry, Israel's largest manufacturing sector, when it sought to streamline and reorganise Israel Military Industries (IMI), Israel Aircraft Industries (IAI), and Rafael during their financial crises in the early 1990s. In each case, access to sources and documents enabled the intricate chain of events to be traced and disentangled. The study shows how past policy choices and institutional constraints can influence the government's ability to implement a chosen policy and impose financial losses on organised interests. By identifying how the institutional framework affects the actors involved, the study sheds a light on the constraints that shape policy outcomes. It argues that elected policy-makers preferred to maintain existing institutional arrangements, despite the serious impediments they posed to government, rather than forcing a particular policy on a reluctant constituency. The result was that some government capabilities remained impaired.