Israel's Prime Minister Benjamin Netanyahu, facing intense pressure from protesters angry about the cost of living, has said he is ready to shift his economic ideology, Haaretz daily said Tuesday.
The newspaper said Netanyahu showed unprecedented openness to the sweeping reforms sought by demonstrators during a conversation on Monday with Manuel Trajtenberg, the economist he has charged with examining the protesters' demands.
"I understand my views need to change," the prime minister reportedly said on Monday, after Trajtenberg warned him he could not keep his old positions, Haaretz reported, citing an unnamed senior cabinet source.
Netanyahu espouses a neo-liberal economic policy, favouring privatisation and lower taxes for the wealthy, and has pointed to Israel's successful weathering of the global financial crisis as a sign that his approach has worked.
But Trajtenberg, who will lead a panel examining protester demands and recommending reforms, reportedly told Netanyahu he would have to rethink his entire economic ideology.
Trajtenberg said his two daughters had taken part in the demonstrations that have rocked Israel in recent weeks, growing steadily since mid-July when activists began setting up a tent city in Tel Aviv to protest at housing costs.
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Trajtenberg has publicly expressed mixed feelings about taking on the role at the head of the committee, saying it came with "enormous" risks.
And he warned Netanyahu that he would not allow the panel to be used as a tool to "kill the issue," Haaretz reported.
The newspaper said Netanyahu showed a willingness to alter his economic positions, telling Trajtenberg that he had recently read a book detailing how Theodor Herzl, the father of political Zionism, had shifted his priorities in changing circumstances.
The premier told Trajtenberg that he would make available the necessary funds to pay for the reforms suggested by the committee, with both men agreeing that the government would not spend outside the country's budget.
That pledge may prove difficult to reconcile with the demands that protesters have laid out in a new document reported by the Israeli media on Tuesday.
The document contains six broad demands: reduction of "social inequalities" and greater "social cohesion;" "altering the main principles of the economic system;" lower living costs, full employment and price controls on staple goods; giving priority to city outskirts; helping the most vulnerable in society and solving the housing crisis.