The past five years have been marked not only by a new quantitative growth in the repatriation of Jews and their family members from the former USSR to Israel, but also by a structural shift in this wave of Aliyah. Unlike the immigrants of the previous decade, approximately two-thirds of whom arrived in Israel from the peripheral towns of the CIS and the Baltics, the current wave represents a highly representative socio-demographic cross-section of the Jewish population of the former USSR. Consequently, it features a significantly higher proportion of individuals from capital cities and major industrial and cultural centers in Russia, Ukraine, and other post-Soviet states. Among them is a substantial group of successful and highly affluent businesspeople who, for a variety of reasons, have chosen the Jewish state as their official and/or actual primary residence, despite the fact that their capital, skills, and business networks would be highly welcomed in many Western nations. The emergence of this group has presented a complex challenge for the Israeli establishment, whose integration policies (with 75% of past immigrants originating from the USSR and CIS) had, for nearly three decades, been tailored to an Aliyah of a completely different composition, with different needs and priorities. New challenges, however, bring new opportunities; the question remains whether the Israeli political, business, and administrative elites can demonstrate the necessary insight and flexibility to address these challenges effectively.

The past five years have been marked not only by a new quantitative growth in the repatriation of Jews and their family members from the former USSR to Israel, but also by a structural shift in this wave of Aliyah. Unlike the immigrants of the previous decade, approximately two-thirds of whom arrived in Israel from the peripheral towns of the CIS and the Baltics, the current wave represents a highly representative socio-demographic cross-section of the Jewish population of the former USSR. Consequently, it features a significantly higher proportion of individuals from capital cities and major industrial and cultural centers in Russia, Ukraine, and other post-Soviet states, including a substantial group of successful and highly affluent businesspeople who have chosen the Jewish state as their official and/or actual primary residence.

The obvious question arising in this context is what factors currently serve as the primary draw for wealthy Russian Jews to Israel, and how the Israeli establishment should respond to this phenomenon, given that the emergence of such a group presents a complex challenge. This is primarily because integration policies—historically designed for an Aliyah where 75% of immigrants came from the USSR and CIS—have for nearly three decades been oriented toward a population with entirely different demographics, needs, and interests.

Primary Motivations

To be realistic, today, in 2019, very few relocate to Israel out of purely Zionist motives; that was the driving force behind repatriation nearly thirty years ago. The world has become far more pragmatic, if not cynical. People choose where to live based on where they can achieve a better quality of life and to what extent. Judging or condemning them for this is pointless. So, what is it about Israel that attracts wealthy Russian Jews, whose capital, skills, and business networks would be highly sought after in many Western countries?

From the perspective of a business immigration consultant and immigration law expert, Israel acts as a magnet for them for at least two reasons. First, during the 29 years I have lived in Israel, the country has transformed beyond recognition. This transformation has not been exclusively positive: Israel has become exceptionally expensive; in local sectors shielded from global competition, service standards remain low while prices are high; and real estate prices in Tel Aviv now shock not only our clients from Moscow but also those from Monaco. On the other hand, over the past three decades, Israel has made a remarkable journey from a small, remote, provincial nation to a fully developed Western-style country that merely happens to be geographically situated between Lebanon and Egypt, with Tel Aviv now standing as a global metropolis on par with New York, London, or Moscow.

The second magnet is purely financial: the ten-year tax holiday on the vast majority of foreign-source income that Israel grants to new immigrants (as well as returning Israelis who have resided abroad for an extended period). Currently, this holiday encompasses not only an exemption from taxation on most foreign income but also an exemption from reporting it. This reporting exemption will, in all likelihood, be abolished sooner or later. We do not view this as a major issue. In fact, we already advise many of our clients not to utilize this exemption, but rather to report their foreign income to the Israeli tax authorities in order to establish a transparent financial history—a track record—for the future. The tax exemption itself, however, appears set to remain for a long time to come.

An additional layer of reassurance comes from the sense that there is currently no serious discussion regarding the abolition of these tax holidays, although the issue was briefly raised as a side effect of investigations involving our Prime Minister. For now, the opportunity remains to generate income globally and pay zero tax on most of it, whereas an Israeli citizen would pay close to 50%, as would a French, German, or American citizen.

The Position of the Authorities

Another critical issue is the reaction of the Israeli establishment to the repatriation of wealthy Russian Jews and how local elites perceive the motivations behind these immigrants acquiring Israeli citizenship. Is it driven by a desire to establish Israel, now or in the future, as the center of life for themselves and their families? Or is it to leverage the benefits of an Israeli passport (Darkon) to continue generating income, and often living, in the United States, Europe, or Russia?

Forty years ago, Israeli Prime Minister Yitzhak Rabin famously referred to Israelis leaving their country as weaklings. Indeed, a country living on a powder keg, in a constant state or mental expectation of war, could understandably view citizens unwilling to