Israel Railways Showdown: Privatization on the Fast Track – and Miri Regev Is Slamming the Brakes
The Israeli government is quietly preparing one of the most dramatic shakeups in decades: the partial privatization of Israel Railways, a move buried deep within the upcoming Economic Arrangements Bill tied to the 2026 budget. The plan could reshape how millions of Israelis commute, and it has already triggered an internal political brawl inside the government.
The Reform That Could Redefine Public Transport
According to reports from Globes, Finance Minister Bezalel Smotrich is pushing forward a plan to open Israel Railways to private operators through competitive tenders, a reform modeled after the country’s bus and light rail systems. Under the proposal, private transport companies would compete to run passenger lines while the state maintains ownership and regulatory control.
This is no small move. Israel Railways, a 4,000-employee behemoth, is one of Israel’s largest government companies, juggling everything from passenger transport to mega-infrastructure projects worth over NIS 50 billion. These include the Ayalon expansion, electrification of the national network, a new inland line along Route 6, and development of real estate and freight operations tied to Israel’s ports.
But critics say the company has become too bloated, too bureaucratic, and too political, a “state within a state” that manages, monitors, and fails itself.
במשרד האוצר מקדמים את הפרטת חברת רכבת ישראל - זאת על רקע הכאוס בהנהלה, התקלות, התרבות הארגונית הקלוקלת, הזנחת התחזוקה של תשתיות החשמול לצד ועד עובדים עם כוח בלתי סביר ■ במשרד התחבורה צפויים להתנגד @TheMarker https://t.co/xpUp32RUcw https://t.co/2djIU15GWr
— Yifat Reuven יפעת ראובן 🎗️ (@reuven_yifat) November 5, 2025
The Case for Privatization: Efficiency, Competition, and Accountability
For years, the company has battled chronic delays, labor unrest, and operational inefficiency. Its on-time performance improved only because the intervals between trains were quietly increased, giving the illusion of reliability while reducing frequency and frustrating passengers.
Despite a growing population and an expanded network, train ridership remains below pre-Covid levels: just 65.4 million trips in 2024, compared to 2019. Meanwhile, Israelis have returned to buses and private cars in record numbers, seeing the train as an unreliable luxury rather than a lifeline.
Reformers argue that dividing the company’s duties, separating infrastructure development from passenger service, would make each more efficient. Independent operators could focus solely on service quality, while the state would manage projects and oversight.
The Regev Roadblock: “Public Transport Belongs to the Public”
Transport Minister Miri Regev has drawn a red line. She is vocally opposing the privatization plan, calling it an “ideological betrayal of the public.”
Her ministry insists that public rail service is a strategic national asset, not a profit engine for private companies. Citing examples from Europe and the UK, the Transport Ministry argues that privatization experiments abroad have often backfired, leading to higher fares, service cuts, and safety lapses.
Regev’s resistance is not new: she previously blocked similar efforts to privatize the remaining state-owned port in Ashdod. Now, she’s positioning herself as the defender of Israeli workers and state control, a move that also shores up her standing within Likud’s populist base and the powerful Histadrut labor federation.
שוב הממשלה הזאת מפרקת את מוסדות המדינה ונותנת אותם בקומבינות לטייקונים מקורבים ולחברי מרכז.
— Merav Michaeli מרב מיכאלי (@MeravMichaeli) November 5, 2025
כל מדינה בעולם שהפריטה את הרכבת הצטערה על כך - אנגליה הלאימה אותה מחדש.
אנחנו השארנו לממשלה הזאת רכבת ישראל חזקה, מתפקדת, שהקדימה את הזמנים בפרויקט החשמול, עם תוכנית חומ״ש לפיתוח בעלות… pic.twitter.com/sacRZCmwT6
Power Plays and Political Fallout
This reform isn’t just about trains, it’s about control, unions, and political leverage.
The railway workers’ union, still reeling from the recent arrest of its chairman in a major corruption scandal, remains one of the most influential in the Likud political orbit. Any move to dilute its power will ignite a fierce backlash inside the coalition.
For Smotrich, this could become a defining test of his economic vision, a chance to prove that Israel can modernize its public infrastructure through market competition. For Regev, it’s a chance to brand herself as the people’s championagainst “corporate technocrats.”
What Comes Next: A Collision Course
The proposed reform marks the biggest state-sector restructuring since the ports privatization of the previous decade. If passed, it could set a precedent for future government downsizing, potentially affecting everything from energy to postal services.
But the clock is ticking. With the 2026 budget approaching and coalition fractures widening, this battle may come to symbolize the deeper tug-of-war over Israel’s economic identity, between liberalization and state protectionism, efficiency and control, reform and resistance.
