The Metro, confidential security projects, and high-speed rail links are the shop window of the future of infrastructure in Israel. But along with the promise of progress, there is considerable doubt about the ability of government agencies to overcome the obstacles to execution.
Those who travel in Israel in cars buses and trains encounter every day the construction sites around the country, from road maintenance and laying of cycle paths to the light rail works in Tel Aviv and Jerusalem to the railway lines being laid along roads 6 and 431. But these works, the result of planning over many years that has suffered from chronic delays, are only part of the reason that Israel has the most congested roads in the Western world.
The numbers highlight the scale of the failure: Since 2015, Israel’s population has grown by 19%, and its road area has grown by a similar amount, 18%, but the number of vehicles on those roads has shot up by 36%. In a country with the highest rate of population growth in the OECD, adding road area is not a solution to the congestion, especially when new neighborhoods continue to be built with no interface with public transport.
In recent years, the fact that Israel has an infrastructure crisis has been acknowledged in government plans and decisions. There is official recognition that this crisis is a factor that harms the quality of life and economic growth. According to a 2022 study by the Aaron Institute for Economic Policy at Reichman University, investment in transport infrastructure could raise productivity per person in Israel, which is currently 26% below that in the reference countries, by more than 5%. In order to close the gap, the state needs to double investment to 2% of GDP, compared with just 0.9% in 2024.
The state is indeed now promoting future projects to the tune of hundreds of billions of shekels, but behind this good news lie substantial difficulties. The Aaron Institute researchers warn that even the existing projects do not reach the required level of investment. Besides that, although most of them have agreed budget sources, execution is meeting with many obstacles, made worse by the attempt to carry out all the huge projects at the same time, over the coming decade.
The Metro: The trap of the project of the century
The flagship of Israel’s infrastructure plans is the Metro project, the like of which has not been seen in Israel. NTA Metropolitan Mass Transit, the company carrying out the project, declares that the works have already begun, although at this stage it’s a matter of clearing infrastructure and groundwork only, a stage that took many years in the case of the light rail Red Line, for the sake of comparison. The huge project, one of the largest of its kind in the world, involves digging 150 kilometers of tunnels under 24 local authorities in Gush Dan (Greater Tel Aviv area), with a target date for the initial launch of 2037. The Metro will change the lives of the people who live in the Greater Tel Aviv metropolis, and the economy of Israel in general.
The size of the logistical challenge is unprecedented. Building the Metro requires Israel to recruit 16,000 foreign workers and to operate simultaneously 24 tunnel boring machines that will dig the tunnels and line them with 1.25 million concrete panels and excavate 40 million cubic meters of earth.
A report by the State Comptroller released last month, however, exposes material failings in the state’s preparations for the project. At the moment there is no plan for recruiting the thousands of foreign workers, there is no stock of available boring machines, and existing local manufacturers are not able to supply the required quantity of concrete panels.
The budget for the project, estimated at NIS 177 billion, is also the subject of a warning from the State Comptroller. The budget is supposed to come partly from special taxation on properties near the stations, but it is feared that there will be a wide gap between immediate needs and the pace at which revenue will be raised from the tax.
There is also a governance problem: the chronic lack of coordination between government ministries, the police, and the infrastructure companies that in the past has delayed every national project. Although the Metro Law is meant to give the Metro statutory priority, the attempt to move forward with a blitz of projects at the same time renders the mission almost impossible.
The is also a shortage of contractors in Israel that meet the threshold conditions for participation in the project, which puts control into the hands of the foreign giants, with the local companies serving as sub-contractors. The severe shortage of engineers in Israel, estimated at 4,500 back in 2020, only makes the situation worse.
Meanwhile, on the international front, Israel’s freedom of action is more limited than ever. European companies are deterred from operating in Israel by political pressures and pro-Palestinian organizations, while the engagement of Chinese companies has been halted because of US pressure.
Despite the obstacles, NTA is moving forward with tenders amounting to tens of billions of shekels, with the aim of starting excavations for the Metro in 2028. The government describes the project as critical for the economy, and says that its benefits will amount to over NIS 30 billion annually, but at the same time it is promoting additional huge projects that threaten the market’s capacity. The proximity in time of the projects raises doubts over whether the Israeli infrastructure market is capable of sustaining this critical mass, as the execution constraints of the Metro can be expected to affect the whole sector.
Confidential tenders of the Ministry of Defense
While NTA publishes tenders, the Ministry of Defense is simultaneously promoting two huge projects that will compete for the same resources. The main one, the details of which are secret but the existence of which was revealed by "Globes", is already making leading contractors consider foregoing work on the Metro. The Ministry of Defense is expected to publish tenders "of crazy dimensions" in the coming years that are seen in the sector as game changers.
The attraction of the defense tenders arises not just from their size, but also from the fact that payments from the Ministry of Defense are considered quicker and more reliable than those for civilian transport projects. That preference is liable to divert infrastructure companies from the Metro to the defense sector.
Besides the confidential tender, the Ministry of Defense has started work on building the barrier on the eastern border at a cost of NIS 5.5 billion. The project, which will stretch 500 kilometers from the Golan Heights to Eilat, will initially focus on an 80 kilometer stretch along the Jordan Valley, and will be another burden on the local market.
Railway projects too
In addition to the huge projects are the challenges of rehabilitation of the south and north of the country after the war, and the ambitious five-year plan of Israel Railways. The main project is the construction of high-speed (250 km/h) tracks to connect both Beersheva and Haifa to Tel Aviv in half an hour. The reality is a long way from that. The project of doubling the coastal tracks (NIS 15.5 billion) is suffering from severe delays, and industry sources cast doubt on the official launch date of 2032.
Further on railways: the project to extend the tracks to Kiryat Shemonah. That project has not been officially budgeted, but there are understandings on it between the Ministry of Finance and the Ministry of Transport. The understandings are linked to a completely different reform, the congestion charge, due to come into force within about eighteen months and to oblige drivers to pay to enter Gush Dan. To avoid repeal of the law instituting the charge because of Minister of Transport Miri Regev’s objections to it, the Ministry of Finance offered in exchange to go ahead with the train to Kiryat Shemonah. The deal, concocted in closed rooms and revealed by "Globes", has not been officially reported, but work on the line, the estimated cost of which is NS 18 billion, is already underway on the ground, while the tender for operating the congestion charge goes ahead.
To sum up, the infrastructure market may be on the move, but the large and so very necessary scope of the tenders obliges the entire government to take preparatory steps to ensure that all the projects can be absorbed, and so far that has not happened.
Published by Globes, Israel business news - en.globes.co.il - on January 28, 2026.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2026.