Most influential Jews in finance, economics and business: Jeff Zients

From the Jerusalem Post's '50 most influential Jews.'

May 25, 2015 12:27
Moshe Kahlon

Jeff Zients. (photo credit: Courtesy)

The Jerusalem Post has put together its annual list of '50 most influential Jews' who have impacted the world last year, and have the potential to affect change in years to come.

What are the economic arguments for US President Barack Obama’s policies in the Middle East? That was the central topic of discussion I had last week in an exclusive interview with Jeffrey Zients, the president’s chief economic adviser, formally serving in the White House as director of the National Economic Council and assistant to the president for economic policy.

Zients is known in Washington as the president’s Econ guy, his Mr. Fix-It: He was instrumental in revamping, after a career initiated in the private sector ultimately launched him into public service.

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Here, speaking for the White House, Zients makes the economic case for a nuclear deal with Iran, against the boycott campaigns against Israel, and for a comprehensive two-state peace accord between Israel and the Palestinians.

You are part of a notable tradition of Jewish figures in positions of influence on US economic policy. Your predecessor is Jewish; the Treasury secretary is Jewish, as is the chairman of the Federal Reserve, and her two immediate predecessors. What accounts for this history, and how do you identify with it?

In the Jewish tradition, there is a strong emphasis placed on service to the broader community and to tikkun olam – “repairing the world.” The aspiration that we each can do our part, however large or small, to help improve the lives or others is part of the Jewish tradition that I grew up in. It’s what attracted me to public service. In this administration and in previous Democratic and Republican administrations, there are many examples of Jewish Americans who have played important roles in the development and implementation of economic, domestic and foreign policy. I’m honored to be part of this lineage. It is something we celebrate and acknowledge, particularly this month during Jewish American Heritage Month.

Critics of the Lausanne framework with Iran over its nuclear program fear a nuclear deal will lead to budget displacement: That Tehran will become a richer nation after sanctions are relieved, and that an influx of foreign investment will free up funds for Iranian activities contrary to the American interest. As the president’s assistant on economic policy matters, would you say that is a legitimate fear?

First, the nuclear related sanctions were always intended to secure a verifiable deal that prevents Iran from obtaining a nuclear weapon – something that is strongly in the interests of the United States, Israel, the region and the entire international community. Without sanctions relief, there would be no deal and an Iran armed with a nuclear weapon would be able to project even more destabilizing power in the region.

Sanctions relief under a potential deal will involve the suspension and eventual lifting of nuclear-related sanctions on Iran. Our sanctions targeting a broad array of Iran’s non-nuclear activities, including its human rights violations, support for terrorism, and destabilizing activities in its region, will remain in full effect and will be vigorously enforced.

Now, we absolutely share the concern that Iran may use some of the money from sanctions relief to fund destabilizing actions in the region and beyond. However, our experts and many outside experts assess that most of the money Iran receives from sanctions relief will not be used to support nefarious activities but rather will be focused primarily on domestic economic recovery.

As a result of US and international sanctions, Iran’s economy is in a major economic hole. The Iranian economy is 15- 20 percent smaller than it would be otherwise and the scale of Iran’s domestic investment needs is estimated be at least half a trillion dollars, which far outstrips the benefit of sanctions relief. Iran will be playing catch-up for a long time to come. And politically, Iranian President Rouhani will be under immense pressure to deliver much-promised economic improvement to the Iranian people once Iran starts receiving sanctions relief.

Even the most severe sanctions regime in history has not been enough to prevent Iranian support to militant proxies or terrorism – these accounts have been prioritized and protected, and the financial cost of this behavior is relatively small to Iran. Geopolitical constraints, not financial ones, already limit greater Iranian activity in the region. That is why we are focused on continuing to work closely with our regional partners to expand and strengthen their own capacity as we collaboratively seek to deter any Iran’s destabilizing activities and support to terrorism.

The Senate Finance Committee has backed an amendment to a bill providing the president with fast-track trade authority, which requires any transatlantic agreement to discourage European governments from engaging in efforts to boycott, divest or sanction Israel and Israeli-controlled territories. Does the White House support this provision? How will this affect the negotiations?

The United States and Israel are close partners, and this is manifested, among other areas, in our strong trade relationship.

The United States has worked in the three decades since signing the US-Israel Free Trade Agreement – our first such agreement with any country – to build robust trade and investment ties with Israel. It is also important to keep in mind that we already have robust anti-boycott measures in place regarding Israel and that the Administration’s policies opposing boycotts directed against the State of Israel remain unchanged. For instance, the Department of Commerce’s Office of Antiboycott Compliance already administers existing anti-boycott laws regarding Israel. It is also important to underscore that longstanding and bipartisan US policy with regard to the status of territories administered by Israel after 1967 and opposing settlement activity remain unchanged.

In terms of the United States’ economic interests in the Middle East, what has changed from the 20th century to the 21st? Is it your assessment that the US has an economic interest in peace between Israel and the Palestinians?

One thing that has changed in recent years is that the US energy position has changed quite significantly. The United States is now the largest oil and gas producer in the world. As production has increased, consumption has declined due in part to tighter fuel economy standards. Today, our reliance on foreign oil is the lowest it has been in over 40 years. At home, this has created new jobs, reduced our trade deficit, moderated energy prices, sparked a domestic manufacturing revival and kept more money flowing into our own economy.

Globally, our increasing energy supplies help reduce the world’s vulnerability to global supply disruptions and price shocks and afford us a stronger hand in pursuing our international security goals, such as sustaining international sanctions on Iran.

But this has not changed the basic fact that energy markets are globally linked and the world still depends on energy supplies from the Middle East. As the president himself has said, the world still depends on the region’s energy supply, and a severe disruption could destabilize the entire global economy.

This is why we remain committed to ensuring the free flow of energy from the Middle East to the world.

More broadly, the United States continues to have a profound interest in an economically and politically stable and prosperous Middle East. In an increasingly globally interconnected world, we have a strong interest in promoting economic growth and stability abroad. When our Middle Eastern partners’ and allies’ economies are growing and creating jobs and opportunity for their people, it is good for US businesses, good for US national security, and good for the global economy.

This interconnectedness means that the United States absolutely has an economic interest in a lasting peace agreement between Israelis and Palestinians. A peace agreement has the potential to significantly advance intra-regional trade in the Middle East, opening up for the first time the possibility of trade between Israel and 19 of its neighbors. This in turn would fuel greater economic opportunities and growth for Israel, and for the entire region.

As Fed Vice Chairman Stan Fischer said when he was governor of the Bank of Israel, the Israeli economy “could grow much faster if we were to achieve peace with our neighbors.”

Experts suggest a two-state solution could inject an additional $3.4 billion a year into the tourism sector alone.

Similarly, a two-state solution would lead to rapid economic development in the West Bank and Gaza. One EU-sponsored study suggests that a peace settlement could spur Palestinian GDP growth of nearly 85%. And the rest of the region will also benefit, with one Israeli-Palestinian think tank estimating that the development of trade corridors through Israel has the potential to increase international trade between Arab countries by at least $2.5b.

You are a product of the private sector, and have recently been credited with streamlining public programs. Can the government be run as efficiently as a private company? Can it be as innovative?

 Prior to joining the Obama Administration in 2009, I spent my professional career in the private sector, where I was fortunate to help lead two companies from early stage through two public offerings, and was involved in a range of public and private companies both as an investor and a Board member. I saw firsthand how a productivity boom transformed private sector performance over the last two decades, with improvements in operations and technology that revolutionized entire industries – increasing output, lowering prices, and increasing customer satisfaction at the same time.  When I came into government, I was struck by the fact that government agencies had missed out on those gains, and too often were operating without the systems, processes and tools for increasing efficiency that are taken for granted in the private sector.

 The good news is that we have the opportunity to move quickly to adopt proven best practices from the private sector to make government work more efficiently.  Here in the U.S., under President Obama’s leadership, we’ve done just that through successful efforts to eliminate wasteful information technology spending, modernize and improve citizen-facing services, and create new programs to recruit new talent and develop existing talent to drive change and innovation.  One example is the Presidential Innovation Fellows program that we established in 2012 to attract top innovators into government.  Already, we’ve seen this program produce results that save taxpayers money, fuel job growth, save lives, and provide tangible benefit to the American people. 

Are you incorporating any economic models from abroad in your advice to the President on how best to tackle income inequality?

Expanding opportunity for all Americans, and addressing poverty and inequality, has been a central principle of President Obama’s economic agenda from day one. You’ve seen it in what he has fought to accomplish in areas like healthcare, reforms to our financial system and our tax policies, and investments in workforce skills and education. President Obama believes that in America everyone should be empowered by the country they call home, not limited by the zip code into which they are born.  That’s why the President’s agenda is focused on expanding opportunity for all:  restoring economic security to hard-hit American families; building stronger neighborhoods and communities; and ensuring young people have the opportunity to reach their full potential.

When it comes to providing the President with advice on how to further achieve our goal of making our economy work for every American, we evaluate ideas from all available avenues, and look to adopt successful examples from around the globe. One example is our focus on increasing the use of apprenticeships to help American workers acquire the skills they need to succeed in good jobs that are available in today’s economy. Hands-on apprenticeships, where workers earn and learn at the same time, are a proven path to good, secure middle-class jobs. In fact, 87 percent of apprentices are employed after completing their programs, with an average starting wage above $50,000. And apprentices earn a significant premium for their skills — as much as $300,000 more than their peers over a lifetime, according to some studies. Our efforts to expand apprenticeships by encouraging apprenticeships in a more diverse array of industries was informed in part by successful efforts to design, market and promote apprenticeships in the United Kingdom.

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