Last year, at the time of The Jerusalem Post Diplomatic Conference, Yair Lapid was just a political candidate, crisscrossing the country asking where Israel’s money was going.

A year later, as finance minister, he is in charge of every shekel, and in his election campaign he reoriented the country’s priorities away from security concerns toward domestic issues.

Lapid then leveraged his achievement in the election to force Prime Minister Binyamin Netanyahu into a coalition without the ultra-Orthodox and obtain the critically important, yet not so coveted, title of finance minister.

Time magazine placed Lapid on its 100 most influential people in the world list, and he topped The Jerusalem Post’s 50 most influential Jews, after not even making the list a year earlier.

Lapid holds the key to Netanyahu’s government’s endurance and he intends to take advantage of that status to ensure that the peace process with the Palestinian Authority advances. He is a member of the security cabinet and the ministerial forum that oversees talks with the PA.

But since he became the man in charge of the country’s finances, it has not been smooth sailing for Lapid. He had to make extensive budget cuts – at least temporarily harming his middle-class constituency – and endure a difficult process of choosing a Bank of Israel governor. He has also faced a slew of economic challenges as the nation continues to deal with high levels of poverty and inequality. The Histadrut labor federation has proven to be a resilient foil to proposed reforms that Lapid hopes will bring down the high cost of living. The country’s sky-rocketing housing prices, which fueled the 2011 social protests whose sentiments fueled Lapid’s election victory, have remained stubbornly high.

The Post sat down with Lapid recently to discuss some of these pressing issues.

You said in an infamous interview after you led your party to an impressive 19 Knesset seats that you believed you would be Israel’s next prime minister. Do you still think so?

I think I should talk about this less. I’ve never hidden the fact that coming into politics I thought of going all the way, but I’m in no hurry. This government has plenty of juice. It can last all four years. So far I did only the difficult, painful things a politician hates doing. I will need some time to gain political profit from the things we are doing now. So yes, but I am not in a hurry and not obsessed with it.

Do you regret accepting the finance portfolio?

I don’t regret taking this job for a second. I entered politics to fight for Israel’s middle class. What better place than the Finance Ministry? But I didn’t think my first fight would be to prevent an economic collapse, and I didn’t know what inheritance I would receive [from my predecessor, Yuval Steinitz].

Please respond to reports that Defense Minister Moshe Ya’alon said privately that he would prevent the full implementation of the Peri Committee recommendations on drafting yeshiva students.

The law is the law, and everyone will follow it. Ya’alon voted for it in the cabinet and the Knesset. He was part of the Peri Committee. We built the law completely in legal cement. If we hadn’t, when the old Tal Committee recommendations were disqualified by the Supreme Court, everyone would have had to be drafted at 18. Our bill makes the process irreversible. There might be those thinking of their future coalitions, but there is no going back from this.

Do you see your controversial bond with Bayit Yehudi head Naftali Bennett continuing?

I don’t see why not. Naftali is an ally and a friend. We disagree on the peace process, but he says as long as we haven’t started evacuating settlements, he can stay in the coalition. We still talk almost every day.

Are you concerned that the handling of the crisis with the EU indicates that expanding settlements is a higher priority for Netanyahu’s government than expanding the economy?

Since I joined the government, no new settlement has been built.

Israeli citizens should be supported. The settlers know that I think that in a future agreement they will be evacuated.

We are working tirelessly to explain to the Europeans that what they are doing is harming the peace process, not helping it. They are strengthening Palestinian extremists who believe that it is best not to do anything on the peace process. But it is now looking like the EU’s Horizon Program [a project of 70 billion euros for research and development to create new growth and jobs from 2014 to 2020] will include Israel after all.

Do you believe a diplomatic agreement can emerge from the current peace process?

If this peace process won’t work, we should start again and again. It may be Churchillian, and if not, it should be: Never, never, never give up. As I said in the campaign, we are seeking an honest divorce from the Palestinians, not a wedding. We [in the Yesh Atid party] will push the process forward tirelessly. Ministers get reports directly from [Israel’s chief negotiator and Justice Minister] Tzipi Livni. I won’t get into details of what is happening in the talks, because that would be irresponsible.

I would rather have a peace process than a headline.

Would you support reaching an interim agreement with the Palestinians?

The conflict is not about borders, Jerusalem, security arrangements, settlements, or Palestinian terror. It’s about hatred, pain, mistrust and bad memories. We need a solution that concludes the ability to go through these emotions. I don’t know if interim state is the name for it, but time is one of the ingredients we need if we want wounds to heal.

Let’s leave it vague for now.

I’m not going to jeopardize the process to be fancied by somebody or get invited to the right caucus. It’s too important to me.

Are you concerned that if peace talks break down there will be another intifada that could harm the economy?

“Fears – economically and otherwise – are never a reason to do nothing. We should overcome fears. But the worst point economically was when the peace process was stuck. This is being taken into consideration.”

Where do you see the peace process and the economy four years from now?

Economy and peace must unite – and they will. Already a year-and-a-half from now, the economy will be better because growth will be up and the deficit down. We have a train going in the right direction.

I’m happy because optimism is part of the economy. Economics is a social science. If people understand the economy is going the right way, it will happen faster. In 1993, after the Oslo process began, international companies came in and the economy was boosted. If optimism had a twin sister, it would be hope.

I’m optimistic about the economy and hopeful about the peace process.

Moving to the economy, why has it taken so long to select a new Bank of Israel governor?

Three candidates have already been approved by the Turkel Committee responsible for vetting them.

We had, as you well know, a streak of bad luck with the first two candidates we chose; and by saying a streak of bad luck, I’m trying not to not have to say “farce.” A lot of what is bad in the Israeli discourse came out through this. I understand the end result of what happened; I don’t understand the amount of bad blood and even evil that came through this.

The prime minister has invented a new English term called “Turkelizing,” so we decided to “Turkelize” them before instead of after, and we did that, and they finished a few days ago. We’re going to take a few days and think about it and contemplate and make up our minds. If we were doing it immediately, you’d be sitting here and saying, “Why aren’t you going through the proper process of thinking and doing it so fast?”

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