Outgoing Bank of Israel Gov. Stanley Fischer on Wednesday denied rumors that he
plans to take a political role in the next government, saying that he was
leaving the bank after eight years for personal reasons.
Though he was
less forthright in Hebrew, telling journalists at a press conference at the Bank
of Israel in Jerusalem that he could not accept positions nobody offered him,
Fischer was more straightforward when he switched to English.
“I do not
have any plans. I do not have any job lined up.
I do not plan on looking
for a job until I leave, because I still have a job until June 30,” he said,
adding that he hopes to continue to have a voice in Israel’s public debate.
Since Fischer’s departure announcement on
Tuesday, media outlets have speculated wildly that the 69-year-old former World
Bank chief economist was eyeing a role as finance minister or foreign minister,
while politicians claimed he was leaving in protest of Prime Minister Binyamin
Netanyahu’s economic policy.
“I’m leaving mainly for personal reasons.
Eight years is a very long time,” Fischer said, citing the difficulty of
distance from his family as a contributing factor. During his tenure, he said,
he had achieved the majority of his goals, including passing a new Bank of
Israel Law and putting to rest a nasty labor dispute within the
“There is no drama. At least no drama involving me,” he later told
Army Radio. “I’ve done what I had to do.”
Eight years, he threw in
drolly, was a nice round number, lucky in Chinese tradition. “They’re very
successful. Maybe it could help us.”
Fischer said fears of Israel’s
economic woes were exaggerated.
Budgetary challenges are clear problems
with clear solutions, unlike the unknown difficulties Israel faced when the
global financial crisis hit in late 2008, he noted. Closing a deficit may be
politically difficult, but it comes down to two main actions: bring in more
revenues and spend less.
“In the last two years, it got out of control a
bit, and we need to take care of it, but I have no doubt the prime minister
understands it needs to be taken care of,” Fischer said, though he lamented the
Finance Ministry’s oversized role in setting policy.
In addition to
passing a responsible state budget, he said, bringing prices down in the housing
market and finding ways to decrease bureaucracy for businesses were top economic
priorities for the country.
Israel’s rank in the World Bank’s Doing
Business index dropped from 26th place down to 38th, he said, not because the
bureaucracy got worse here, but because the rest of the world was rapidly
working to make business easier. In a competitive international market, constant
improvements are necessary to stay apace.
Meretz chairwoman Zehava Gal-On
said the governor’s departure was a show of no confidence in Netanyahu over the
budget and rising inequality.
“The governor put forth important
achievements, but failed to address the central challenges that stand before the
Netanyahu government, and those are reducing inequality, rehabilitating social
services and saving the weaker levels and middle class,” Gal-On
Social justice protest leader Itzik Alrov on Wednesday welcomed
Fischer’s pending retirement, saying he was “primarily responsible for the real
estate bubble” in Israel.
The Bank of Israel governor’s achievements only
“look good on paper,” Alrov said, citing expanding social gaps and price hikes
as examples of failures during his leadership.
Fischer conceded at the
press conference that beyond budgets and interest rates, the government needed
to concern itself with socioeconomic policy, finding the right balance to help
the country’s less well-off. But while specifying that he had criticisms of
Netanyahu and his policies, Fischer maintained that he had faith in the prime
minister’s strong macroeconomic and policy knowledge.
“The prime minister
understands economics. He is responsible for reforms that contributed to
economic stability in 2003, which is one of the foundations of the good economic
performance in recent years,” he said. “Yes, I had criticism.
But all in
all... listen, nobody is perfect,” he continued. “I have criticism for myself as
well, but I won’t specify those any further.”
Regarding the deficit, in
particular, Fischer said the government ignored the Bank’s warnings dating back
“Generally, I don’t believe advisers should pass their advice
through the media. When we started worrying that the message was not getting
across, we made a clear statement to the public,” he said.
Noting that he
had another five months as the head of the central bank (“It’s not a farewell
party”), Fischer played down negative market reactions to his impending
“I am sure that after the next governor arrives and starts
working, and has the benefit of a much stronger system, people will quickly
understand that he – or she – can manage the bank.”
dramatic speculations over Fischer’s political ambitions or possible discord
with the elected leadership, the biggest question on everyone’s mind was who
would replace the governor come July.
“There are several very good
candidates for this job in Israel, and it would seem to me that while I greatly
appreciate that they went outside” – Fischer said, referring to then-prime
minister Ariel Sharon and thenfinance minister Netanyahu’s 2005 offer that
plucked him out of his position as vice chairman of Citigroup in the US – “I
don’t think it’s something they should do every time.”
The six other
members of the Bank’s Monetary Committee, which decides key interest rates
alongside Fischer, are all possible candidates given their experience and
expertise. Key among them is Fischer’s deputy, Karnit Flug, whose abilities he
endorsed at the conference without giving direct backing.
“I don’t plan
to speculate on names of candidates to replace me,” he said. “Regarding the
question about the fact that I recommended the appointment of Deputy Gov. Karnit
Flug, when we recommended her we knew that her role is also to fill the role of
governor if necessary.
I would not have suggested appointing a deputy
governor I wasn’t convinced could act as governor when necessary.”
Lynn, who leads Israel’s business lobby, gave The Jerusalem Post his own
“I would suggest bringing back [Fischer’s predecessor at the
Bank of Israel] David Klein.
If he’s not interested or doesn’t accept,
then Manual Trajtenberg, who has very good macroeconomic sense, correct views of
the social and economic, is not too extreme on the social side – a balanced
man,” he said. The widely respected Trajtenberg headed a committee on government
reforms for a variety of social issues in the wake of the summer social protests
Other possible successors, according to Bloomberg, are Prof. Avi
Ben-Bassat, head of the Bank of Israel’s research department, as well as the
central bank’s former deputy governor, Zvi Eckstein, said Jonathan Katz, a
Jerusalembased economist for HSBC Holdings Plc. Also mentioned is Galia Maor,
who stepped down last year as chief executive of Bank Leumi.Jerusalem
Post staff contributed to this report.