Trajtenberg power couple could pose conflict of interest

Deputy Bank of Israel Governor Nadine Baudot-Trajtenberg may have to quit if her husband Manuel Trajtenberg is to become Finance Minister.

January 4, 2015 17:57
3 minute read.

Professor Michael Trajtenberg. (photo credit: TAU)


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Is there such a thing as too much success in one family? The Trajtenbergs may answer that question in the affirmative come March 17.

Manuel Trajtenberg, the economist who was tasked with addressing Israel’s socioeconomic problems following the 2011 social protests, announced that he was running with the Labor-Hatnua list as its candidate for finance minister last week.

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The problem, however, is that his wife, Nadine Baudot- Trajtenberg, holds the No.

2 spot at the Bank of Israel, which would doubtless create a serious conflict of interest if he is elected.

While the laws defining conflict of interest for ministers generally refer to business holdings, the attorney-general could rule that having a couple atop the Finance Ministry and in the upper echelons of the central bank represents a serious conflict.

While the Finance Ministry, which is responsible for setting the country’s fiscal policy through budgets and taxation, is always led by a cabinet member affiliated with a political party, the Bank of Israel is supposed to be independent. It is supposed to give apolitical advice to the prime minister and make decisions on monetary policy based purely on economic calculations.

A strong familial connection to a politician, especially one running the Finance Ministry, could theoretically skew the decision-making process and call into question the bank’s independence. Central bank independence is considered a fundamental necessity for good economic governance.

“It’s such a strong conflict of interest. The Bank of Israel is supposed to be impartial and serve as a counterbalance to the minister of finance in advising the government, and it seems to me that one of them will not be able to serve in the position. It won’t work,” said Barak Medina, a constitutional law expert at the Hebrew University and the former dean of its law faculty.

“There is no specific law about [this particular situation], but it’s just a matter of logic or understanding the precedence of the court. It seems obvious. I don’t think it will even be disputed,” said Medina.

Though ministers can recuse themselves from limited sets of decisions with conflicts, the overlap between the Finance Ministry and the bank would be too vast to allow for such an arrangement, according to Medina.

Thus, if the “Zionist camp” led by Labor’s Isaac Herzog and Hatnua’s Tzipi Livni, which is polling as the largest party thus far, is indeed given the chance to form the next government, it is likely that either Trajtenberg will have to withdraw his ambition for the Finance portfolio or Baudot-Trajtenberg will have to resign from her position.

That dynamic may not sit well with women’s rights advocates, who might see the decision as a high-profile example of a successful woman sacrificing her career for that of her husband.

It might sting doubly given that Baudot-Trajtenberg is part of a feminist first in Israel. Her boss, Karnit Flug, is the first woman to lead BoI. Flug’s decision to appoint Baudot-Trajtenberg as her deputy marked the first time the bank’s top two positions were held by women.

“In the case of Trajtenberg and his wife, I’m not sure what’s going to happen, but I assume from listening to the man over the years that it’s not something he’ll ask her to do,” said Galit Desheh, executive director of Israel Women’s Network, a women’s rights group.

That said, she continued, “I think we need to be extra careful when issues like this are on the table, because situations where the man gets a high-powered position and the wife stands down are more common than the opposite.”

There are not enough women in high-powered positions, especially in the fields of finance and economics, Desheh said, and Israel “needs to try to figure out how to keep as many talented women in their positions, because we need more women in those positions.”

The Canadian-born Baudot- Trajtenberg is no stranger to breaking gender barriers.

She was the first woman in Quebec to be awarded a Rhodes Scholarship, and, like her husband, she holds a PhD in Economics from Harvard University.

Representatives for Trajtenberg, the bank, and the attorney- general each said that it was too early to comment on the situation, and that it would be dealt with only if the conflict actually arose.

Asked about the problem in a Channel 2 interview Friday, Trajtenberg joked: “If she’ll continue to be the deputy governor and I’ll be the finance minister, then we will have solved the problems between coordinating fiscal policy and monetary policy.”

In the last government, policy disagreements between Flug and then-finance minister Yair Lapid were a regular part of the political discourse.

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