Leiderman unexpectedly withdraws BOI Gov. nomination

Withdrawl of second candidate for job in days leaves an air of uncertainty over Israel’s future monetary policy.

August 3, 2013 20:11
2 minute read.
Prof. Leo Leiderman.

Leo Leiderman 370. (photo credit: Courtesy)


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In a stunning turnaround, Bank HaPoalim Chief Economist Leo Leiderman on Friday evening became the second Bank of Israel nominee in less than a week to withdraw his candidacy for the position.

A statement released on behalf of Leiderman said that "after holding intensive discussions with his family for the past two days, he decided that he would prefer to continue to work as a private person at Tel Aviv University and at Bank HaPoalim."

A terse notice from the Prime Minister’s Office added: “The prime minister and finance minister expressed their regret at the decision." Leiderman’s planned Sunday meeting with the Turkel Committee, responsible for hearing complaints and approving candidates for the position, was canceled.

The sudden announcement raised speculation that Leiderman, who just a day earlier expressed confidence in his ability to produce positive changes within a hundred days of entering the position, was not prepared to deal with claims pouring into the Turkel Committee.

Since Leiderman’s Wednesday nomination, reports surfaced about an allegedly embarrassing incident that brought his service at Deutsche Bank in the early 2000’s to a sudden close, rebellion among members of the BOI’s monetary committee over his appointment, and even insinuations that he was unfit for the position because he was in regular touch with an astrologer.

Just a few days earlier, the previous nominee Jacob Frenkel withdrew his candidacy following an uproar over an alleged 2006 shoplifting incident in the Honk Kong airport, an event which produced no charges and that Frenkel said was a misunderstanding.

"It turns out that economics professors are a very colorful and wild bunch,” Finance Minister Yair Lapid dryly quipped in a weekly e-mail to supporters.

Leiderman’s decision leaves an air of uncertainty over Israel’s future monetary policy. In the turbulent month that passed since former governor Stanley Fischer stepped down, the Fischer’s deputy Karnit Flug has served as acting governor, making interest rate decisions with the monetary committee Fischer instituted in 2010. Flug, who Prime Minister Binyamin Netanyahu and Lapid passed over for the position of BOI chief first with Frenkel and again with Leiderman, announced her plans to resign following the second snub.

"Netanyahu and Lapid should go to Dr. Karnit Flug's house now to say a big sorry to her and beg her to agree to be nominated for the position of Bank of Israel Governor, something that should have happened a long time ago, before this ridiculous farce began,” Opposition Leader Shelly Yacimovich told Channel 10 on Friday, a day after suggesting sexism may have played a role in Flug being overlooked.

Meretz MK Ilan Gilon mocked Netanyahu and Lapid for their failure in "selecting a governor to replace the governor that replaced the governor that quit."

Knesset Economics Committee Chairman MK Avishai Braverman said he would work to institute an orderly process of selecting candidates to avoid such "farces" in the future, and reiterated his own support for Flug.

Flug vowed to stay on long enough to help a new governor – whoever he or she may be – transitions into the role.

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