When my good friend Bret Stephens and I went to meet Binyamin Netanyahu at the Treasury about halfway into his term as finance minister we knew he would focus on economics.
It was a precondition he had made, and we gladly respected it; Bret was a graduate of the London School of Economics and a senior editor at the Wall Street Journal, and I had had my own fair share of economics past, conviction and curiosity. And so, the three of us had a lively, even fascinating, discussion about fiscal restraint, monetary discipline, privatization drives, pension reforms, seaport competition, concentrated banking, unionism, taxation, globalization, inflation, deflation and even stagflation. Yet when we tried to steer the conversation, at least off the record, to diplomacy, we hit the same brick wall with which the media, both local and foreign, had by then become familiar: the treasurer would only talk about money.
Meanwhile, in meetings with Ariel Sharon in those days I tried to learn about the prime minister's thoughts on Netanyahu in general, and his reforms in particular. He had nothing bad to say of the man who had not long before challenged him for the Likud's leadership, and in fact added that Bibi "is working very hard, knows what he is doing, and is doing the right things." All that was back in the prehistoric times when disengagement had yet to be unveiled, maybe even conceived, when Sharon's government still included Effi Eitam, Benny Elon and Avigdor Lieberman. Back then, Sharon and Netanyahu had a deal, whereby the PM would focus on military and foreign affairs while the treasurer focused on the economy, and neither interfered in the other's affairs. The two abided by their deal, until Sharon threw his bombshell, in an interview with Haaretz's Yoel Marcus. Historians will doubtfully ever find written evidence of this, but suspicions that part of Netanyahu's subsequent frustration was related to his having apparently learned of the plan from the media will be difficult to dismiss.
In any event, from that moment on Netanyahu's political time was fast running out, just when his accomplishments at the Treasury were becoming universally admired. Soon enough, just when the shekel restabilized, employment expanded, privatizations accelerated, the pension reform was completed, foreign investments began soaring, the banking reform was introduced and the seaports were decoupled, Netanyahu was compelled to set aside the pie-charts, graphs and histograms that had become his daily staple, in order to turn his binoculars on what was approaching from beyond the horizon. Eventually, his ideological, strategic, social and tactical analysis of his situation proved disastrous.
IDEOLOGICALLY, Netanyahu was not supposed to have much of a dilemma. Having previously parted with Hebron, he said all along he did not dispute Sharon's view that Gaza was not to be retained. His misgivings, all in the realms of timing, cost and effectiveness, were instrumental. Still, having concluded that the retreat would only result in more violence he felt a need to voice his concern much the way Churchill did prior to 1939. This is nothing to scoff at, particularly in light of what Gaza is indeed spewing at us even as this sentence is being written.
Yet Netanyahu miscalculated the public's expectations from the pullout. The way Middle Israelis saw it, the disengagement project was not supposed to bring peace, only to massively reduce daily friction between Palestinian and Israeli civilians, and to diminish the long-term demographic imbalance that was fast emerging here. These aspects of the dilemma he never seriously addressed, other than to say that Israel's own Arab citizens would pose a demographic threat in their own right, a statement that dodges the Gaza demographic crisis, and distorts the Israeli Arab situation.
More importantly, Netanyahu's hawkishness on Gaza provoked his middle-class following just when his economic reforms provoked his working-class support base. The result was a massive erosion of his political infrastructure, even before one configures the charismatic Sharon's sway on the mainstream electorate when it came to anything related to security in general and the settlements in particular.
Apparently, the way Netanyahu saw it the so-called National Camp was cohesive, and his to keep. Yet it was neither. In fact, since the early 1950s, when Menachem Begin first courted Israel's downtrodden, there was a dissonance between the populism they expected, and Revisionist Movement founder Vladimir Jabotinsky's capitalism, which Begin's main political ally, the Liberals, espoused. This contradiction was never resolved, and Netanyahu thought it could be ignored provided he marched on with resolute reforms that would bear such sweet fruit that no one would be able to argue with. As it were, he allowed his disengagement attitude to stop his reform drive prematurely, and abandon Sharon's succession to his arch-rival, Ehud Olmert.
Still, Netanyahu's reforms could have been more universally appreciated even by the time he left the Treasury, had he been as swift and resolute about tax cuts as he was about his other reforms. Had value-added tax, income tax or sales taxes on cars been cut faster and deeper, Netanyahu would not have been staring down the biographical abyss at which he has now arrived. The way he handled himself, he ended up losing the historic Likud's populist electorate to Eli Yishai, and its capitalist portion to Avigdor Lieberman.
BEYOND ALL these strategic miscalculations, there were also poor tactics.
Netanyahu is probably the only aspiring prime minister in history, certainly in Israel, who rejected a premiership served on a silver platter. He did that in 2001, when - in the wake of Ehud Barak's resignation - the Right passed special legislation to enable his running, despite his having not been at the time a lawmaker. Netanyahu did so because he saw no sense in governing without a solid parliamentary base. It was a fair concern, but, as it were, Ariel Sharon eventually demonstrated it was an obstacle that could have been surpassed. Even more ominously, with terror raging at the time the way it did it was no time to fuss over concerns such as Netanyahu was voicing.
Sadly, when Netanyahu saw Sharon's consolidation of his premiership, he did not humbly concede that it had ended up in good hands; he challenged it. The successive defeats he was handed by Sharon only seemed to further fuel him, like an Icarus hoping to finally fly thanks to yet a few more feathers added to his hopelessly insufficient wings. Yet no matter what Bibi would do, Sharon was simply a better tactician. Now, having been overpowered even by Shas and Lieberman, it turns out that someone was also better at strategically reading the Right, just like Kadima, and particularly its campaign strategist Eyal Arad, were better at reading the Center.
Ironically, both Eyal Arad and Avigdor Lieberman were once among Netanyahu's closest aides. Yet unlike Ehud Olmert, whose aides have been with him for decades, and whose idea of loyalty has always been that it's a two-way street, Bibi's confidantes, from Danny Naveh and Tzahi Hanegbi to Yisrael Katz and Aviv Bushinsky - never lasted. At the end of the day, it was that social-skills failure that proved more decisive in Bibi's demise than all his tactical, strategic, ideological and analytical merits and drawbacks put together.
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