Financial responsibility

Israel's finance ministers have never been popular and indeed often became convenient punching bags.

April 2, 2006 21:29
3 minute read.
Financial responsibility

money cash 88. (photo credit: )


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The compelling attractiveness of the Finance portfolio for the parties now mightily vying for it could inspire numerous PhD dissertations, given the potential dangers it entails. In view of the thrashing just delivered to Binyamin Netanyahu - the recent and quite revolutionary finance minister - we may be forgiven for wondering why, for the sake of their self-preservation, politicians don't eschew the Treasury. Israel's finance ministers have never been popular and indeed often became convenient punching bags. However, the Kadima-Labor tug-of-war for the seemingly thankless task isn't senselessly prestige-motivated. As Tourism Minister Avraham Hirchson has pointed out, the Finance portfolio is of critical importance; the party that holds it can use it to ensure its policies are followed. Moreover, in the just-concluded campaign the economy and concomitant social issues were plainly high, unusually so, on the electorate's scale of priorities. Parties like Labor and Shas - even to some extent Kadima - conducted populist campaigns emphasizing the hardships produced by Netanyahu's economic policies while downplaying the once-looming collapse from which those policies helped rehabilitate the economy. This was highly effective, as the elections results show. Even the curious rise of the Gil Pensioners Party - though due in no small measure to fad protest votes - attests to the fact that social issues became prominent in a country where existential concerns hitherto overshadowed all else. That new stress on economics makes the Treasury an even more potent source of power than it has anyway always been. This is underscored by the latent clash of economic philosophies that guide Kadima and Labor. Much as Kadima denigrated Netanyahu, its luminaries served in the same cabinet with him, backed his thinking and enjoyed its fruits. That contrasts sharply with the trade-unionist zeal of Amir Peretz and his ambition to reallocate resources so as restore the welfare state to, at least, pre-Netanyahu proportions. The choice is not merely of degrees of government largesse but, rather, of fundamental premises. Whichever party gains the Finance Ministry, however, must not lose sight of the fact that electioneering is over. It must resist the temptation to undo everything that Netanyahu accomplished - at considerable personal political cost. He was accused of making the rich richer but took on the banks, the financial markets and the pension funds. To unravel much of this may be politically profitable in the short haul, but in the long run it could prove disastrous. The finance minister who poses as the generous benefactor of the poor will no doubt score points. But ultimately, doling out welfare only increases poverty by reducing growth and employment opportunities. The poor, especially in the haredi and Arab sectors, must be weaned from government funds and encouraged to work. Greater selectivity is mandated for income subsidies. Not all able-bodied claimants are indeed needy. It's an open secret that Israel's welfare rolls are crammed with those who fail to declare incomes earned "unofficially." This denies help to those who really cannot help themselves, such as the elderly and infirm. A great burden has been thrust upon Ehud Olmert's shoulders. He no longer enjoys the luxuries of a caretaker premier. Assuming he is charged with forming the next coalition, and succeeds in doing so, he must steer the ship of state through socioeconomic storms, but also with ever-present external threats in mind. As the murderous bombing in Kedumim, the daily Kassam attacks and even the debut of Katyusha fire from Gaza demonstrate, we haven't yet achieved true security or the reduction in heavy military expenditures such security might engender. Moreover, Olmert's projected withdrawal from much of the West Bank won't be cheap. His first crucial test will be his ability to resist a temporary political fix at the expense of financial responsibility. Kadima may wish to distinguish itself from Netanyahu's economic policies, and change many of his priorities. But it shouldn't do so by going backwards, abetting structural anomalies and returning to policies, which, for much of its history, debilitated Israel's economy.

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