Fischer denies reports of future in politics

Bank of Israel Governor says he is stepping down for personal reasons, adds he has accomplished much during his tenure.

Bank of Israel Governor Stanley Fischer resigns 370 (photo credit: Sasson Tiram)
Bank of Israel Governor Stanley Fischer resigns 370
(photo credit: Sasson Tiram)
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 bank.
“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 said.
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 to 2010.
“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 departure.
“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.”
Indeed, beyond 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.”
Uriel Lynn, who leads Israel’s business lobby, gave The Jerusalem Post his own suggestions.
“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 in 2010.
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.