Analysis: Sky could be the limit for finance minister Bar-On

Appointment of director-general for the Treasury could be crucial to Olmert loyalist's tenure.

By AVI BAR-LEV
bar-on 88.298 (photo credit: Ariel Jerozolimski [file])
bar-on 88.298
(photo credit: Ariel Jerozolimski [file])
In the coming days, new finance minister Ronnie Bar-On, assuming he is confirmed in the job, will be looking to appoint a director-general for the Treasury. He'll need somebody to pilot the troubled ministry back to clear skies following months of turbulence which saw internal and police investigations, tax scandals, public battles between top Treasury officials and the Prime Minister's Office, and a rising pile of urgent reforms awaiting action. The troubles culminated in the departure this week of Avraham Hirchson, following serious fraud investigations which had forced his earlier suspension from office and left the ministry without a steady pair of hands at the helm. The decision Bar-On will have to make on a new D-G won't be easy. But he would be wise to choose a manager who can restore calm, order and confidence. If he gets it right, and proves an astute steward at the Treasury and in national politics, Bar-On's meteoric rise through government may yet take him higher still. Here's his first problem however: Unlike other ministries, at the Treasury the director-general is not in complete control; true power, rather, lies with the various division chiefs. Directors-general at other ministries, notably the Ministry of Foreign Affairs, the Defense Ministry and the Prime Minister's Office, historically carry much more authority and get a lot more done during their tenures. The most powerful officials at Finance are the accountant-general and the head of the state budget department. These two offices are where much of the real action takes place, and the office of the D-G largely oversees the bureaucracy. There are thus at least two people in the ministry who, while nominally under the authority of the D-G, are in essence political appointments made by the finance minister, owing their loyalties to their political master, not their direct superior. A rare exception of a dominant D-G was Yossi Bachar, who was brought in by Binyamin Netanyahu to carry out substantive reforms and was consulted regularly by his minister. By contrast, some observers say that former another former D-G, Ohad Marani, had little impact and that, although highly respected, Professor Avi Ben Bassat also made no serious impression on the power structure at the ministry during his time in the D-G's job. Yarom Ariav, the current director-general, enjoys wide support in the political echelon, but has not changed the ministry's power structure either. It is unclear whether the new finance minister will want to keep Ariav on, or replace him with someone new. If he does go on a hiring spree, Bar-On will want to appoint people he trusts to the top, critical positions. A new D-G would have to learn to navigate between running the Treasury's business, and not getting in the way of the minister's interests as manifested by the two most important officials. A new D-G today would also have a rare chance to affect the balance of forces within the ministry, as most of the Treasury's powerful division chiefs are to be replaced within the year - Accountant-General Yaron Zelikha, who has been so consistently critical of government practices all the way to the top, will likely be gone within the next three months - and so many simultaneous departures could enable the new minister to remake the power structure as a more centralized, and manageable, hierarchy. Bar-On will look to appoint a clean, reliable D-G - who can be trusted to pilot the ministry smoothly, while generally leaving the economy on "autopilot," just the way the business leaders want it. This would leave Bar-On free to do what he does best - defend Prime Minister Ehud Olmert from his enemies, both inside and outside Kadima, and, together with new/old ministerial face Haim Ramon, work to entrench Kadima on the ground, in the local authorities, and in the consciousness of the public. If elections were held now, after all, Kadima would likely be decimated and the Israeli political landscape would revert to its long-time bipolar configuration of Likud-Labor. Bar-On is not known to have any socio-economic agenda to speak of, and he will not enter the Finance Ministry with any grandiose plans for reform. He is also not known to have any particular background or expertise in financial matters. He was a criminal lawyer before he entered politics, and not a commercial lawyer. Bar-On is known, however, to have the admirable habit of appointing good people to key positions, as at the Interior Ministry. Olmert and Bar-on have a shared interest in letting good people run the Treasury in a quietly efficient manner, in the hope that the economy continues to expand at a good clip, unemployment continues to fall, and privatization proceeds at a steady pace which will not cause protest marches from single mothers and other unsympathetic headlines. Olmert wants the public to forget that Binyamin Netanyahu was an effective finance minister, and that can only happen if Bar-On does a good job over the next few years, all things staying fiscally equal. Netanyahu, for his part, will want to remind people just how successful his stewardship of the Treasury was, and to lay the blame for any and all of the country's economic slip-ups at Bar-On and Olmert's door, with his eye all the time on winning the next general elections. Elections are not likely to take place before mid-2008 at the earliest, possibly prompted by Defense Minister Ehud Barak pulling his Labor party out of the coalition, and Olmert struggling to meet the price set by United Torah Judaism for its entrance as a replacement. But the coalition could actually hold on far longer. Barak's position on leaving the government is vague at best - though much will depend on the wording of the final Winograd report - and he has enough powerful Labor ministers on his side to help get any result he wants from Labor's Central Committee on staying or bolting. And even if Labor did bolt, UTJ has a price; to rebuild his coalition majority, all Olmert would have to do is pay it. So it is technically possible for Olmert to go all the way until 2010 with a shaky coalition, and for Bar-On to go all the way with him. Were Olmert forced to leave office for one reason [Winograd] or another [State Comptroller Lindenstrauss], Bar-On would also be in a good position to take over the reins if he has shown demonstrable success as finance minister. What constitutes demonstrable success? Passing the 2007 state bud-get, and seeing through the reforms already in the pipeline; keeping unemployment heading down and foreign investment heading up; as well as securing a healthy aid package from the Americans. Do all that, and he would only go up in the opinion polls. It's anybody's guess what impact the final Winograd report - slated to come out in October if no warning letters are issued, and at a much later date if they are - will have on Olmert's position as prime minister. But if he cannot survive it, and Kadima is forced to choose a new leader without going to general elections, Bar-On would be at the forefront of the Olmert loyalist camp, a camp which which start at a distinct disadvantage in the succession battle. There are, however, few real heavyweights in this group - Ramon will forever be handicapped by his sexual assault conviction; Immigrant Absorption Minister Ze'ev Boim and Environment Minister Gideon Ezra would be unlikely leadership challengers; Housing and Construction Minister Meir Sheetrit perhaps comes closest to Bar-On in terms of political influence, but his loyalty to Olmert is in question. Lining up against the Olmert loyalists would be such relative heavyweights as Foreign Minister Tzipi Livni (though she did her credentials serious damage by eschewing a leadership bid when urging Olmert to resign after the interim Winograd report came out), Internal Security Minister Avi Dichter (who has made very little political impact since joining politics, and who handled the changes at the top of the police force inexpertly, but who is well-liked), and Transportation Minister Shaul Mofaz, a "Mr. Security" whose star may be rising. But if he can preside over a quietly industrious Finance Ministry for a few years and improve Kadima's backing on the streets, Bar-On could earn himself the opportunity to mount a realistic challenge. As finance minister, he could, should he so choose, also be well placed to divide and conquer the anti-Olmert camp, including by swinging bud-get allocations to some ministries over others - Internal Security, say, over Transportation, thus creating a wed-ge between Dichter and Mofaz. But all of this will prove immensely more complex if, as Treasury D-G, he has a manager in constant tension with the division chiefs, and if he has to spend much of his time putting out fires. That's why this first appointment, for Bar-On, and to an extent for Olmert, may prove to be so crucial.