Analysis: The waiting game at the Finance Ministry

Twice over the last two years, a small team of senior ministers and financial leaders hit the phones to calm the nerves of major investors in Israel and abroad. The first time was immediately after Binyamin Netanyahu resigned in August 2005 from the Finance Ministry in protest over disengagement. The second, five months later, was after Prime Minister Ariel Sharon's second stroke. In both cases, the markets needed assurance that the fiscal policies were not about to change and that the government wasn't planning an "elections economy." In both cases after a slight hiccup, the stock indices were right back on track. And in both cases, it was Ehud Olmert who stepped in, replacing Netanyahu as finance minister and then Sharon as premier, reassuring the markets that there was a steady hand on the reins. On Sunday, as Avraham Hirchson suspended himself for a three-month leave of absence from the Finance Ministry, not even a blip was registered on the stock exchange radar. Once again Olmert was assuming the dual responsibility of prime minister and finance minister. He might be receiving single-digit approval ratings from the Israeli electorate as a whole, but at least on Ahad Ha-am Street, they still trust him. More than anything, they trust him for not handing the Treasury over to Amir Peretz. The crisis in the Finance Ministry is a reflection of the malaise affecting the whole Israeli system. Not long ago, it was seen as the pinnacle of public service, a solid rock in the stormy sea of corruption and ineptitude. Now, not only has the minister been forced to suspend himself amid charges of serious corruption, the Tax Authority is also paralyzed by a bribes scandal and the Accountant-General Yaron Zelicha, brave crusader or chronic nudnik, who can tell, is isolated within the ministry. As one of the young economists of the Budget Department, the ministry's elite, said recently, "We are the only ones here still keeping things together." But none of this shambles seem to really matter, with the economy booming, the shekel as strong as ever and the stock exchange breaking records monthly. The markets don't even mind that we're going to have a part-time finance minister now. For how long will Olmert hold on to the ministry before appointing a replacement? It's hard to believe Olmert's old ally Hirchson will ever return there, but by only suspending himself, he did Olmert a favor by not forcing him to appoint a permanent replacement just yet. Now the prime minister can afford to wait and select the most useful moment to pick his new finance minister. First he has to wait and see how the chips fall after the Winograd Committee delivers its first partial report in a couple of weeks. Then he must see who Labor choose as their new chairman on May 28. By then Haim Ramon will have finished his community service and Olmert will be able to decide who he needs most by his side: Ramon, the slick behind-the-scenes operator, or perhaps Meir Sheetrit, Kadima heavyweight and potential rival? Olmert is certain to be saddened by the apparent downfall of yet another old friend and ally but Hirchson's departure at least opens up some unexpected political opportunities.